Cases & Developments

The American Council on Education (ACE) along with 20 higher education associations sent a letter to congressional leaders requesting an increase in funding for Minority-Serving Institutions (MSI) for fiscal year 2026. The letter also urges Congress to reinstate funding that was cut during fiscal year 2025. The letter explains that the abrupt cut in funding will cause irreparable harm to hundreds of institutions and emphasizes the bipartisan support the funding has maintained for the last several decades.

The White House sent a letter to nine universities along with a proposed “Compact for Academic Excellence in Higher Education” outlining the “priorities of the U.S. Government” in its engagements with universities. The letter suggests that by signing the Compact, the “Federal Government would have assurance that signatory institutions are complying with civil rights law and pursuing Federal priorities with vigor,” which would in turn “yield multiple positive benefits for the school, including allowance for increased overhead payments where feasible, substantial and meaningful federal grants, and other federal partnerships.” Among its many obligations, the Compact would require institutions to: (1) prohibit the considerations of factors “such as sex, ethnicity, race, nationality, political views, sexual orientation, gender identity, religious associations, or proxies for any of those factors”  — either “explicitly or implicitly” in any decision related to admissions or financial support; (2) commit to fostering a vibrant marketplace of ideas, while at the same time,  “transforming or abolishing institutional units that purposefully punish, belittle, or even spark violence against conservative ideas”; (3) maintain institutional neutrality at all levels of their administration; (4) commit to freezing tuition rates charged to American students for the next five years; (5) limit international undergraduate student enrollments to no more than 15 percent of the student population; and (6) commit “to defining” male and female according to “reproductive function and biological processes.”  The Compact requires the President, Provost and Head of Admissions to certify the university’s compliance on an annual basis. Adherence to the agreement will also be subject to review by the Department of Justice, with universities found to have willfully or negligently violated the agreement subject to a loss of access to “the benefits of this agreement” and other penalties, which may include requiring the return of “all monies advanced by the U.S. government during the year of any violation.”  The letter offers the schools the opportunity to provide “limited, targeted feedback” on the Compact (which the authors note is “largely in final form”) by October 20, 2025, and announces the White House’s goal of having a signed agreement no later than November 21, 2025.

The Department of Education (the Department) published a Dear Colleague Letter (DCL) reminding institutions of the legal restrictions on using federal grant funds for lobbying including that the use of federal grant funds for membership dues to professional or trade organizations, including national associations, remains strictly prohibited. The DCL notes that while 2 C.F.R. § 200.450(c) allows the use of federal funds for membership in business, technical, and professional organizations, “that allowance does not extend to organizations whose primary purpose is lobbying . . .[n]or does it allow payment of dues to any organization that fails to separate lobbying from non-lobbying costs.” The DCL further states that it is the responsibility of the grantee to ensure that any membership fee funds are not used for lobbying, even when the membership organization’s primary purpose is not lobbying. Grantees are also responsible for maintaining adequate documentation to demonstrate compliance and avoid payment of dues to organizations that do not report the proportion of their activities that are dedicated to lobbying. The DCL concludes by stating failure to comply may result in disallowed costs, audit findings, program reviews, and additional oversight or enforcement actions by the Department up to the termination of a grant.

The American Council on Education (ACE) along with 60 higher education associations sent a letter to congressional leaders requesting that they include clear legislative language in the final fiscal year 2026 appropriations bills mandating that the administration allocate funds as directed by Congress. The letter notes the need for increased stability, certainty, and transparency for colleges and universities about the availability of federal funding, particularly after the significant disruptions and terminations of funding in recent months.

Order Granting Plaintiffs’ Motion for Preliminary Injunction. Plaintiffs, a group of researchers at the University of California, sought a preliminary injunction blocking the Department of Defense, Department of Transportation, and Department of Health and Human Services from the mass termination of multi-year research grants via form letter, following the court’s June decision to grant a preliminary injunction blocking the termination of grants at three other agencies, which the Ninth Circuit upheld. Rejecting the government’s argument that plaintiffs’ claims belonged in the Court of Federal Claims, the court distinguished the Supreme Court’s recent decision in NIH v. APHA, reasoning (1) plaintiffs, as individual researchers, were not parties to the grant agreement, and thus, could not obtain any relief from the Court of Federal Claims and (2) plaintiffs’ First Amendment claims were well established to be beyond the Court of Federal Claims’ jurisdiction. The court found that plaintiffs were likely to succeed on their claim that the three agencies’ termination of their grants was arbitrary and capricious in violation of the Administrative Procedure Act (APA). The court further found that, despite troubling evidence of viewpoint discrimination across all three agencies, plaintiffs had demonstrated a likelihood of success on the merits of their First Amendment claim with respect to the actions of the Department of Transportation. The court concluded plaintiffs had satisfied the other prongs necessary for a preliminary injunction on these claims and granted their request for relief.

The Department of Education (the Department) announced its withdrawal of the June 3, 2025 and July 14, 2025 Notice Inviting Applications (NIAs) for new awards for the Strengthening Alaska Native and Native Hawaiian-Serving Institutions Part A (ANNH Part A), Strengthening Asian American and Native American Pacific Islander-Serving Institutions Part A (AANAPISI Part A), Strengthening Native American-Serving Nontribal Institutions Part A (NASNTI Part A) and Developing Hispanic-Serving Institutions programs (DHSI). This withdrawal follows the Justice Department’s announcement that it will no longer defend from legal challenge programs providing funding for        HSIs, which they allege are unconstitutional.

The Department of Education announced its plan to redistribute existing discretionary funding totaling $495 million to Historically Black Colleges and Universities (HBCUs) and Tribally Controlled Colleges and Universities (TCCUs). This funding will be in addition to the anticipated fiscal year 2025 funding.