(CNN) The American University of Afghanistan is drawing up plans to shut down next year, a casualty of anticipated US government budget slashing of the school's steady stream of funding, three sources familiar with the planning tell CNN.
The university is widely regarded as a top university in Afghanistan and the only one that provides a Western-style education. Established in 2006, the school now has a student body that is about half female and presents an important opportunity for women, who the Taliban once forbid from going to school. Many of its graduates have gone on to serve in the Afghan government.
The university relies on the US Agency for International Development for more than 60% of its budget and could not operate without the agency's financial backing. The school has been unable to secure assurance from the agency that it will continue funding the school.
The current funding will last through May. The university's annual budget is about $28 million, the school's president, David Sedney, told CNN.
"We have a fiduciary responsibility to the faculty, our students and our donors," said a source familiar with the planning for the possible closure. "It is really important that we address what could be the worst-case scenario."
In recent weeks, USAID had a close-out meeting with university personnel at the US Embassy in Kabul, sources told CNN. They covered the procedures for closing a project. The USAID administrator, Mark Green, had a meeting with members of the university's board of trustees in Washington earlier this month and made no firm commitments to renew funding.
"At a meeting with members of the AUAF Board of Trustees on December 9, 2019, USAID's leadership once again strongly encouraged the university to diversify its funding sources, as representatives from the Agency had done in past correspondence and previous meetings, both in Washington and in Kabul," a USAID spokesperson told CNN. "AUAF's Board, not USAID, has the fiduciary responsibility to make decisions regarding the future of the university, which is an independent entity."
As the funding stands now, the year's courses will finish, but the university will have to activate its plan to shut down after graduation.
"In March, international staff will start looking for new jobs. If we are not able to offer contracts by April they will take other jobs," said a source familiar with the university's planning for a possible shutdown.
The education of more than 800 Afghan students, who expected to finish their undergraduate or graduate degrees at the university, would also be upended if the doors closed in May. While the university is seeking out ways to help its students find other places to finish their education should that be necessary, it is a complex and cumbersome process.
"There is no university in Afghanistan like AUAF," said another source familiar with the planning. "We are trying to create a plan [for students] but it would be a highly irresponsible thing for USAID to withdraw funding."
The precise reason that USAID has made no formal funding commitment to the university remains unclear to those involved. News of the potential closing of the university comes as the Trump administration is preparing to announce a drawdown of US troops in Afghanistan.
"In many ways it is a mystery, other than the fact that we know that the Trump administration wants to spend less money abroad and be less involved in Afghanistan," said one source familiar with the school's position. "We are working to make the changes they have asked for."
A USAID spokesperson said future funding for the university will be the result of a "competitive process" and depends on the school's ability to comply with an agreement it made with USAID to improve its operations, fiduciary oversight and internal controls. That agreement came after reports cited alarm about the school's management of its funding.
Former first lady Laura Bush launched the university five years after the Afghanistan War began.
"Establishing a university was a commitment to higher education but also a recognition of the talent in the country. The US government wanted to educate them in their country. It took wrestling with OMB and USAID to get it funded, but it got done," said Anita McBride, who was Bush's chief of staff at the time. "Mrs. Bush's presiding over it was essentially underscoring that education was important to the overall focus of rebuilding of Afghanistan."
"My fear is this university will be caught up in the overall strategy of our posturing and our position as the US government towards Afghanistan. Security remains the biggest obstacle for the school and, frankly, for women progress and women empowerment generally," McBride said.
The university has not escaped the plague of the country's long war. Fifteen people were killed, according to the school, and the university was closed for seven months after a Taliban attack on the school in 2016. Two staff members were kidnapped outside the university and held for more than three years before being freed in a swap this fall.
Students who were attacked by the Taliban in the 2016 assault have graduated in recent years.
Initially, the university was entirely funded by the US government. The institution has developed additional funding streams in recent years, but it has also faced scrutiny its handling of finances.
The special inspector general for Afghanistan reconstruction put out a report earlier this year to Congress that found the university had "lost more than $63 million since 2012."
University officials fought back on some conclusions of the report -- saying none of the money was actually lost -- but did embark on a cost-cutting mission.
University officials say they cut costs by about 15% in the last year. They have done so by cutting staff, reducing travel and trimming back new expenditures. But USAID appears to be focusing on a new model for where its funding will go in Afghanistan.
The agency encouraged the university to apply for funding through one of its new programs that will seek applications in a competitive pool from organizations that will improve the employability of Afghan men and women by giving them "workforce skills." The program -- called Advancing Higher Education for Afghanistan's Development -- will award its first round of funding next year.
University officials see an uphill battle before them.
"We have not given up hope. The closure would be a huge political symbol. The American University of Afghanistan is the single best thing that the US has done in terms of a positive legacy in Afghanistan," said Sedney. "It represents hope for a peaceful future. We provide the highest quality education available in Afghanistan, and our students are already in leadership positions in government and in the nonprofit sector."
The US National Defense Authorization Act, signed into law last week, included continued support to coeducational "institutions of higher education in Kabul, Afghanistan." Some congressional aides pointed to the language as an indicator that the support for the university would be legally obliged to continue.
A USAID spokesperson said they would work with Congress to implement the law and also "review the landscape of higher-education institutions in Afghanistan eligible for support."
CORRECTION: This story has been updated to correct the number of people who died in the 2016 attack at the university. It also clarifies the number of students who would be impacted if the school closes, a figure that includes incoming students.