Policy & Advocacy
June 30, 2025

AASCU Federal Highlights – June 2025

A compilation of policy news shared in AASCU’s Weekly Federal Policy Update. Sign up to receive news weekly, along with other timely updates.

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Weekly Federal Policy Update
June’s Lead Story

Joint Associations Group on Indirect Costs Shares Recommendations With Higher Ed Community

AASCU has joined a community-based effort to develop potential replacement models for funding the indirect costs of federal research grants. The Joint Associations Group on Indirect Costs shared its recommendations earlier this month.

Read more.
Other news and resources
June Documents & resources
From the week of June 26

Senate Parliamentarian Makes Education-Related Byrd Rulings

Late last night, the Senate Budget Committee Democrats released rulings from the Senate Parliamentarian, Elizabeth MacDonough, that listed Byrd rule rulings on the HELP Committee portion of the Senate’s budget reconciliation bill. The Senate Parliamentarian found that several student aid and loan provisions would violate the Byrd rule. These include the following provisions related to:

  • Workforce Pell;
  • Student loan repayment;
  • Student loan eligibility; and
  • Public Service Loan Forgiveness (PSLF)

A running list of policies rejected from the bill, as currently written, can be viewed here. MacDonough recently ruled on matters regarding basic needs, health care, and immigration. As a reminder, the Byrd rule allows provisions to be struck by a point of order on the Senate floor that do not sufficiently impact revenue and spending.

At this stage, Senate leadership must either revise the measures that have not survived the Byrd rule or proceed without a significant portion of the bill’s anticipated savings. AASCU will continue to monitor developments and provide updates as the process continues. As we dissect and report on the FY25 Budget Reconciliation process, we encourage our members to follow along with our posts on our GR Network, for which you can sign up for here.

Senate Finance FY25 Budget Reconciliation Update

Last Monday, the Senate Finance Committee released text representing the Committee’s portion of the Senate’s budget reconciliation bill. The Committee provided a section-by-section summary.

This bill includes provisions related to higher education, including changes to the excise tax on investment income of certain private college endowments. Starting in 2026, the Senate proposal would replace the current flat 1.4% tax with a tiered structure: 1.4% for institutions with per-student endowments between $500,000 and $750,000; 4% for $750,000 to $2 million; and 8% for more than $2 million.

As in the House bill, the Senate version excludes qualified religious institutions and calculates endowment size based on U.S. students only. The Senate bill further excludes institutions that did not participate in Title IV programs in the prior year and expands the definition of taxable income to include student loan interest and certain royalty income.

Education and Workforce Committee Holds Markup on Accreditation-Related Bills

On Wednesday, the House Education and Workforce Committee held a markup of several bills, including two pertaining to accreditation: H.R. 2516, the Accreditation for College Excellence Act of 2025, and H.R. 4054, the Accreditation Choice and Innovation Act. H.R. 2516 seeks to amend the Higher Education Act of 1965 to prohibit political litmus tests in the accreditation of institutions of higher education. H.R. 4054 seeks to implement a variety of changes to the accreditation system, including limiting the scope of the Federal government’s role in the accreditation process, encouraging new accreditors, and focusing accreditors more on outcomes. Both bills were favorably reported by the Committee, the former by a vote of 20-15 and 21-15, respectively. They will now proceed to the House floor.

Senate HELP Committee Considers ED Nominees

Earlier today, the Senate Health, Education, Labor, and Pensions (HELP) Committee voted on several nominations for the U.S. Department of Education (ED), including Penny Schwinn to be Deputy Secretary of Education and Kimberly Richey to be Assistant Secretary for Civil Rights. The nominations of both Schwinn and Richey were moved forward by party-line votes of 12-11, respectively. Their nominations now proceed to the Senate floor for final confirmation. AASCU will report on developments related to their confirmations.

