An Unprecedented Semester: Higher Education Faces Challenges From Washington

President Trump has issued a dizzying number of executive orders (EOs) and new policies affecting colleges and universities. Also impacting the sector, is the recent passage of the Reconciliation Bill by the US House of Representatives, which heads to the US Senate for consideration next month. Below, we summarize recent Trump Administration and congressional developments.

Trump Administration Actions

Federal Funds and Tax-Exempt Status

Over the past few months, the Trump Administration has taken steps to block federal funding from major universities and even threatened to remove the tax-exempt status of institutions that fail to comply with policy directives. A few notable actions are summarized below: 

• In March and April, the Trump Administration froze federal grants and contracts over its concerns about antisemitism on campuses. This included suspending $400 million of federal grants and contracts with Columbia University, $210 million with Princeton University, $510 million with Brown University, $1 billion with Cornell University, $800 million with Johns Hopkins University, and $790 million with Northwestern University.

• On April 11, the US Department of Education (DOE), Department of Health and Human Services (HHS), and Government Services Administration (GSA) wrote a joint letter to Harvard University requiring that it make a number of significant internal changes, including eliminating diversity preferences in hiring and admissions decisions, reducing faculty autonomy, and changing campus disciplinary processes. Shortly thereafter, Harvard responded that it could not comply with most of these directives. A subsequent public letter from Harvard’s president signaled its intention to fight the Administration. It then filed a lawsuit in federal court seeking to enjoin the government’s actions.

• Over the past two months, the Trump Administration announced that it was reviewing over $9 billion dollars in federal grants received by Harvard, and even stated that it might revoke Harvard’s tax-exempt status. Such a move would be an unprecedented attack on a private university and would hamstring its finances. While the Internal Revenue Service (IRS) has some degree of discretion to make decisions about the tax-exempt status of nonprofits, the Trump Administration’s comments signal its willingness to intercede in IRS decision-making to exert financial pressure on institutions that refuse to comply with its directives.

DEI

President Trump has issued multiple EOs targeting diversity, equity, and inclusion (DEI) programs both inside and outside of higher education.

On January 20 and 21, — Trump’s first two days in office — he issued EO 14151 (Ending Racial and Wasteful Government DEI Programs and Preferencing) and EO 14173 (Ending Illegal Discrimination and Restoring Merit-Based Opportunity). These EOs aim to dismantle DEI programs and policies in the federal government and encourage the private sector to do the same. EO 14173 directs the US Attorney General and Secretary of Education to issue guidance “regarding the measures and practices required to comply with Students for Fair Admissions, Inc. v. President and Fellows of Harvard College,” a 2023 US Supreme Court decision holding that race should not be used a factor in admissions decisions.

On February 14, the DOE issued a Dear Colleague Letter (addressed to higher education leaders) explaining its interpretation of existing federal civil rights laws and describing how educational institutions can comply with such laws. The DOE “will no longer tolerate … laws that [treat] students differently on the basis of race to achieve nebulous goals such as diversity, racial balancing, social justice, or equity[.]”

In March, the DOE announced it was opening investigations into 45 universities for their DEI policies and six programs for “alleged impermissible race-based scholarships and race-based segregation.” The list includes Ivy League institutions like Cornell and Yale, as well as public schools like Arizona State and Rutgers.

Antisemitism

President Trump campaigned on promises to address antisemitism on college campuses. Through a series of EOs and administrative policies, his Administration has taken steps to investigate and punish institutions, particularly those with significant pro-Palestinian or anti-Israel protest activities.

On January 29, President Trump issued EO 14188 (Additional Measures to Combat Anti-Semitism). This order directs all executive branch agencies to identify and report to President Trump “all civil and criminal authorities or actions within the jurisdiction of that agency … that might be used to curb or combat anti-Semitism.” The order encourages the US Attorney General to pursue civil rights cases, and the US Secretaries of State, Education, and Homeland Security to provide “recommendations for familiarizing institutions of higher education with the grounds for inadmissibility under 8 U.S.C. § 1182(a)(3) so that such institutions may monitor for and report activities by alien students and staff relevant to those grounds and for ensuring that such reports about aliens lead, as appropriate and consistent with applicable law, to investigations and, if warranted, actions to remove such aliens.”

