Nine Institutions Sent Trump Administration’s New Plan for Higher Education
Nine universities were sent an agreement from the Trump Administration regarding its new plan for higher education. The nine institutions include University of Arizona, Brown University, Dartmouth College, the Massachusetts Institute of Technology, the University of Pennsylvania, the University of Southern California, the University of Texas at Austin, Vanderbilt University, and the University of Virginia. The Trump Administration has suggested that agreement with the “Compact for Academic Excellence in Higher Education” would result in undefined “extra benefits.” The Compact would require institutions to agree to:
- Ban consideration of race, sex, and political views, as well as “proxies” for any of those factors, in admissions decisions, except at single-sex and religious schools.
- Cap undergraduate international student enrollment at 15 percent with no more than 5 percent from any one country. Institutions would be asked to select foreign students on the basis of talent rather than on the basis of financial advantage to the university, and to screen out those applicants who demonstrate hostility toward the United States. The Compact does not address international students enrolling in graduate programs.
- Freeze average published price for tuition and fees.
- Take steps to ensure their institutions are “a vibrant marketplace of ideas where different views can be explored, debated, and challenged.”
- Require undergraduate applicants to take standardized tests to ensure the use of only objective criteria for admissions.
According to articles in a number of newspapers and journals, such as The Wall Street Journal of October 8, 2025, and Inside Higher Education of October 8, 2025, multiple major associations representing institutions and faculty have been urging institutions not to sign the Compact. Some suggest that the Compact may be extended to all institutions, and some are concluding that failure to agree may threaten current federal funding. Needless to say, the proposal has raised alarm by colleges and universities by suggesting that they agree to significant restrictions for unknown benefits.
As of October 12, 2025, The Wall Street Journal reported that the Massachusetts Institute of Technology (MIT) became the first university to reject the proposal since it would restrict freedom of expression and MIT’s independence. Several institutions have offered noncommittal statements about the Compact, some suggesting concern.
Federal Government Shuts Down on October 1st
The federal fiscal year ended on September 30, 2025. Since a CR did not pass, the federal government shut down on October 1, 2025, at 12:01 a.m. On September 25, 2025, the White House Office of Management and Budget (OMB) instructed federal agencies to prepare reduction-in-force (RIF) plans for mass firings during a government showdown. The move to reduce the government workforce if there is a shutdown escalated the stakes of a potential shutdown. The move is a significant break from how shutdowns have been handled in the past, when most furloughs were temporary and employees returned to work with back pay once Congress voted to reopen the government.
ED published its contingency plans on September 28, 2025, which indicated that over 80 percent of the Department and Federal Student Aid staff will be furloughed if there is a lapse in appropriations. The plan indicated that if there is a shutdown, student aid, including Pell Grants and Federal Direct Loans, will continue to be disbursed. FAFSA processing and student loan servicing will continue. Student borrowers will be required to continue making payments on any outstanding student loan debt.
On October 1, 2025, Federal Student Aid (FSA) issued an Electronic Announcement (GENERAL-25-42) providing guidance regarding federal student aid processing and customer service delays. The Electronic Announcement specified that there will be minimal impact on students, borrowers, schools, lenders, and guaranty agencies and their ability to participate in Title IV programs since during the lapse in appropriations, the majority of FSA processors, contact centers, and websites remain operational.
The Department of Veterans Affairs published an announcement regarding “Agency Operations in the Absence of Appropriations,” indicating that VA benefits will continue to be processed and delivered, including compensation, pension, education, and housing benefits.
Senator Cassidy Requests Information on Improving Transparency in Higher Education
On September 30, 2025, Chairman of the Senate Committee on Health, Education, Labor and Pensions (HELP) Bill Cassidy, M.D. (R-LA) released a press release requesting information from stakeholders on ways to improve transparency in higher education to lower costs and ensure students and families choose the best college option. The full request is included in the press release and asks stakeholders for feedback on the reforms that will best serve students and families.
