Cases & Developments

Opinion and Order Certifying Class Action and Granting Plaintiffs’ Motion for Preliminary Injunction. Plaintiffs, individuals, organizations, and states consolidated from Trump v. State of Washington, Trump v. State of New Jersey, and Trump v. CASA, Inc., originally filed suit to challenge the validity of President Trump’s Executive Order (E.O.) 14160, titled “Protecting the Meaning and Value of American Citizenship”, which aimed to deny birthright citizenship to children born in the U.S. to undocumented immigrants. Following the Supreme Court’s most recent decision in CASA, which narrowed federal courts’ authority to issue universal injunctions, plaintiffs amended their complaint to proceed as a class action and sought class-wide relief. On July 16th, the court issued an indicative ruling contingent on the Fourth Circuit remanding the case. On July 29th, the Fourth Circuit remanded the case to “allow the district court to comport expeditiously with the Supreme Court’s directions in CASA, ensuring that any injunction complies with that decision [and to] allow for an immediate ruling on the plaintiffs’ motion for class-wide relief, so that appellate review of the merits of that relief can come sooner rather than later.” Based on the limited remand from the Fourth Circuit, the court granted plaintiffs’ motion for class certification, which includes “Any child who has been born or will be born in the United States after February 19, 2025, (1) whose mother was unlawfully present in the United States and whose father was not a United States citizen or lawful permanent resident at the time of said person’s birth, or (2) whose mother’s presence in the United States at the time of said person’s birth was lawful but temporary and whose father was not a United States citizen or lawful permanent resident at the time of said person’s birth.” Finally, the court enjoined enforcement of the Executive Order against the certified class and applied the preliminary injunction to all members of the certified class across the country, effectively dissolving the former injunction from February 5, 2025.  

The U.S. Department of Energy (the Department) announced a new policy action aimed at halting inefficient spending by colleges and universities. The Department announced that it will limit financial support of “indirect costs” of Department research funding to 15% and ultimately aim to generate over $405 million in annual cost savings. The Department currently provides funding to more than 300 institutions of higher education (IHEs) and stated in the announcement that the average rate of indirect costs incurred is greater than 30%. The Department further stated that it will no longer use the negotiated indirect cost rate for grants awarded to IHEs, and the new 15% indirect cost rate will be the standard for all IHE grant awards. Finally, the Department intends to terminate all grant awards that do not conform to this updated policy.  

Order Granting in part and Denying in part Plaintiffs’ Motion for Preliminary Injunction. Plaintiffs, the American Association of Colleges for Teacher Education, National Center for Teacher Residencies, and Maryland Association of Colleges for Teacher Education filed for a Temporary Restraining Order/ Preliminary Injunction following the Department of Education’s (the Department) termination of grants awarded through the Teacher Quality Partnership Program (TQP), Supporting Effective Educator Development Program (SEED), and Teacher School Leader incentive program (TSL). The Grant Recipients’ Grant Awards were terminated upon the Department’s supposed finding that “the grant is . . . inconsistent with, and no longer effectuates, Department priorities.” Plaintiffs’ TRO was granted on March 10, 2025, and a hearing to consider the preliminary injunction was held on March 13, 2025. In determining that plaintiffs are entitled to a preliminary injunction, the Court noted that the Termination Letters, though based on the “department priorities” established by the Secretary or Department, must still go through public notice and comment rulemaking. Specifically, “nothing before the court supports, or tends to support, a conclusion that in fact the Department reviewed the grant award of each Grant recipient and, on such review, in fact, found it to run afoul of previously lawfully established agency priorities.” Finding that plaintiffs made a clear showing that the Department’s termination of the Grant Recipients’ Grant Program awards violates the Administrative Procedure Act (APA), and that they will likely suffer irreparable harm due to being deprived of “essential funding required to continue their teacher preparation programs and the deprivation “complete[ly] eviscerates [] [p]laintiffs’ mission” the Court ordered Defendants to reinstate the TQP, SEED, and TSL Grant Awards of the National Center for Teacher Residencies as well as Grant Recipient members in accordance with the Grand Award Notification terms and conditions within five days of entry of the Order. Further, Defendants are ordered to not terminate and are enjoined from terminating any TQP, SEED, or TSL Grant Program award. The remaining portion of plaintiffs’ motion, specifically, plaintiffs’ Fifth Amendment claim that the Termination Provision of Executive Order 14151 (“Ending Radical and Wasteful Government DEI Programs and Preferencing”) is unconditionally vague, did not meet the burden required and is denied.