ED Announces Launch of 2026-2027 FAFSA Beta Testing in August

On Monday, ED announced it will launch the first round of beta testing for the 2026–2027 Free Application for Federal Student Aid (FAFSA) form starting August 4. This follows two key updates aimed at simplifying the FAFSA experience: real-time identity verification for users with a Social Security number, and a new contributor invite process that allows students to invite a parent or spouse by email rather than entering their personal information. ED will conduct beta testing in two phases — initially with selected school districts and higher education institutions, followed by broader public participation later in August. Institutions and State agencies may begin receiving official Institutional Student Information Records (ISIRs) during this period, which they may use for internal testing or wait to process during the regular award cycle. ED encourages reporting any issues during this beta phase to help ensure a smooth public release by October 1.

State Department Resumes Student Visa Interviews

Last Wednesday, according to POLITICO, the U.S. State Department instructed diplomats to begin reviewing the online activity of all foreign nationals applying for student and educational visas. An internal State Department cable advised consular officers to examine social media accounts and public databases such as LexisNexis for content that may suggest anti-U.S. views, support for terrorism, or antisemitic behavior. Although this information alone will not automatically disqualify an applicant, it will lead to further review to determine whether the individual is likely to follow U.S. laws and visa rules. The guidance also tells officers to pay close attention to applicants with a history of political activism and to preserve any concerning material through screenshots and detailed notes. As the cable states, “Applicants who demonstrate a history of political activism” should be assessed for the likelihood they would “continue such activity in the United States.”

AASCU Joins National Push Against Federal Cap on Research Reimbursements

AASCU has joined 17 other higher education organizations in filing an amicus brief opposing the new federal cap on facilities and administrative cost reimbursements for research grants. Led by the National Association of College and University Business Officers (NACUBO) and the Council on Governmental Relations (COGR), the brief argues that the 15% cap imposed by agencies such as the National Institutes of Health (NIH), National Science Foundation (NSF), Department of Energy (DOE), and Department of Health and Human Services (HHS) threatens the financial sustainability of federally funded research.

This unprecedented joint legal brief—NACUBO’s first in its 63-year history—reflects the growing concern, including among RPUs, that shifting research infrastructure costs onto universities could potentially undermine innovation and public service missions. In FY24 alone, 207 RPUs received 10,229 awards totaling nearly $5B from NIH. If the caps remain in place, these institutions could be impacted.

AASCU and its fellow signatories are also collaborating to develop a fairer and more transparent framework for reimbursing facilities and administrative (F&A) costs, aiming to ensure long-term support for the institutions that drive scientific discovery, progress, and economic development. We will keep you informed as these lawsuits against NIH, brought forth by various higher education associations, organizations, and institutions, unfold.

Courts Block Defense Cap on Indirect Research Costs

Last Tuesday, a federal judge in Boston temporarily halted a U.S. Department of Defense (DoD) policy that would limit reimbursement for indirect research costs to 15% for universities receiving federal research funding. The ruling by U.S. District Judge Brian Murphy responded to a lawsuit filed by 12 universities, including MIT and Johns Hopkins, along with several academic associations. The plaintiffs argued that the new policy conflicted with existing federal regulations and congressional guidance. The DoD has stated that the policy could result in up to $900 million in annual savings. As a reminder, indirect research costs refer to expenses not directly spent on research and data collection, such as facilities, equipment, and staff. Courts have already halted 15% caps attempted at other agencies, including NIH and DOE.

Student Loan Collection Update from ED

On Monday, during her keynote address at the Western Governors Association meeting, Secretary of Education Linda McMahon announced that ED has collected nearly $200 million in student loan payments since resuming collections on defaulted federal loans in May. The agency restarted collections through the Treasury Offset Program, which intercepts government payments like tax refunds to recover delinquent debt, though Social Security benefits remain protected. “We’re focused on restoring accountability while giving borrowers a fair path forward,” McMahon said.

From the week of June 12

Senate HELP Committee Releases Budget Reconciliation Text

On Tuesday, the Senate Health, Education, Labor, and Pensions (HELP) Committee released text representing the Committee’s portion of the Senate’s budget reconciliation bill. The bill text can be found here. The press release announcing the bill text can be found here. The Committee provided section-by-section can be found here.

