AASCU Federal Highlights – September 2025
A compilation of policy news shared in AASCU’s Weekly Federal Policy Update.
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September‘s Lead Story
Continuing Resolution & Government Shutdown Updates
Last Friday, the House passed a continuing resolution (CR) that will extend fiscal year 2025 (FY25) funding through November 21, 2025, by a 217-212 vote. The Senate then failed to pass the House CR measure on a 44-48 vote and the Democrats’ proposed alternative by a 47-45 vote. As such, there is currently no CR in place to continue to fund the federal government past the expiration of the current fiscal year. Democratic congressional leaders were scheduled to meet with President Trump on the matter today, but earlier this week, that meeting was cancelled. At this time, no public meetings are scheduled between the Administration and Congressional leaders.
Yesterday, POLITICO reported that the Office of Management and Budget (OMB) instructed federal agencies to identify programs, projects, and activities that will lose discretionary funding on October 1 without any backup funding options. For those identified, OMB told agencies to consider reduction-in-force plans that go beyond typical furloughs, potentially resulting in permanent job cuts for programs that do not align with President Trump’s policy priorities in the event of a government shutdown.
At present, the House is not scheduled to be back in session until October 7, though the Senate will next be in session for legislative business during the afternoon of September 29. AASCU will continue to monitor whether a CR is passed by Congress by the Tuesday, September 30 deadline, or alternatively, if the government shuts down. You can follow along with the timely reporting of updates regarding a government shutdown on AASCU’s GR Network.
Other news and resources
September Documents & resources
From the week of Sept. 25
ED Opens FAFSA to All Students
On Wednesday, the U.S. Department of Education (ED) announced that all students may access the 2026-2027 Free Application for Federal Student Aid (FAFSA). As a reminder, the first round of beta testing, which occurred in August, only allowed select students to access the FAFSA portal. All students can utilize this portal now, but the application will technically remain in a beta-testing stage until October 1. This expanded access for the next week will allow students and families to start using the test model to begin their applications.
ED Releases Initial Loan Proposal for Upcoming Negotiated Rulemaking Sessions
Today, ED released materials pertaining to the upcoming Reimagining and Improving Student Education (RISE) Committee negotiated rulemaking sessions. These sessions will be taking place from September 29 – October 3. As a reminder, the RISE Committee will be considering proposed regulations regarding the implementation of the student loan provisions in the One Big Beautiful Bill Act. Topics that will be discussed include Public Service Loan Forgiveness (PSLF), loan limits pertaining to Direct Loans, the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans, and loan deferment, forbearance, and rehabilitation.
Negotiators on the Committee who will be representing institutions of higher education (IHEs), include Jenna Colvin (President of Georgia Independent College Association) as the primary negotiator for private nonprofit IHEs, Andy Vaughn (President and Chief Executive Officer of Alliant Internation University) as the primary negotiator for proprietary IHEs, and Timothy B. King (Vice Provost for Student Success at Jacksonville State University) as the primary negotiator for public IHEs.
Thune Files Resolution to Confirm Nominees including ED Nominees
On Thursday, Senate Majority Leader John Thune (R-ND) filed a resolution, S.Res.412, to confirm over 100 Administration nominees. Among these nominations are the four remaining ED nominees, including David Barker, nominee for Assistant Secretary for Postsecondary Education, and Kimberly Richey, nominee for Assistant Secretary for Civil Rights. No action has been taken since this filing, but AASCU will continue to monitor for any major updates.
Administration Actions Involving H-1B Visas
This week, the Administration announced two new actions regarding H-1B visas. On Friday, the president issued a proclamation that directed a new $100,000 fee to be placed on H-1B visa applications. The U.S. Department of Homeland Security (DHS) later clarified that this restriction will not impact current visa holders or those undergoing renewals, but rather only affects new applicants moving forward. As part of the President’s proclamation, the Secretary of Labor has also been directed to initiate a rulemaking to revise the prevailing wage levels. These levels determine what employers must pay in order to qualify for the H-1B program.
Following this $100,000 fee proclamation, DHS proposed a rule to “implement a weighted selection process that would generally favor the allocation of H-1B visas to higher-skilled and higher-paid aliens, while maintaining the opportunity for employers to secure H-1B workers at all wage levels, to better serve the Congressional intent for the H-1B program.” In other words, under the new lottery system, top-paying professions are given more lottery tickets and, therefore, better odds of getting a visa.
Both of these restrictions will make it more difficult for colleges and universities to hire international employees under H-1B visas to support their research and serve as faculty. While fees on H-1B visa applications have existed in the past, this high $100,000 cost serves as a greater barrier than higher education institutions have faced to date.