Trump Administration Places Harvard University on HCM
On September 19, 2025, the Department of Education announced that it has placed Harvard University on heightened cash monitoring (HCM), which means Harvard must disburse federal student aid using institutional funds before seeking reimbursement from ED. ED also issued a demand for a $36 million irrevocable letter of credit (LOC), which is 30 percent of the federal financial aid received by Harvard last year. ED also warned Harvard that it risks losing access to all federal student aid programs if it fails to comply with ongoing civil rights investigations.
Secretary of Education Linda McMahon said: “Today’s actions follow Harvard’s own admission that there are material concerns about its financial health. As a result, Harvard must now seek reimbursement after distributing federal student aid and post financial protection so that the Department can ensure taxpayer funds are not at risk.”
House Appropriations Committee Passes the FY 2026 Labor, Health and Human Services, Education, and Related Agencies Appropriations Act
On September 9, 2025, the House Appropriations Committee passed the Labor, Health and Human Services, Education, and Related Agencies Appropriations Act, 2026, by a vote of 35-28. The bill will now move to the House floor for consideration, although no floor action has been scheduled.
On July 31, 2025, the Senate Appropriations Committee passed its version of the education appropriations bill, and set the Pell Grant maximum at $7,395 for the 2026-2027 award year, the same funding as the 2025-2026 award year. The Federal Supplemental Educational Opportunity Grant (FSEOG) program would be allocated $910,000,000, and the Federal Work-Study program would be allocated $1,230,000,000, the same funding amounts allocated for FY 2025.
Congress has until September 30, 2025, to pass legislation that would fund the federal government, or risk a government shutdown.
The text of the House Appropriations Committee report of the bill provides a statement regarding 90/10 calculations and distance education on page 251:
“90/10 Rule.—The 90/10 rule under the HEA requires proprietary IHEs to derive at least 10 percent of their tuition and fee revenue from non-Title IV sources. Under the prior Administration, the Department issued a rule in October 2022 to include other Federal education assistance funds from other Federal agencies, not just Title IV funds, as required by P.L. 117–2, as well as other changes. The rule was effective July 1, 2023, for institutional fiscal years that begin on or after January 1, 2023, requiring some institutions to comply as of January 1, 2023. The Committee is aware that commenters questioned this timing for compliance and sought clarification on what statutory authority the Department used as a basis for that determination. The Committee also notes strong concerns that the preamble to the rule purported to interpret the rule to penalize institutions for utilizing distance learning. The Committee understands that the Department issued an interpretive rule, “Classification of Revenue Under Title IV,” published in the Federal Register on July 7, 2025, stating that this preamble language is non-binding, because the Department did not incorporate it through changes to the regulatory text. The interpretive rule further rescinded that non-binding language in the preamble and made clear that the Department believes ineligible distance education program revenue may be included in the 90/10 revenue calculation. Additionally, the Committee encourages efforts by the Department to provide clear communication and information on this rule, given its complexities and significant impact on students and proprietary institutions.”
Previously, on September 2, 2025, the House and Senate members returned from August recess, and the House Appropriations Committee Subcommittee released the Labor, Health and Human Services, Education, and Related Agencies (LHHSE) Appropriations Act, 2026. The Subcommittee issued a press release which quoted Labor, Health and Human Services, Education, and Related Agencies Subcommittee Chairman Robert Aderholt (R-AL) as saying:
“As you may know, this subcommittee is responsible for the largest non-defense expenditure in the federal government. Therefore, it presents one of the greatest opportunities for us to reevaluate our spending priorities to ensure taxpayer dollars are being spent responsibly, in order to provide for critical services in healthcare, workforce development, and education – all while eliminating waste and cutting out politically motivated programs being pushed by non-elected bureaucrats. Even last year, we were dedicated to getting government spending under control. But now, it’s particularly encouraging to have a partner in the White House that shares this commitment. The Trump Administration, through its Department of Government Efficiency (DOGE), has already begun working with agencies to realign spending where it should be, helping us build on that shared momentum for fiscal responsibility.”