This bill addresses several areas, including student loan repayment, borrowing limits, institutional eligibility, regulatory oversight, and Pell Grants. Key provisions include:

  • Excluding students from Pell Grant eligibility if they receive other grant aid (including from other federal or non-federal sources) that meets or exceeds the full cost of attendance;
  • Allocating $10.5 billion in new mandatory funding for Pell Grants to address the Pell Grant funding shortfall;
  • Eliminating Grad PLUS loans;
  • Capping graduate loan borrowing at $20,500 per year and $100,000 total, and professional graduate borrowing at $50,000 per year and $200,000 total;
  • Introducing new eligibility requirements for institutions based on the earnings of former students, specifying that:
    • Undergraduate programs will lose federal student loan eligibility if their graduates earn less than the median high school graduate in that state;
    • Graduate programs will lose eligibility if their former students earn less than the median bachelor’s degree recipient in the same field and state;
    • Programs failing to meet these earnings thresholds for two out of three years will lose eligibility.
  • Unlike the House’s version, the Senate bill does not include new restrictions on Pell Grant eligibility based on a student’s level of enrollment or impose risk-sharing measures for institutions of higher education (IHEs).

As a reminder, per the chamber’s FY25 budget resolution, the Committee has been tasked with producing at least $1 billion in expenditure savings from programs within its jurisdiction, so the proposed cuts are less drastic than the House version. After other Senate committees release their reconciliation texts, Senate Majority Leader John Thune (R-SD) is expected to schedule a combined package, including the HELP Committee text, for floor consideration. Leader Thune has targeted completing Senate consideration of this package before the 4th of July, hoping that the president will sign it into law before that date.

In the meantime, we encourage you to contact your U.S. senators ASAP to make your concerns heard before votes occur and the proposal is sent back to the House. Recently, ACE released a great resource providing a state-by-state breakdown of the impacts of the House’s proposed cuts. You can share this data and access our pre-drafted, customizable action alert for your senators here.

SFFA and Tennessee File Case Against HSI Grant Program

On Wednesday, Students for Fair Admissions (SFFA) and the state of Tennessee filed a lawsuit against ED, challenging the constitutionality of the Hispanic-Serving Institutions (HSI) grant program under Title V of the Higher Education Act. As a reminder, SFFA’s 2023 lawsuit against Harvard led to the Supreme Court ruling that it is unconstitutional to consider race in college admissions. In this new case, the plaintiffs argue that basing eligibility for federal funding on whether an institution enrolls at least 25 percent Hispanic undergraduate students amounts to racial discrimination. Tennessee and SFFA claim that the requirement excludes colleges that serve Hispanic and low-income students but do not meet the numerical threshold, denying them access to grants that support facilities, faculty, and student services. They assert the enrollment benchmark is not historically grounded and places institutions in the position of either engaging in race-conscious enrollment practices or forgoing funding altogether. AASCU will continue to monitor this issue.

ED Announces New Financial Aid Temporary Verification Requirement for IHEs

On Friday, the U.S. Department of Education (ED) announced new steps to prevent identity theft and fraud in federal student aid programs for the fall 2025 semester. These steps require IHEs to verify the identities of certain first-time applicants enrolled in summer courses and follow updated requirements for acceptable documentation. Applicants must present a valid, unexpired government-issued photo ID either in person or during a live video conference to an authorized institutional representative, and the IHE must keep a copy of the ID on file. The Office of Federal Student Aid expects that only a small number of students will need to complete this identity verification during the summer.

These new requirements come as the Department ramps up oversight in response to growing concerns about fraud. In its press release, the Department noted that fraud detection efforts over the past week have identified nearly 150,000 potentially suspicious identities in current Free Application for Federal Student Aid (FAFSA) submissions. Looking ahead, the Department plans to implement a permanent identity screening process for all FAFSA applicants starting this fall.

Senate Budget Hearing on NIH and Related Letter

On Tuesday, the Senate Appropriations Committee held a hearing on the President’s FY26 Budget Request for the National Institutes of Health (NIH). Notably, during this hearing, Director Jay Bhattacharya did not defend President Trump’s proposed budget cuts, the pausing of grants to research institutions, or the cap on indirect costs for Federal research dollars appropriated to NIH grantees. Relatedly, on Monday, hundreds of NIH staffers signed a letter known as the “Bethesda Declaration,” expressing dissent to “Administration policies that undermine the NIH mission, waste public resources, and harm the health of Americans and people across the globe.”

