AASCU Federal Highlights – January 2026

From the week of Jan. 8

FY26 Appropriations Update

At the conclusion of 2025, the Senate was working to advance a five-bill “minibus” that included funding for Labor, Health and Human Services, Education, and Related Agencies (LHHS). However, the chamber was unable to pass the package before recessing. As a reminder, “minibus” is an informal term used by Congress to describe when several appropriations bills are combined into one bill, so long as the combined product does not represent all 12 annual appropriations bills (which would be called an “omnibus”).

This week, Senate Appropriations Chair Susan Collins (R-ME) and Senate Majority Leader John Thune (R-SD) shared their intention to move Defense and LHHS funding together as the final minibus package. As a reminder, the fiscal year (FY) 2025 continuing resolution (CR) is set to expire on January 30, 2026. To date, Congress has passed one of five minibuses, which provided funding for the Legislative Branch, Military Construction, Veterans Affairs, Agriculture, Rural Development, and the Food and Drug Administration, alongside passage of the CR in November.

AASCU will continue to monitor whether Congress can reach an agreement on LHHS funding ahead of the CR deadline and avert a government shutdown.

AHEAD Committee Negotiated Rulemaking Sessions on Earnings Test

This week, the Advisory Committee on Accreditation and Higher Education Development (AHEAD) held its second round of negotiated rulemaking sessions. As a reminder, the first round focused on Workforce Pell Grants, on which the Committee reached consensus late last year. The current round has centered on proposed regulatory language establishing earnings accountability and reporting requirements tied to H.R. 1, the One Big Beautiful Bill Act. The Committee is also considering how to align these new requirements with existing Gainful Employment (GE) and Fair Value Transparency (FVT) regulations issued under the Biden Administration. Under the Department’s proposal, the earnings accountability and reporting framework would apply to all Title IV programs eligible for Direct Loans and would replace the debt-to-earnings metrics currently used in the GE and FVT rules.

On Wednesday, the U.S. Department of Education (ED) shared its anticipated implementation timeline for these changes. In early 2027, institutions of higher education (IHEs) would be notified if they fail the earnings test and would have until July 1, 2027, to appeal the determination. If an appeal is unsuccessful or not pursued, July 1, 2027, would mark the completion of the first year of failure. Because institutions must fail the earnings test for two consecutive years to lose Title IV loan eligibility, the earliest an institution could face a loss of eligibility would be July 1, 2028.

The Committee will conduct a final consensus check on these matters on Friday of this week. If consensus is achieved, then ED largely proposes the consensus product as a proposed rule for public comment. If consensus is not achieved, then ED can issue a proposed rule for public comment as it sees fit.

DOJ Issues Memorandum Opinion on Race-Based ED Programs

At the end of last year, the U.S. Department of Justice (DOJ) released a memorandum opinion concluding that several ED programs include unconstitutional race-based eligibility provisions that violate the Fifth Amendment’s equal protection clause, including Hispanic-Serving Institution programs and other Minority-Serving Institution programs. The opinion stated that the “race-based portions of the Department of Education programs are unconstitutional” but are “inseverable from their surrounding statutory schemes.” ED has indicated that approximately a dozen programs are affected by DOJ’s findings, and it will work with Congress to reform those programs. It is also worth noting that the findings were welcomed by House Education and Workforce Committee Chair Tim Walberg (R-MI), who has signaled congressional interest in revisiting the relevant authorizing statutes.

Court Blocks Administration Action on Indirect Costs; Related Appropriations Bill Provision

The issue of indirect cost rates arose in two instances over the past week. First, a federal appeals court upheld a lower district court ruling that barred the Administration from implementing a 15 percent indirect cost rate for grants from the National Institutes of Health. In June, AASCU joined other organizations in filing an amicus brief in support of a suit brought by 22 state attorneys general and other associations on this matter. While no formal action has been taken to date, AASCU expects the Administration to appeal this ruling.

Additionally, this week the House is considering a three-bill appropriations minibus that would provide appropriations for the U.S. Departments of Commerce, Justice, Energy, and Interior, as well as the National Aeronautics and Space Administration (NASA) and the National Science Foundation (NSF). Included in this bill is a prohibition on the Administration applying any constraints on indirect cost rates for financial assistance from the U.S. Department of Commerce, NASA, and NSF that were not in place prior to the beginning of this Administration. The House is expected to pass the measure later today, with Senate consideration likely for next week.