The Committee Summary describes the proposals for the Department of Education, which would fund the 2026-2027 award year. The bill would maintain funding for Pell Grants at the discretionary maximum award level of $6,335, which — when combined with mandatory funding under current law — would continue to support a total maximum award of $7,395, which is the same funding as the 2025-2026 award year. The bill would also eliminate the FSEOG program. The FWS program would be funded at $779 million, which is a $451 million decrease from FY 2025. Overall, ED would be allocated $67 billion, which is a $12 billion decrease from the FY 2025 level, but is aligned with the White House’s budget request.
The House Committee Appropriations bill proposes that Workplace Pell Grants be renamed “Trump Grants.” Another provision would extend the National Advisory Committee on Institutional Quality and Integrity’s (NACIQI) authority through FY 2026.
The House Committee Democrats also issued a press release describing the bill cuts: “The middle class, the working class, and vulnerable Americans are facing a cost-of-living crisis. They need affordable health care, access to reproductive health, and good public schools, but with the 2026 Labor, Health and Human Services, and Education, and Related Agencies funding bill, Republicans ‘are abandoning them,’” according to House Appropriations Committee and Labor, Health and Human Services, and Education, and Related Agencies Subcommittee Ranking Member Rosa DeLauro (D-CT).
House Holds Hearing on Reforming College Pricing
On September 16, 2025, the House Committee on Education and Workforce Subcommittee on Higher Education and Workforce Development held a hearing titled, “No More Surprises: Reforming College Pricing for Students and Families.” In his opening statement, Subcommittee Chairman Burgess Owens (R-UT) said: “The process of determining the true cost of college is clouded in mystery. Colleges and universities routinely advertise prices that bear little resemblance to what families ultimately pay. Too often aid packages are filled with unclear or deceptive figures. This is not how major financial decisions are made in other parts of our economy. When you buy a home, federal law requires clear disclosures so you know exactly what you will owe. When you purchase a car, consumer protections guard against deceptive pricing. Yet when it comes to a college degree, an investment that can rival or exceed the cost of a home, students are left in the dark.”
Members and the witnesses discussed college affordability and the need for higher education costs to be transparent to students and families. The hearing recap and the link to the hearing is available on Chairman Owens’s website.
ED Provides Guidance on the Use of FTI, FAFSA Data, and Non-FAFSA Data
On September 30, 2025, the Department of Education issued a Dear Colleague Letter (DCL) (GEN-25-08), providing guidance on the permitted access, disclosure, and use of Federal Tax Information (FTI), FAFSA data, and non-FAFSA data by institutions, state higher education agencies that administer state-based financial aid, and contractors under the Higher Education Act (HEA), the Internal Revenue Code (IRC), the Family Educational Rights and Privacy Act (FERPA), and the Privacy Act of 1974 (Privacy Act). This DCL supersedes previous guidance published in the November 7, 2024, Electronic Announcement, and provides long-awaited guidance related to FTI.
- FAFSA data is all information entered on the application or transferred from previous year’s application. It also includes most data that the FAFSA Processing System (FPS) derives from the application, such as Federal Pell Grant eligibility and the Student Aid Index (SAI).
- FTI is all the data received from the IRS via the FUTURE Act Direct Data Exchange (FA-DDX) as well as data that the FPS directly derives that could be used to reverse calculate FTI, such as the student or parent payroll tax allowance.
- Non-FAFSA, institutional, or school data are the terms for information that is originated by schools or other entities. This includes total aid awarded, grant and loan receipt and amounts, and unmet financial need.