Members of the Fulbright Foreign Scholarship Board Resign

On Wednesday, all members of the Fulbright Foreign Scholarship Board resigned. Board members cited political influence by the Trump Administration as the reason for this mass resignation. In a statement, the 12 former board members stated they resigned “rather than endorse unprecedented actions that we believe are impermissible under the law, compromise U.S. national interests and integrity, and undermine the mission and mandates Congress established for the Fulbright program nearly 80 years ago.” White House spokesperson Anna Kelly responded, saying, “President Trump, not the Fulbright Board, was elected by the American people to ensure all foreign policy initiatives align with our national interests.”

From the week of June 5

President Trump Releases FY26 Budget Request

On Friday, President Trump released his fiscal year 2026 (FY26) budget request, which proposes $66.7 billion for the U.S. Department of Education (ED)—a $12 billion, or 15 percent, reduction compared to FY25. Notably, ED’s budget materials compare FY26 funding levels to final FY24 amounts rather than FY25. ED has yet to publicly clarify how and at what level it will fund many programs in FY25.

Highlights pertaining to higher education, in comparison to FY24 proposals, include the following:

  • Career and Technical Education (CTE) State Grants: $1.450 billion ($2 million decrease)
  • Adult Education State Grants: $0 ($715.5 million decrease)
  • Adult Education National Activities: $0 ($13.7 million decrease)
  • Maximum Pell Grant: $5,710 ($1,685 decrease)
  • Supplemental Educational Opportunity Grants (SEOG): $0 ($910 million decrease)
  • Federal Work-Study (FWS): $250 million ($980 million decrease)
  • Student Aid Administration: $2.058 billion (level funded)
  • TRIO Programs: $0 ($1.191 billion decrease)
  • GEAR UP: $0 ($388 million decrease)
  • Teacher Quality Partnerships (TQP): $0 ($70 million decrease)
  • Institutional Aid programs, including funds to HBCUs, HSIs, and all MSIs: level funded compared to FY24, except for the Strengthening Institutions Program for which the Administration proposes to eliminate funding

AASCU will keep you informed as the FY26 appropriations process continues and updated on our subsequent advocacy efforts.

Republican Members Push Back on Administration’s Proposed Budget Cuts

This week, Congress has continued to hold budget hearings regarding ED. On Tuesday, the Senate Appropriations Committee held a hearing on ED’s budget, and on Wednesday, the House Education and Workforce Committee held its respective hearing. Topics discussed include accountability within TRIO programs, antisemitism on college campuses, and the increasing costs of higher education. Notably, several members raised concerns about the President’s Budget Request to eliminate funding for TRIO in FY26.

Senate Appropriations Committee Chair Susan Collins (R-ME) expressed concern about the proposed elimination and questioned Secretary McMahon on the decision. Sec. McMahon responded that while TRIO is funded through the end of this fiscal year, ED did not include it in its FY26 budget request due to limited oversight and concerns about effectiveness. Other Members suggested alternative approaches to ensuring accountability, such as auditing the program or reviewing the existing TRIO reports that all grantees are required to submit to identify and address performance issues. Sec. McMahon said ED is open to working with Congress to improve accountability if the program is ultimately funded.

FY25 Reconciliation Update

AASCU last reported that the House passed its version of the reconciliation bill. The Senate has since begun work on its own version, with some committees starting to release legislative text. However, it remains unclear when the Senate Health, Education, Labor, and Pensions (HELP) Committee will unveil its draft. All eyes are on the Committee to see whether it will adopt the House’s proposed changes to Pell Grants and risk-sharing provisions.

It is worth noting that this Monday, former de-facto head of the Department of Government Efficiency (DOGE), Elon Musk, negatively tweeted about the reconciliation bill. He wrote, “I’m sorry, but I just can’t stand it anymore…This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination. Shame on those who voted for it: you know you did wrong. You know it.”

Republican leadership, including Speaker of the House Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD) have spoken in opposition to Musk’s statement, defending their approach and characterizing the situation as a difference in opinion. AASCU will continue to monitor how this will impact passage of the bill in the Senate and in the meantime, we encourage you to promptly take action our Reconciliation Bill alert.