FSA Releases FY22 Cohort Default Rates
Yesterday, the Office of Federal Student Aid (FSA) published data on the FY22 Official Cohort Default Rates (CDRs). The FY22 CDRs are based on student loan borrowers who began repaying their Direct Loans or Federal Family Education Loans (FFEL) between October 1, 2021, and September 30, 2022, and who defaulted between October 1, 2021, and September 30, 2024. The main finding was that the FY22 National CDR calculated on August 3, 2025, is 0.0%, which remains unchanged from the FY21 Official National CDR of 0.0%. According to FSA, the FY22 rates were heavily influenced by the federal student loan payment pause that started on March 13, 2020, in response to the COVID-19 pandemic. During this period, borrowers with loans held by ED were not required to make payments, and none of those borrowers entered default. Next year’s release of the FY23 CDRs will be the first year since the pandemic that students with ED-held Direct Loans or FFEL Loans would be reported as having defaulted on such loans and thereby impacting individual schools’ CDRs.
From the week of Sept. 18
ED Reallocates MSI Funding to HBCUs and Tribal Colleges
On Monday, U.S. Secretary of Education Linda McMahon announced that ED will be reallocating discretionary funding originally appropriated for several Minority-Serving Institution (MSI) grant programs, international education, and teacher preparation programs to Historically Black Colleges and Universities (HBCUs) and Tribal Controlled Colleges and Universities (TCCUs). Last week, AASCU reported on ED’s announcement to cease funding programs for MSIs due to the programs’ respective eligibility reliance on racial or ethnic quotas, which the Administration asserts to be unconstitutional. Moving forward, ED will be using the funding to award additional funding to HBCUs and TCCUs, totaling $495 million. While some HBCU leaders have noted appreciation for this increase in funding, there is acknowledgment by other stakeholders that this action was taken at the cost of MSIs and the students they serve.
AASCU will continue to update you on all legislative, legal, and advocacy developments related to MSI funding.
House GOP Leadership Releases CR Text
The House GOP leadership released the text of a continuing resolution (CR) that will continue government funding through November 21, 2025. In the context of Labor, Health and Human Services, Education, and Related Agencies appropriations, the CR continues funding at levels provided in fiscal year 2025 (FY25) through this date. House Speaker Mike Johnson has said the House is likely to vote on the CR this Friday.
With Republicans holding a slim 219–213 majority, Speaker Johnson can afford only two defections, though he has often managed to secure last-minute support. Meanwhile, Democrats in both chambers have proposed an alternative funding bill extending government funding only until Oct. 31, paired with health care measures like reversing Medicaid cuts passed in the FY25 Budget Reconciliation bill — but Republicans in both chambers have dismissed the proposal.
As a reminder, FY25 ends on midnight September 30, so Congress will either need to pass a CR by this time or face a government shutdown. Both chambers will be on recess next week, but AASCU will continue to monitor and report on updates.
Education and Workforce Subcommittee Holds Hearing on Reforming College Pricing
On Tuesday, the U.S. House Education & Workforce Subcommittee on Higher Education and Workforce Development held a hearing titled “No More Surprises: Reforming College Pricing for Students and Families”. Lawmakers and higher-education experts discussed ways to improve transparency in college pricing so students and families can make better-informed decisions. Rep. Burgess Owens (R-UT), chair of the subcommittee, criticized how many institutions advertise sticker prices that don’t reflect the real cost after financial aid and fees; he stressed that students deserve “honesty and transparency” so they can budget and plan without needing legal or financial expertise. Rep. Alma Adams (D-NC), ranking member, agreed that clearer information is crucial, but noted that transparency alone won’t solve rising higher-education costs.
During the hearing, experts also urged the Department of Education to fully implement Financial Value Transparency regulations, releasing existing data and enforcing consistent, plain-language disclosures to help students understand the real cost of college.
Congressmembers highlighted several proposals to improve clarity, including the Understanding the True Cost of College Act, which would standardize financial aid offers for easier comparison, and the College Transparency Act, which would provide data on student outcomes like completion rates and earnings. AASCU has previously supported the latter piece of legislation as well as College Cost Transparency Initiative (CCT) efforts.