The DCL explains the difference between FTI, FAFSA, and non-FAFSA, institutional, or school data, as well as the different laws governing the data’s usage and disclosures. The DCL explains the situations in which FTI and FAFSA data may be used or shared without student consent. This includes using FTI and FAFSA data for the application, award, and administration of financial aid, and specifying that state agencies are to use this data only for state-based financial aid for which the applicant is eligible. The DCL confirms previous verbal guidance from ED that states: “Offices like institutional research that hold responsibility for required reporting such as IPEDS are permitted to access FTI,” although they must receive FTI training.
School and state agencies may use FAFSA data to determine an applicant’s possible eligibility for means tested benefits. State agencies may use only students’ identifying information from the FAFSA to check if a graduating student has submitted an application.
The DCL also details situations in which data can be used or shared with written student consent, including how state agencies may share FAFSA data (excluding FTI) with federal, state, local government agencies, or tribal organizations to help students receive assistance for any component of their cost of attendance.
The DCL also provides reminders on how FTI can be changed on a FAFSA via professional judgment adjustments, which then makes the new tax information FAFSA-data rather than FTI, and how certain NSLDS data use provisions remain unchanged. Finally, the DCL reminds schools and state agencies of the requirements related to both types of student consent: one for the disclosure of information under FERPA and one for HEA disclosures.
ED Reminds Institutions Regarding the Prohibited Use of Federal Grant Funds for Lobbying and Allowable Membership Costs
On September 30, 2025, the Department of Education issued a Dear Colleague Letter (DCL) (GEN-25-09), which provided guidance clarifying the longstanding statutory and regulatory prohibitions on the use of federal grant funds for lobbying, including membership dues that support lobbying activity. As grantees, institutions are responsible for ensuring that the use of federal funds complies with applicable federal statutes and regulations, which include the following:
- Ensuring no federal grant dollars are used directly or indirectly to pay for lobbying efforts;
- A presumption that membership fee amounts tied to a percentage of a federal grant are unallowable;
- Maintaining adequate documentation to demonstrate compliance to ensure that membership fees are not used on lobbying and are reasonable and necessary; and
- Avoiding payment of dues to organizations that cannot or do not report the proportion of their activities that are dedicated to lobbying.
The DCL states that failure to comply with these provisions could result in disallowed costs, audit findings, program reviews, and additional oversight or enforcement actions by the Department up to the termination of the institution’s grant.
ED Concludes First Round of Neg Reg for the RISE Committee
On October 3, 2025, the Reimagining and Improving Student Education (RISE) Committee concluded its first week of negotiated rulemaking. Most of the discussions focused on the Department of Education’s definition of “professional student.” The One Big Beautiful Bill Act (OBBBA) created new loan limits for graduate students, who will have an aggregate cap of $100,000 with an annual limit of $20,500, while a professional student will have a $200,000 aggregate limit with an annual limit of $50,000. ED’s proposed definition called for an “interim professional student,” where a student could be considered a professional student if they were enrolled before July 1, 2027, in a program of study that awards a professional degree upon completion of the program. A program would be considered a professional study program for these purposes if it existed as of July 4, 2025, if students received Title IV funds for the program in the 2024-2025 award year, and if the institution designates it as a professional degree. Many of the negotiators asked whether ED had the legal authority to create this interim definition of a professional student. The next session will be held in November.
The Department clarified at the session that the effective date for several of the changes would be July 1, 2026. ED explained that since the date was legally mandated in the OBBBA, the master calendar does not apply.