ED Announces Steps to Combat Fraud in Federal Student Aid Programs

Last Wednesday, ED announced steps to reduce fraud in Federal student aid programs. In its press release, ED stated that “A recent comprehensive analysis uncovered nearly $90 million disbursed to ineligible recipients, including thousands of deceased individuals receiving some form of payment.” To address this issue, ED has taken several steps: it has improved real-time data-sharing with the Social Security Administration to prevent aid from going to deceased individuals; collaborated with the U.S. Department of Homeland Security to obtain clearer information on immigration parole status and avoid awarding aid to ineligible applicants; restarted automated post-screening of student aid records for the 2024–25 and 2025–26 Free Application for Federal Student Aid (FAFSA) cycles to keep records current with eligibility updates; and resumed identifying applicants who may have used another person’s identity when submitting the FAFSA.

Administration Announces Intention to Revoke Visas of Chinese Students

Last Thursday, U.S. Secretary of State Marco Rubio publicly made a statement that “Under President Trump’s leadership, the U.S. State Department will work with the Department of Homeland Security to aggressively revoke visas for Chinese students, including those with connections to the Chinese Communist Party or studying in critical fields….We will also revise visa criteria to enhance scrutiny of all future visa applications from the People’s Republic of China and Hong Kong.” POLITICO reported that embassies have not yet been given formal guidance on how to carry out Sec. Rubio’s plans. In response to Chinese students concerned that they are going to have their visas revoked, Trump has stated, “They’re going to be OK. It’s going to work out fine….We just want to check out the individual students. We have to, and that’s true with all colleges.”

Higher Ed Organizations Oppose Broad Pause on Student Visas

On Friday, AASCU and other higher education organizations sent a letter to Sec. Rubio expressing concern over his decision to pause all new student visa interviews at U.S. embassies and consular sections to allow for expanded social media screening and vetting. The letter cautioned that this pause could significantly delay international students—many already admitted for the Summer and Fall 2025 semesters—from arriving in time to begin their studies. The letter reaffirmed a willingness to work with Federal officials on legitimate security concerns, warning that a broad suspension of visa processing “would send a message that our nation no longer welcomes talented students and scholars from other countries” and “hinder our ability to compete for the world’s best and brightest minds to study in the United States.”

Trump Administration Seeks to Eliminate Public Media Funding

The Trump administration has formally requested that Congress rescind $9.4 billion in previously approved federal spending, targeting $1.1 billion from the Corporation for Public Broadcasting (CPB) and $8.3 billion from foreign aid programs. The proposed cuts to CPB, which funds NPR and PBS, would eliminate federal support for FY26 and FY27, potentially impacting educational programming and local journalism, sometimes produced in collaboration with higher education institutions. This move follows Executive Order 14290, signed on May 1, 2025, directing the cessation of federal funding to CPB, citing alleged political bias. NPR and PBS have filed similar lawsuits challenging the order, arguing it violates the First Amendment, warning of serious consequences for public access to local news, educational content, and emergency alerts—particularly in underserved rural communities. CPB leadership also emphasized that federal support is irreplaceable and that these cuts would disrupt longstanding bipartisan investments in public-private partnerships.

The foreign aid rescissions, part of a broader America First policy, include significant reductions to USAID programs, global health initiatives, and contributions to international organizations. Critics warn that these cuts could undermine U.S. influence abroad and disrupt partnerships between public media and educational institutions.

Amber Northern Appointed to Serve as Senior Advisor on IES Reform

On Friday, ED announced the appointment of Dr. Amber Northern as a senior advisor to Secretary of Education Linda McMahon, with a focus on reforming the Institute of Education Sciences (IES). Dr. Northern will work closely with Acting Director Dr. Matthew Soldner. Her background includes previously serving as Senior Vice President for Research at the Thomas B. Fordham Institute and working in K–12 and higher education settings. Sec. McMahon stated, “As we return education to the states, it’s essential that educators have access to accurate data to inform their work and develop best practices. Dr. Northern’s deep expertise in education statistics and years of experience in the classroom will be an asset as we re-envision the work of IES.” This re-envisioning will involve prioritizing student-centered research and best practices over “politically charged topics,” according to Sec. McMahon.