After this EO was issued, the US Department of Justice (DOJ) announced that it was forming a multi-agency Task Force to Combat Anti-Semitism, whose priority is to eliminate antisemitism in educational institutions.

Since the formation of the Task Force, numerous federal agencies have issued policies about antisemitism and opened investigations into specific schools. Below are several recent notable actions:

• On March 5, the US Equal Employment Opportunity Commission released a statement promising to hold colleges and universities accountable for antisemitism on campuses which “have created a hostile-work environment for their Jewish employees.”

• Two days later, as noted above, the DOJ, HHS, DOE, and GSA announced that they were cancelling $400 million worth of federal grants and contracts with Columbia. As has been widely reported, Columbia has been a hotspot for pro-Palestinian and anti-Israeli protests that many have perceived as antisemitic.

• The following week, the DOE’s Office of Civil Rights (OCR) sent letters to 60 universities, informing them that they are being investigated for Title IV violations relating to antisemitism and could face enforcement actions. Much like the list of schools that the DOE is investigating for DEI, OCR’s list includes a diverse range of schools from large research universities like Harvard to small liberal arts colleges like Swarthmore to public institutions like Portland State.

In sum, the Trump Administration has mobilized federal agencies to actively police antisemitism, or perceived antisemitism, on college campuses. Some have questioned the Administration’s approach in these efforts.

Title IX

On January 31, the DOE announced that it would reinstate 2020 Title IX regulations enacted during President Trump’s first term. Generally, these regulations create more procedural protections for those accused of sexual harassment or assault. On the same day, the DOE’s OCR issued a Dear Colleague Letter, noting that all investigations initiated under the 2024 Title IX regulations must be adjusted to comply with the 2020 Title IX regulations.

While the Biden Administration interpreted Title IX as having protections against discrimination based on gender identity or sexual orientation, the Trump Administration does not. In other words, those categories are no longer considered to be protected under Title IX.

Further information on the 2020 Title IX regulations can be found in our client alert Title IX Regulations Impose New Requirements on K-12 Districts.

Athletics

On February 5, President Trump signed EO 14201 (Keeping Men Out of Women’s Sports), which rescinds funding from institutions that permit transgender athletes to participate in women’s sports. This EO requires the Secretary of Education to initiate enforcement actions against colleges and universities violating this policy. It adopts the definitions of gender proscribed in EO 14168 (Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government), issued on January 20: “It is the policy of the United States to recognize two sexes, male and female. These sexes are not changeable and are grounded in fundamental and incontrovertible reality.”

The day after EO 14201 was issued, the National Collegiate Athletic Association revised its policy for transgender athletes, prohibiting transgender athletes from competing in women’s sports.

The DOE’s OCR already launched investigations into higher educational institutions and secondary school athletic associations for alleged violations of Title IX, including of San Jose State University, University of Pennsylvania and Massachusetts Interscholastic Athletic Association. These institutions had prior media attention or lawsuits over their inclusion of transgender athletes that likely drew the Administration’s attention shortly after the 2024 election.

On March 19, the Trump Administration announced that it was suspending approximately $175 million in federal funding to Penn, at least in part because Penn had allowed a transgender athlete, who graduated in 2022, to participate on the women’s swim team.

On April 28, OCR announced that it concluded that Penn violated Title IX and produced a Resolution Agreement that would require the university to “[r]estore to all female athletes all individual athletic records, titles, honors, awards or similar recognition for Division I swimming competitions misappropriated by male athletes competing in female categories” and send an accompanying apology letter.

Generally, the Trump Administration is taking a hard line against colleges and universities’ efforts to include transgender students in collegiate athletics — a serious enough priority that it found its way into the president’s State of the Union address.

Immigration

President Trump has dramatically increased immigration investigation and enforcement efforts since taking office. Colleges and universities have begun to see immigration-related issues impact their students, employees, and campuses, including US Immigration and Customs Enforcement raids and challenges for students or faculty to enter or remain in the United States.