House Ed and Workforce Committee Marks Up Pregnant Students’ Rights Act

Today, the House Education and Workforce Committee held a markup of H.R. 6359, the Pregnant Students’ Rights Act, advancing the bill for further consideration by the full chamber. The measure would require that IHEs participating in federal student aid programs annually provide certain information to pregnant students, both prospective and enrolled, on their rights and resources for carrying to term. Specifically, it would mandate that IHEs provide information on such rights under Title IX, as well as available accommodations and a list of on-campus and community resources to support students who continue their education while pregnant.

During the session, Committee members discussed the bill’s intent and scope, with some emphasizing the importance of ensuring students are informed about available supports and their rights on campus, while others expressed concerns about aspects of the bill’s language and the nature of information it would require institutions to distribute. The committee ultimately voted to advance the bill largely along party lines. AASCU will continue to provide updates on the status of the bill as it moves to the House floor.

ED Opens Foreign Gift Portal to Public Submissions

Last Friday, ED launched a new Section 117 reporting portal for IHEs to disclose gifts or contracts of $250,000 or more from foreign sources. The updated portal is said to incorporate user feedback from the previous system, including bulk upload capabilities and easier correction of submissions. The next submission deadline for Section 117 reports is January 31, 2026. ED emphasized that compliance with the reporting requirements remains mandatory and may result in enforcement action for failures to submit.

Senate Confirms Mack as Assistant Secretary for ETA

On December 18, the Senate voted 53 to 43 to confirm 97 subcabinet nominations, including Henry Mack as the Assistant Secretary for Employment and Training at the U.S. Department of Labor. This represented the third batch of nominations moved by Republicans since they changed the chamber’s rules in September to allow multiple subcabinet nominations to be considered under one legislative vehicle. It was also one of Congress’ final acts of the year before departing for the holiday recess.

H-1B Visa Update: DHS Finalizes Rule and Related Court Action

On December 29, the U.S. Department of Homeland Security (DHS) finalized a rule overhauling the H-1B visa lottery, which will give applicants in higher-paying positions greater odds of selection. The new rule replaces the previous random system with a tiered, wage-based weighting process. Relatedly, a federal judge upheld President Trump’s authority to impose a $100,000 fee on H-1B visa applications, finding that the fee falls within the powers Congress delegated to the executive branch under immigration law.

ED Announces the Submission of More than 5 Million FAFSA Forms

Late last month, ED reported that more than 5 million Free Application for Federal Student Aid (FAFSA) forms for the 2026–27 award year have been submitted, representing a nearly 150 percent increase compared with the same point last year. It is worth noting that this year’s FAFSA form launch was earlier than in previous years. U.S. Secretary of Education Linda McMahon also attributed the submission success to the efforts the Department engaged in to redesign and streamline the form.

From the week of Jan. 22

Appropriations Update – House Passes FY26 Education Funding

On Thursday, the House passed H.R. 7148 – Consolidated Appropriations Act, 2026, by a vote of 341 – 88. The text of H.R. 7148 and the accompanying explanatory language were released on Tuesday morning. This bill includes final fiscal year (FY) 2026 appropriations for the U.S. Departments of Labor, Health and Human Services, Education and Related Agencies (LHHS) in addition to funding for the U.S. Departments of Defense, Transportation and Housing and Urban Development. View the bill text. View the text of the explanatory statement.

Overall, the bill provided $79 billion to the U.S. Department of Education (ED). Notably, while the explanatory statement expresses concern about ED’s recent, unprecedented use of interagency agreements (IAAs) to transfer significant programmatic responsibilities, procure services, and detail staff to other Federal agencies, there is no language blocking the Administration’s use of IAAs. It is also worth mentioning that the bill proposes to fund many of the institutional aid programs that the Administration has sought to defund, including Hispanic Serving Institutions (HSIs). It is unlikely, however, that the bill will cause the Administration to shift its position that Minority Serving Institution programs outside of the Historically Black Colleges and Universities (HBCUs) and Tribal College programs are constitutional.