On September 26, 2025, the Department of Education released the issue papers for the Reimagining and Improving Student Education (RISE) negotiated rulemaking committee, which began on September 29, 2025. The RISE committee will ultimately vote on regulatory text in five separate issue papers:
- Discussion Draft and Prepared Text Fixed Loan Repayment Plans Provisions
- Discussion Draft and Prepared Text Loan Limit Provisions and Definitions
- Discussion Draft and Prepared Text Miscellaneous Loan Repayment Provisions and Public Service Loan Forgiveness
- Discussion Draft and Prepared Text Income-Driven Repayment Plans Provisions
- Discussion Draft and Prepared Text Loan Deferment, Forbearance, and Rehabilitation Provisions
FSA Releases 2026-2027 College Financing Plan
On September 25, 2025, Federal Student Aid (FSA) released an Electronic Announcement (OPE-25-01) announcing the publication of the 2026-2027 College Financing Plan (CFP) on the Department’s Office of Postsecondary Education website. The CFP is updated annually and was developed as an option for institutions to notify students about their financial aid packages. It is intended primarily for prospective students to receive information about costs and financial aid so that they can compare institutions to make informed decisions. Also, for schools that receive federal funds under the military and veterans benefits programs, using the CFP helps meet the disclosure requirement of Executive Order 13607.
ED Announces that the 2026-2027 FAFSA Form is Online and Available Before October 1st
On September 24, 2025, the Department of Education announced in a press release that the 2026-2027 FAFSA form is online and available, which is the earliest launch in the program’s history. It is required to be available on October 1st of each year. Secretary of Education Linda McMahon said: “I am extremely proud to announce the earliest launch of the FAFSA form in history, which ensures American students and families have access to critical resources as they begin or continue their postsecondary education journey.”
ED introduced a series of updates designed to streamline the application process and improve system performance:
- Redesigned Contributor Invite Process: Students can now invite their parents or contributor to complete their portion of the FAFSA form;
- Instant Verification for New StudentAid.gov Accounts: Students and parents now receive faster account confirmation; and
- Industry-Leading Best Practices: Enhancements ensure students have access to the best tools and resources. Colleges and universities can receive more accurate data and stronger protection against fraud and abuse.
FSA Notifies Domestic and Foreign Schools of their CDRs; FSA Releases National Default Rate Briefing for FY 2022
On September 22, 2025, Federal Student Aid (FSA) announced (LOANS-25-08) that it distributed the Fiscal Year 2022 Official Cohort Default Rate (CDR) notification packages to all eligible and foreign schools. On September 24, 2025, FSA issued an Electronic Announcement (LOANS-25-09), providing the National Default Rate Briefing for FY 2022 Official Cohort Default Rates (CDRs). The FY 2022 CDRs were calculated using the cohort of student loan borrowers who entered repayment on their Direct Loan or FFEL Program loans between October 1, 2021, and September 30, 2022.
The Electronic Announcement states that the FY 2022 CDRs were significantly impacted by the pause on federal student loan payments that began March 13, 2020, and ended on September 1, 2023. During the pause, borrowers with student loans held by ED were not required to make any payments, and no borrowers with ED-held loans entered default.
The CDRs were the following:
- Public 0%
- Private 0%
- Proprietary 0%
FSA Announces Updated 2024-2025 Award Year Deadline Dates for Reports and Other Records Associated with the FAFSA
On September 18, 2025, Federal Student Aid (FSA) issued an Electronic Announcement indicating that it had published an updated Notice in the Federal Register announcing the submission deadlines for documents and other information from applicants and institutions participating in certain Federal student aid programs for the 2024-2025 award year. This updated Notice supersedes the 2024-2025 award year deadline dates previously published on September 18, 2024. The Department is extending the deadline date for the receipt of corrections, notices of change of address or institution, or requests for a duplicate FAFSA Submission Summary to September 30, 2025, or the student’s last date of enrollment for the 2024-2025 award year. In addition, ED removed references to identity verification reporting for the V4/V5 Verification Tracking Groups, since, as noted in Electronic Announcement (GENERAL-25-36), reporting verification of identity is not required for the 2024-2025 award year.
ED Announces NACIQI Meeting on October 21, 2025
On September 17, 2025, the Department of Education published a Notice in the Federal Register announcing the National Advisory Committee on Institutional Quality and Integrity (NACIQI) meeting on October 21, 2025, from 9:00 a.m. to 5:00 p.m. The purpose of the meeting will be to conduct a review of compliance reports submitted by five accrediting agencies, to elect a committee chairperson, and to share the Administration’s higher education policy priorities.