Below is a summary of recent immigration developments that may impact higher education institutions:

• On May 30 the US Department of State issued a cable to all US embassies and consulates directing them to scrutinize more closely any travelers going to Harvard for any reason. The cable states: “To address acute concerns of violence and anti-Semitism at Harvard University, this cable instructs posts to immediately begin additional vetting of any nonimmigrant visa applicant seeking to travel to Harvard University for any purpose. Such applicants include, but are not limited to prospective students, students, faculty, employees, contractors, guest speakers, and tourists.” In addition, the cable explicitly contemplates expanding such enhanced vetting to other student visa applicants and applicants for other visa categories.

• On May 27, the Department of State issued a cable to all US embassies and consulates instructing them to stop scheduling student and exchange visitor visa appointments until they develop procedures for enhanced vetting of each applicant’s social media. Although the State Department indicated that they anticipated having those procedures developed “in the coming days,” delays and suspensions of visa appointments are likely to jeopardize foreign students’ ability to start their US summer or fall courses.

• On May 28, the Department of State issued a press statement that it will “aggressively revoke visas for Chinese students, including those with connections to the Chinese Communist Party or studying in critical fields.” In addition, the State Department will “enhance scrutiny of all future visa applications from the People’s Republic of China and Hong Kong.” This last statement has broader implications than to just foreign students. All categories of Chinese and Hong Kongese visa applicants will face “extreme vetting,” including those applying for work visas and tourist/business visitor visas.

• On May 22, the US Department of Homeland Security (DHS) revoked Harvard’s Student and Exchange Visitor Program certification, preventing Harvard from sponsoring student visas for international students for the 2025-2026 academic year. In the 2024-2025 academic year, roughly 6,800 international students were enrolled at Harvard, or 27.2% of total students. The revocation would require international students to transfer to another university to keep their student visa status. DHS claims that the revocation is necessary because Harvard failed to provide required records pertaining to nonimmigrant students enrolled at Harvard, including evidence of international students’ misconduct. In the revocation notice, DHS requested Harvard provide six broad categories of documents within 72 hours, which included records “regarding illegal activity whether on or off campus, by a nonimmigrant student enrolled in Harvard University in the last five years” and “all disciplinary records of all nonimmigrant students enrolled in Harvard University in the last five years.” On May 23, Harvard filed a lawsuit challenging the revocation, and requested a temporary restraining order, which the court granted.

• At the outset of his second term, on January 20, President Trump issued EO 14159 (Protecting the American People Against Invasion) and EO 14161 (Protecting the United States from Foreign Terrorists and Other National Security and Public Safety Threats), which both affirmed the Administration’s desire to increase immigration enforcement. The EOs require the Attorney General and Secretary of DHS to take action to prevent “Sanctuary Jurisdictions” from obtaining federal funds, and to institute criminal or civil actions for violations. The EOs also require agencies to ensure that immigrants, including those present in the United States, “do not bear hostile attitudes towards [U.S.] citizens, culture, government, institutions, or founding principles, and do not advocate for, aid, or support designated foreign terrorists and other threats to our national security.”

• On January 20, DHS issued two directives rescinding the Biden Administration’s guidelines that prevented immigration enforcement actions near protected areas, such as schools and health care facilities, and ending the use of humanitarian parole programs. 

• The Trump Administration has been revoking the visas for faculty members and students as well as terminating student and exchange visitor program records for foreign students, often without any written notice to the student. The National Association of International Educators estimated that the Administration has canceled more than 800 visas for faculty members and students. A number of faculty members and students have filed class action or individual lawsuits challenging the revocation of their visas.

• For example, on April 11, a class action was filed in the US District Court for the Northern District of Georgia on behalf of 133 student plaintiffs whose student visas were revoked and their records in the Student and Exchange Visitor (SEVIS) system were terminated. On April 18 the court granted a temporary restraining order, ordering the government to reinstate the 133 plaintiffs’ status on the SEVIS system.