For more highlights, see below:

• Strengthening Institutions – cut by $10 million – $102.070 million
• Strengthening HBCUs – increased by $4.812 million – $405.778 million
• Developing HSIs – increased by $2.747 million – $231.637 million
• Promoting Post-Baccalaureate Opportunities for Hispanic Americans – increased by $329,000 – $27.780 million
• HBCU Capital Financing Program – level funded – $20.678 million
• Strengthening Historically Black Graduate Institutions – increased by $1.215 million – $102.501 million
• Pell – Maximum grant is held level – $7,395
• Supplemental Educational Opportunity Grant (SEOG) – level funded – $910 million
• Federal Work Study – level funded – $1.230 billion
• Federal Student Aid Administration – level funded – $2.059 billion
• TRIO – level funded – $1.191 billion
• GEAR UP – level funded – $388 million
• Child Care Access Means Parents in Schools (CCAMPIS) – level funded – $75 million
• Teacher Quality Partnerships – level funded – $70 million

Federal Ruling on TRIO Grants

On Friday, a Federal district court judge ordered ED to reconsider certain TRIO grants that were denied or discontinued last year, finding that ED failed to adequately explain its decisions or comply with statutory and regulatory requirements. The ruling stems from lawsuits filed by the Council for Opportunity in Education (COE) after more than 100 TRIO grants—about 3 percent of all programs, serving over 43,600 students—were canceled over alleged nondiscrimination concerns and alignment with the Administration’s anti-DEI priorities. Judge Chutkan determined that ED likely applied new policy priorities retroactively and did not provide a rational or transparent basis for its actions. The preliminary injunction applies narrowly to certain COE member institutions, requiring ED to reevaluate affected grants, while broader questions about jurisdiction and the ultimate outcome of the case remain unresolved.

ED Pauses Wage Seizure Efforts

On Friday, ED temporarily paused involuntary collection efforts on Federal student loans, including the use of administrative wage garnishment and the Treasury Offset Program, as it works to implement new repayment reforms authorized under H.R. 1, the One Big Beautiful Bill Act. ED stated that the delay is intended to allow time to roll out “simplified” repayment options, including a new income-driven repayment plan and new opportunities for borrowers to rehabilitate defaulted loans, with key changes becoming available beginning July 1. During this period, borrowers in default will not face wage garnishment or seizure of tax refunds, though defaults will continue to be reported to credit bureaus. For institutions, the absence of immediate financial penalties for borrowers in default (beyond credit reporting) may result in more defaults and therefore higher institutional cohort default rates.

House Passes Pregnant Students’ Rights Act

On Thursday, the House passed H.R. 6359, the Pregnant Students’ Rights Act, on a 217 – 211 vote. This bill requires each institution of higher education (IHE) that participates in Federal student aid programs to provide certain information to prospective and enrolled students on the rights and resources for pregnant students to carry a baby to term or students who may become pregnant while enrolled at the IHE to carry a baby to term. The House is expected to consider the bill today and AASCU will continue to monitor for developments on the passage of the bill.

Title IX Investigation Launched into California Community College Athletic Association

ED and the U.S. Department of Justice have opened a Title IX investigation into the California Community College Athletic Association (3C2A) over allegations that its transgender participation policy violates Federal sex-based protections. The investigation, led by the Title IX Special Investigations Team, follows a complaint alleging that the policy allowed a male athlete to compete on a women’s volleyball team and access women’s locker facilities, resulting in discrimination against female athletes. Federal officials stated that, as a governing body for institutions receiving Federal financial assistance, 3C2A is required to ensure compliance with Title IX. The investigation adds to a growing number of Title IX enforcement actions and comes amid heightened Federal scrutiny of athletic participation policies.

ED Ends Appeal of Injunction on Race-based Guidance

ED and the Plaintiffs in American Federation of Teachers v. U.S. Department of Education jointly agreed to allow for the agency’s appeal for this case to be dropped. The case centered on the February 14, 2025 Dear Colleague Letter from ED that stated that race-based programing and related policies were illegal and should not be utilized by IHEs and K-12 schools. ED had asserted that they would begin investigations two weeks after the Dear Colleague Letter’s release. AASCU will continue to monitor for developments on next steps related to the subject matter of the Dear Colleague Letter.