The compliance reports under review are for:
- Accreditation Commission for Midwifery Education
- American Physical Therapy Association
- Middle States Commission on Higher Education
- New England Commission of Higher Education
- Western Association of Schools and Colleges
ED Makes Investments in Charter Schools, American History and Civics Programs, HBCUs, and TCCUs
On September 15, 2025, the Department of Education announced that it is making investments in charter schools, American history and civics programs, Historically Black Colleges and Universities (HBCUs), and Tribally Controlled Colleges and Universities (TCCUs). These allocations will be repurposed from programs ED had determined were “not in the best interest of students and families.” [See article below.]
Secretary of Education Linda McMahon said: “Today, the Department is making three massive investments – redirecting financial support away from ineffective and discriminatory programs toward those who support student success. We are proud to make the largest investment in the Charter Schools Grants Program in the Department’s history, support American history programs that will inspire young people to be active and informed citizens, and recognize Black Colleges and Universities’ and Tribally Controlled Colleges and Universities’ historic contributions to improving education and opportunity in our country.”
ACE and 18 Other Higher Education Associations Urge the U.S. Court of Appeals for the Federal Circuit to Stay a VA Policy that Limits GI Bill Benefits for Veterans and their Families
On September 15, 2025, the American Council on Education (ACE) announced that on September 12, 2025, ACE and 18 other higher education associations filed an amicus brief in the U.S. Court of Appeals for the Federal Circuit supporting a request to stay a new Department of Veterans Affairs (VA) policy that limits GI Bill benefits for veterans and their families. The amicus brief argues that the VA policy will cause “immediate, direct, and irreparable harm that will be felt by educational institutions across the country” unless it is stayed pending the court’s decision.
The announcement explains that the central issue is the VA’s decision to limit the education benefits of otherwise-qualified veterans and their dependents under the Post-9/11 and Montgomery GI bills to 36 months, despite the Supreme Court’s ruling in Rudisill v. McDonough that veterans eligible under both programs are entitled to receive up to 48 months of combined benefits. In August 2025, the VA issued new guidance in its Benefits Administration Manual that prompted a legal challenge from veterans, dependents, veterans service organizations, and the Commonwealth of Virginia. According to the Petition for Review, the VA issued “the 2024 Education Directives, which must be followed by claims examiners in evaluating claims for education benefits, prescribe how the VA will deny or grant veterans’ education benefits, allegedly in compliance with the Rudisill decision.” However, the 2024 Education Directives deny benefits to veterans who have served long enough to accrue Post-9/11 and Montgomery GI benefits but do not have a break in service. ACE and the other higher educational institutions contend that the 2024 Education Directives are incompatible with the plain text of the GI bills, as interpreted by the Supreme Court in Rudisill. Thus, according to ACE and the other institutions, the VA is unlawfully denying benefits to veterans who choose to service their country continuously without a break in service.
Federal District Court Rules in Favor of ED in the GE Final Rule Lawsuits
On October 2, 2025, Judge Reed O’Connor, the Chief District Judge of the U.S. District Court for the Northern District of Texas, entered an Order granting the Department of Education’s motion for summary judgment and denying the motions for summary judgment brought by the Ogle School of Beauty and Cosmetology and Tricoci University of Beauty and Cosmetology as well as Duvall’s School of Cosmetology and the American Association of Cosmetology Schools. Judge O’Connor found that the Department’s interpretation of “gainful employment” under the Biden rule’s debt-to-earnings and earnings premium measures was the best interpretation based on the statute.
It is likely that one or more of the plaintiffs will appeal the ruling to the Fifth Circuit. ED will be amending the Biden GE rule as part of the accountability measures from the One Big Beautiful Bill Act when it convenes the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee negotiated rulemaking scheduled in December and January.