AASCU Federal Highlights – February 2026
A compilation of policy news shared in AASCU’s Weekly Federal Policy Update.
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February’s Lead Story
Congress Finalizes Education Appropriations for FY26
After a few days of a partial government shutdown due to a lapse in funding, President Trump signed a “minibus” into law that provided fiscal year 2026 (FY26) funding. This minibus provided $79 billion to ED overall.
Read more.Other news and resources
February Documents & resources
From the week of Feb. 5
Congress Finalizes Education Appropriations for FY26
After a few days of a partial government shutdown due to a lapse in funding for the U.S. Department of Education (ED), amongst other agencies, on Tuesday, President Trump signed a “minibus” into law that provided fiscal year 2026 (FY26) funding 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 as well as funding related to financial services and U.S. State Department issues. This minibus provided $79 billion to ED overall. Read highlights from the bill pertaining to education.
Notably, full-year funding for the U.S. Department of Homeland Security (DHS) was not included in the appropriations package. Instead, the package included a two-week extension of this funding. As AASCU reported last week, the events in Minnesota led Senate Democratic Leadership to announce that they would not vote for an FY26 bill that includes funding for DHS without further changes. If Congress does not reach an agreement by February 13, DHS could face a funding lapse or be forced onto another short-term continuing resolution.
House Education and Workforce Committee Holds Hearing on Rising College Costs
On Wednesday, the House Subcommittee on Higher Education and Workforce held a hearing titled “Runaway College Spending Meets the Working Families Tax Cuts.” The hearing focused on the rising costs of higher education and the role of budget legislation passed last summer, often referred to as the One Big Beautiful Bill Act (or the Working Families Tax Cut Act), in reducing these costs. While both sides of the aisle agreed that the growing unaffordability of college hinders access, interpretations of the impact of this legislation on college affordability differed. Namely, Republicans praised the law’s simplification of loan repayment and its caps on federal borrowing for graduate and professional students, while Democrats argued that the law’s changes to Pell grants and borrowing limits will narrow pathways for underserved communities.
ED Examines FERPA Compliance in Student Voting Data Study
Today, ED’s Student Privacy Policy Office announced it has launched investigations into Tufts University and the National Student Clearinghouse to determine whether the National Study of Learning, Voting, and Engagement (NSLVE) complies with the Family Educational Rights and Privacy Act (FERPA). The review follows reports alleging that the process of collecting and sharing NSLVE data may involve unauthorized disclosure of student information to third parties.
The investigations will examine what student data is collected, how and with whom it is shared, and whether required student consent was obtained. The Department also issued new guidance to postsecondary institutions clarifying FERPA obligations related to student data privacy, rescinding prior guidance that encouraged participation in NSLVE, and warning that use of upcoming NSLVE data could pose FERPA compliance risks.
From the week of Feb. 12
Education Under Secretary Kent Shares Remarks on Workforce Pell Implementation at ACCT Conference
This week, U.S. Under Secretary of Education Nicholas Kent spoke at the Association of Community College Trustees (ACCT) annual conference, where he shared that the U.S. Department of Education (ED) will soon be publishing the Workforce Pell Grant proposed rule for public comment and is on track to launch the new Workforce Pell Grant program on July 1, 2026. He noted that Congress did not appropriate additional funds to ED to carry out this program and is unsure of how students will engage with this new program, which makes costing this out a little bit of an imperfect science at the very beginning.”
Under Secretary Kent also addressed interagency agreements (IAAs), noting that ED is transferring some of its functions and operations to the U.S. Department of Labor (DOL). He acknowledged that there have been some “hiccups” along the way, but implied that they have been minor.
Following Kent’s comments, ED officially submitted its Workforce Pell Grant regulatory proposal to the Office of Management and Budget on February 10th for review. This review, which typically lasts approximately 30 days but can be shorter or longer, is the last step before a proposed rule on this topic is issued for public comment.
Assistant Labor Secretary Mack Announces Workforce Pell Priority in Strengthening Community College Training Grants
On Tuesday, at the same ACCT conference, DOL Assistant Secretary Mack announced that the upcoming Strengthening Community College Training Grants competition will prioritize getting more community colleges prepared for ED’s expected July launch of Workforce Pell Grants. Strengthening Community College Training Grants are competitive grants that support partnerships between community colleges and local industry to help meet employers’ and workers’ skill-development needs.
Assistant Secretary Mack describes the intentions of the upcoming grant competition as “largely dedicated to equipping you all with the resources you need to grow short-term training programs that then would be eligible for Workforce Pell,” including by seeding money for programmatic development, faculty hiring, and faculty salaries. He said the grant program will initially be funded at $65 million, with the possibility of increasing to more than $130 million.