• In the wake of these reports, many universities and colleges have advised employees and students who are not US citizens to postpone any nonessential travel, including to academic conferences.

Additional information about how education institutions can prepare for immigration investigations and raids in the workplace can be found in our client alert, Employers, Be Prepared for Raids and Unannounced Workplace Enforcement Actions.

Foreign Gift and Contract Disclosures

On April 23, Trump signed EO (Transparency Regarding Foreign Influence at American Universities) aimed at increasing transparency into foreign funds that universities receive. This order authorizes the DOE to work with the Attorney General to ensure colleges and universities provide complete and timely disclosure of foreign federal funds.

Shortly thereafter, the DOE announced that it was re-assuming the DOE’s enforcement functions relating to the disclosures of foreign gifts and contracts under the Higher Education Act of 1965, which requires higher education institutions to disclose foreign source gifts and contracts with a value of $250,000 or more annually. The DOE has announced investigations into Penn, Harvard, and University of California, Berkeley, for allegedly failing to disclose foreign funding sources.

Vaccine Mandates

On February 15, President Trump signed EO 14214 (Keeping Education Accessible and Ending COVID-19 Vaccine Mandates in Schools). This order proscribes that “[f]ederal funds should not be used to directly or directly support or subsidize [any education institution] that requires students to have received a COVID-19 vaccine to attend any in-person education program.”

This marks a direct shift from the pro-vaccination policies of the Biden Administration. The politics of vaccine mandates have been complex, with Democrats generally more favorable towards mandatory vaccination and Republicans generally opposed.

House Actions

Taxes on Endowments

While endowments had historically been exempt from federal income tax, that changed with the enactment of the Tax Cuts and Jobs Act in 2017. The 2017 bill imposed a 1.4% tax on endowment income of private colleges and universities with more than 500 tuition-paying students, more than 50% of students located in the United States, and endowment per student value of more than $500,000. In 2023, 56 private institutions paid tax on their endowment, or roughly $380 million.

This year, the beginning of the 119th Congress saw a flurry of proposed legislation on this issue introduced by Republicans in both the US House and Senate. Some proposals raised the rate on a select subset of the wealthiest schools in the nation, increasing the rate from 1.4% to the corporate rate of 21%, and reduced the per-student requirement from $500,000 to $200,000 per student, which would in effect double the number of schools subject to the tax.

On May 22, the House passed their reconciliation package, known as HR 1 or the “Big, Beautiful Bill,” which includes a significant endowment tax increase based on a graduated rate structure beginning at the current 1.4% and phasing up to a top rate of 21%, depending on the overall size of the institution’s endowment and the value per enrolled American student. For example, an institution with an endowment per student between $500,000 and $750,000 would pay a 1.4% tax rate, institutions with assets between $750,000 and $1.25 million would pay a 7% tax rate, institutions with an endowment between $1.25 and $2 million would pay a 14% tax rate, and institutions with an endowment with a per student over $2,000,000 would pay a 21% tax rate.

While it is not yet clear whether the US Senate Finance Committee will adopt the same structure as the House’s proposal, it is all but certain that there will be an increase in the endowment tax from the current rate. Moreover, the Trump Administration has long favored increasing the tax; in fact, then-Senator JD Vance proposed to raise the tax on universities valued over $10 billion from 1.4% to 35% in 2023.

An increase in the endowment excise tax comes at a time when private universities and colleges are facing multiple other financial strains, including cuts to campus-based aid programs as well as reductions or pauses in federal funding.

Takeaways

This will hardly be a “summer vacation” for higher education leaders. Colleges and universities are facing, and will continue to face, unprecedented scrutiny. The federal government is paying close attention to issues ranging from curriculum to immigration to campus culture. Educational institutions must stay apprised of federal directives and proactively review their policies to identify potential risks.

ArentFox Schiff has extensive experience in the sector. We are available to support colleges and universities with the specific challenges they may face, including regulatory compliance, government inquiries, litigation, immigration-related challenges, or enforcement actions specifically in the Section 501(c)(3), False Claims Act, Government Relations, and Political Activity Compliance areas.