Complaint from the American Federation of Teachers requesting the court to compel the U.S. Department of Education (the Department) to abide by Congress’s command and provide borrowers with the ability to repay their loans through the affordable income-driven repayment plans to which they are entitled. Plaintiff is a membership organization representing 1.8 million teachers, higher education faculty and professional staff, federal, state, and local government employees, and nurses and other healthcare professionals; many of whom have student loan debt and are eligible for Public Service Loan Forgiveness (PSLF). Plaintiffs note that the Income-Contingent Repayment Plan (ICR) is made by way of statute in 1994, and mandates that “the Secretary shall offer a borrower of a loan. . . an income contingent repayment plan, with varying annual repayment amounts based on the income of the borrower.” Plaintiffs contend that on February 26, 2025, the current Administration issued a Stop Work Order, directing all loan servicers to stop accepting and processing income-driven repayment applications; effectively shutting down income-driven repayment option for at least three months, with no indications as to when, if ever, they will be reinstated. As a result, plaintiffs allege borrowers are unable to access affordable monthly payment plans, and some borrowers are being thrust into default on their debt, as well as some public service workers are being denied their statutory right to lower their monthly payment and earn credit toward public Service Loan Forgiveness. Plaintiffs request that the court issue both preliminary injunctive relief and permanent injunctive relief preventing the Department from collecting from borrowers who are eligible for income-driven repayment until it satisfies its statutory, regulatory, and contractual obligations under IBR, ICR, and PSLF. 

The American Council on Education (ACE) sent a letter to the U.S. Department of Education (the Department) expressing concerns with reports that the Department intends to rescind the 2011 bundled services guidance. The guidance was initially imposed to provide a clear framework for institutions when partnering with outside entities. The letter emphasizes how rescinding the guidance risks an untold number of current contracts coming to an abrupt and harmful halt. The letter recommends foregoing immediate action in favor of working with stakeholders and Congress to effectively address the concerns, but if the Department does choose to proceed, the letter emphasizes that priority be taken to (1) preserve clarification of incentive compensation, and (2) implement a grace period for institutions with current contractual agreements. 

Memorandum denying Defendant’s Motion to Dismiss. Plaintiff, a former student at King’s College during Spring 2020, on behalf of himself and a putative class, brought contract and unjust enrichment claims against the College after it ceased in-person instruction and closed campus facilities due to the coronavirus pandemic. Initially, although the College sought to dismiss the contract claim as one for educational malpractice, the court ruled that plaintiff’s challenge was to the type rather than the quality of education promised. Thus, the court permitted the claim to proceed, finding that an implied contract existed based on the College’s marketing material and other bulletins promoting the benefits of being on campus. The court also permitted plaintiff’s unjust enrichment claims to proceed, finding the payment of tuition and fees tantamount to a conferred benefit. 

Summary from the National Association of College & University Business Officers on legislative and regulatory actions that occurred from August 15-September 5, 2023.  This summary highlights the U.S. Department of Education’s Annual Lists of its top 10 audit and school program review findings for FY22; the Office of Federal Student Aid’s Federal Application for Free Student Aid (FAFSA) simplification webinar recordings; a RAND Corporation report on Income-Share Agreements; and NACUBO’s participation in an amicus brief filed with 10 other organizations in Indiana Municipal Power Agency v. U.S. in support of utility providers suing the federal government to prevent it from reneging on commitments under the Build America Bonds (BABs) program.