ED Issues FERPA Guidance to Higher Education Institutions
Last Thursday, ED issued guidance to all postsecondary education institutions on their obligations under the Family Educational Rights and Privacy Act (FERPA) regarding student data privacy and the consequences of noncompliance. In its letter, ED expressed concerns about the National Study of Learning, Voting, and Engagement (NSLVE)’s use of directory information. NSLVE is a study of student political engagement in institutions of higher education (IHEs), encompassing data from over 1,000 U.S. colleges and universities, and is designed to promote civic engagement through analysis of student voting behavior. ED advises institutions that intend to use any NSLVE report or data this year to wait until ED has completed its investigations and warns that any IHE that uses NSLVE data released in 2026 could be at risk of FERPA violations.
ED Releases Data on Foreign Gifts and Contracts
On Wednesday, ED released data from 2025 foreign funding disclosures submitted by American colleges and universities. In total, over 8,300 transactions worth more than $5.2 billion in foreign gifts and contracts were reported. As a reminder, Section 117 of the Higher Education Act, requires IHEs receiving federal financial assistance to disclose foreign source gifts and contracts with a value of $250,000 or more yearly to ED. More information can be found in ED’s foreign funding reporting portal, which was launched by the Administration in early 2026.
Tribal Leaders Convene on Proposed Indian Education Interagency Agreements
Federal officials from ED, DOL, and the Department of the Interior (DOI) held a tribal consultation on the proposed IAAs that would move oversight of certain Native higher education programs to DOI, while ED retains policymaking authority. During the session, many college leaders voiced concerns that the IAAs were finalized without adequate tribal input. Ahniwake Rose, president and CEO of the American Indian Higher Education Consortium, questioned why only one consultation was scheduled to discuss such sweeping changes.
Tribal representatives also shared apprehensions that, while the DOI carries primary trust and treaty responsibilities, the Bureau of Indian Education lacks the capacity to take on additional higher education programs. The agency currently operates Haskell Indian Nations University and the Southwestern Indian Polytechnic Institute and provides funding to 29 tribal colleges and two tribally controlled technical colleges.
Appellate Court Overturns Preliminary Injunction on DEI Executive Orders
On Friday, an appellate court lifted the preliminary injunction issued by Maryland Judge Adam Abelson in February 2025, which prohibited federal agencies from implementing certain provisions of Trump’s executive orders on Diversity, Equity, and Inclusion (DEI). The panel found that the plaintiffs failed to show the orders infringed on their First and Fifth Amendment rights, largely because the orders were instructions to federal agencies that only indirectly required the plaintiffs to take action on compliance. It is worth noting that the decision concerned a motion for emergency relief and did not address the underlying merits of the case, which will be returned to the district court for further consideration. AASCU will continue to update you on the status of further decisions.
From the week of Feb. 19
CBO Projects Pell Shortfall in Fiscal Year 2026
On Friday, the Congressional Budget Office (CBO) projected that the Federal Pell Grant Program will face a $5.450 billion shortfall in fiscal year 2026. This shortfall, predicted for the second year in a row by the CBO, increases exponentially to $11.5 billion in fiscal year 2027, with a cumulative total of $132 billion by 2036 (assuming Congress does not change its appropriations for Pell Grants). With most Pell awards for the 2025–26 academic year already released, Congress cannot address the shortfall by adjusting them during the current academic year. The U.S. Department of Education (ED) also announced last month that the maximum Pell Grant for the 2026-27 award year would be $7,395, as expected. AASCU will continue to provide updates on proposals from Congress or the Administration to address this steep shortfall.
Pending ED Change to McNair Postbaccalaureate Achievement Program Eligibility Requirements
This week, two students dropped their lawsuit against ED regarding the definition of “underrepresented” used to determine eligibility for the McNair Post-Baccalaureate Achievement Program. The McNair program is designed to help participants from disadvantaged backgrounds with strong academic potential complete the undergraduate requirements for pursuing doctoral studies.
ED previously defined “underrepresented” as students who are Black, Hispanic, American Indian, Alaskan Native, Native Hawaiian, or Native American Pacific Islander, which the plaintiffs argued was eligibility criteria that discriminated against students based on their race. Moving forward, ED has agreed to change these eligibility requirements, which led the plaintiffs to ultimately drop the case.
Notably, at the end of last year, the U.S. Department of Justice published a Memorandum Opinion stating that “The McNair program could continue to function well without the use of race-based classifications, and we think that administering the program without such classifications would not fundamentally alter the way Congress intended the program to operate,” with which ED Secretary Linda McMahon agreed. While the eligibility criteria changes have not yet been publicized, AASCU will continue to follow this issue.
Student Loan Processing Backlogs, Rising Borrower Default Rates, and High Institutional Nonpayment Rates, All Pointing to a Likely Rise in Cohort Default Rates
Last week, the Federal Reserve Bank of New York published a report indicating that approximately one million student loan borrowers defaulted on their federal student loans last year, and the student loan delinquency rate remains high (at 9.6%). In a court filing, ED also released data revealing that, while it has made some headway in processing Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF) applications, a significant backlog remains, totaling 626,412 IDR applications and 86,520 PSLF Buyback applications.
Moreover, with the Saving on a Valuable Education (SAVE) plan set to end, over seven million federal student loan borrowers will have to transition to a new IDR plan, likely compounding on this backlog issue. The exact date at which SAVE plan enrollees will be required to transition to a new IDR plan has not yet been set. Given the increase in student loan borrower default rates and the backlog of IDR and PSLF applications, AASCU expects institutions to see higher cohort default rates, with the official public release of these rates slated for September.
Similarly, yesterday, ED shared new data showing that over 1,800 institutions have nonpayment rates at or above 25%. Nonpayment rates are defined as the percentage of Direct Loan borrowers, on an institutional basis, who entered repayment between January 2020 and May 2025 and whose federal student loans were more than 90 days delinquent. While nonpayment rates are distinct from default rates (which are defined as 270 days of delinquency), this measure raises concern that institutions are moving toward higher default rates. AASCU will continue to monitor these developments.
ED Announces Resolution Agreements to End Partnerships with The Ph.D. Project
Earlier today, ED’s Office for Civil Rights (OCR) announced that it has reached 31 resolution agreements with institutions of higher education (IHEs) to end their partnerships with The Ph.D. Project. ED describes the Ph.D. Project as “an organization which provides doctoral students with insights into obtaining a Ph.D., but unlawfully limits eligibility based on the race of participants.” This determination stemmed from investigations OCR conducted several months earlier, during which the office identified violations of Title VI of the Civil Rights Act of 1964 due to discrimination on the basis of race.
The 31 resolution agreements represent institutions that have already ended their partnership with the Ph.D. Project or intend to do so. See a full list of IHEs that have agreed to these terms.
From the week of Feb. 26
Senate HELP Committee Schedules then Pulls Markup on Understanding the True Cost of College Act
The Senate Health, Education, Labor, and Pensions (HELP) Committee had scheduled a markup on S.1558, the Understanding the True Cost of College Act of 2025 for today. This bill would require colleges to use uniform financial aid offer terminology and standard definitions in all financial award letters. Early this morning, however, the Committee pulled this bill from the markup without providing information on when it might be rescheduled. AASCU will continue to monitor the scheduling of any future markup on this legislation.
ED Issues Non-binding Guidance on Criteria and Process for Accrediting Agency Recognition
This morning, ED announced a new interpretive rule in pre-published form that details the Administration’s interpretation of existing regulations governing the criteria and process for ED’s initial recognition of an accrediting agency. ED states that the goal of this rule is to reduce barriers to the recognition of accrediting agencies and to promote competition in assessing the quality of education and training offered by institutions.
Officials noted that only a limited number of new accreditors have been recognized in recent decades and stated that additional reforms are underway, including updates to accreditation guidance, grant funding to support emerging accreditors, and a negotiated rulemaking process (the Accreditation, Innovation, and Modernization or “AIM” Committee) to consider further regulatory changes. As an interpretation of existing rules rather than a change to current regulations, typical regulatory requirements are not necessary for this guidance to take effect.
ED Announces IAA with State Department on Foreign Gift Reporting
On Tuesday, the U.S. Department of Education (ED) announced a new interagency agreement (IAA) with the U.S. Department of State regarding foreign gift reporting as required under section 117 of the Higher Education Act. According to ED’s press release, “Through this partnership, State will support ED in managing the Section 117 foreign funding reporting portal and use its national security and foreign national academic admissions expertise to review and assess the industry’s compliance with the law, share data with the public and federal stakeholders, and identify potential threats.” See a fact sheet on the IAA. As a reminder, this interagency agreement ties to President Trump’s broader agenda to shift functions and operations of ED to other agencies and comes after other interagency agreements, including those between ED and the U.S. Department of Labor to manage activities for TRIO and GEAR UP.
Student Loan Discharge Advancing After Dual Court Decisions
Some borrowers will see significant federal student debt relief as two federal court decisions cleared the way for automatic discharges of eligible loans. At issue in Sweet v. McMahon (formerly Sweet v. Cardona), a long-running class-action lawsuit over the ED’s handling of borrower defense to repayment claims, a federal court denied the Department’s bid to delay key deadlines tied to settlement relief, reaffirming that eligible borrowers should receive loan discharges and refunds without further individual adjudication after prolonged delays. That settlement, stemming from claims that ED failed to process borrower defense applications in a timely manner, has already provided relief to many participants and covers multiple “relief groups” defined by the court’s order.
In a separate development, just one day before the settlement decision, the U.S. Supreme Court declined to intervene to block the processing of automatic discharges pending broader appeals, allowing the lower court orders implementing discharge and refund provisions to stand while litigation continues. This effectively removes a significant procedural hurdle that had paused widespread implementation of these discharges, enabling ED to proceed with cancelling qualifying federal student loan debt and issuing refunds where applicable.
These developments do not affect other pending student loan litigation outside the Sweet settlement framework. On Tuesday, in response, ED filed a notice of appeal related to the Sweet decision to a higher court. AASCU will continue to keep you updated on all legal proceedings related to federal student loans.