From the week of Sept. 11
ED Announces End to Federal Funding for Several MSI Programs
On Wednesday, the U.S. Department of Education (ED) announced it will cease discretionary funding for several Minority-Serving Institution (MSI) grant programs that rely on racial or ethnic quotas. This follows the U.S. Solicitor General’s determination that such programs—specifically Hispanic-Serving Institutions (HSIs)—violate the Fifth Amendment’s equal protection guarantees and that the U.S. Department of Justice (DOJ) would not defend HSIs in ongoing litigation. Citing similar constitutional concerns across all MSI programs, ED will reallocate roughly $350 million in fiscal year 2025 (FY25) discretionary funds to other initiatives that do not condition eligibility on race or ethnicity. The affected programs include the following:
- Strengthening Alaska Native and Native Hawaiian-Serving Institutions (Title III Part A);
- Strengthening Predominantly Black Institutions (Title III Part A);
- Strengthening Asian American- and Native American Pacific Islander-Serving Institutions (Title III Part A);
- Strengthening Native American-Serving Nontribal Institutions (Title III Part A);
- Minority Science and Engineering Improvement (Title III Part E);
- Developing Hispanic-Serving Institutions (Title V Part A); and
- Promoting Postbaccalaureate Opportunities for Hispanic Americans (Title V Part B).
Grantees with multiyear projects not yet in their final budget period will receive a one-year no-cost extension of the performance period of all discontinued awards, allowing them to complete approved activities and close out their programs by September 30, 2026. Additionally, grantees already in their final budget year may request a one-time extension of up to 12 months, also ending no later than September 30, 2026, to finish their work and conclude the project within the approved scope.
It is worth noting that while ED will not renew existing awards or issue new grants under these discretionary programs, it will continue distributing approximately $132 million in mandatory funds that cannot legally be reprogrammed. Secretary of Education Linda McMahon emphasized ED’s commitment to eliminating race-based discrimination in federal programs and pledged to work with Congress to redesign support for under-resourced institutions without using racial quotas.
You can view AASCU’s statement in response to ED’s decision here. If your institution is an AASCU member and you have received a rejection, termination, or discontinuation letter from ED, please contact AASCU. We will continue to report on the status of these programs amidst ongoing litigation efforts.
House Appropriations Full Committee Passes LHHS Bill
On Tuesday, the House Appropriations Full Committee passed its FY26 Labor, Health and Human Services, Education, and Related Agencies (LHHS) bill by a 35-28 vote. Read the committee summary. Read the bill text. Read the Committee report.
Higher education highlights include the following:
- The maximum Pell grant amount was maintained at $7,395.
- The Supplemental Educational Opportunity Grant (SEOG) program received no funding.
- The Federal Work Study program received $778.9 million ($451.1 million decrease from FY25)
- Student Aid Administration was level-funded at $2.059 billion.
- Developing HSIs was level-funded at $228.9 million.
- TRIO was level-funded at $1.191 billion.
- GEAR UP was level-funded at $388 million.
New Steps Regarding ED and DOL Workforce Development Partnership
On Monday, the U.S. Department of Labor (DOL) and ED announced the launch of a new integrated state plan portal to streamline the administration of federal workforce development programs under the Workforce Innovation and Opportunity Act (WIOA), including adult education and family literacy initiatives. As part of a broader interagency agreement signed in May, ED will transfer funding and staff to the DOL, which will now serve as the central hub for managing key workforce programs, including those funded by the Carl D. Perkins Career and Technical Education Act. While DOL will handle day-to-day operations, ED retains policymaking and oversight authority. The agencies state that the new system aims to reduce bureaucratic inefficiencies and improve service delivery to states and grantees through shared platforms. Secretaries Chavez-DeRemer and McMahon emphasized the reforms align with the Trump Administration’s goal to better prepare Americans for high-paying skilled jobs by enhancing coordination between education and workforce programs.
SCOTUS Emergency Docket Allows Trump’s Foreign Aid Impoundment
On Tuesday, Chief Justice John Roberts temporarily allowed the Trump Administration to freeze approximately $4 billion in foreign aid while the Supreme Court considers an emergency appeal from the DOJ challenging a lower court’s order requiring the funds to be spent by September 30. As a reminder, last week AASCU reported that the Office of Management and Budget had announced the cancellation of this funding through a “pocket rescission,” which the U.S. Government Accountability Office has stated is illegal under the Impoundment Control Act. Since then, a district court judge ruled that the Administration’s use of a pocket rescission to withhold the aid was unlawful. This Supreme Court decision pauses that ruling, allowing the Administration to temporarily continue withholding the funds while the case proceeds. If the Supreme Court issues a decision on this matter before September 30, that ruling will likely have implications for other federal funding that the Administration has not allocated, as directed by Congressional appropriations bills.
From the week of Sept. 4
House Appropriations Subcommittee Passes LHHS Bill
On Tuesday, the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies (LHHS) passed its fiscal year 2026 (FY26) bill. Read the Committee summary. Read the bill text. Overall, the bill provides $184.5 billion in discretionary funding for FY26, $13.7 billion (7%) below the comparable FY25 enacted level. The U.S. Department of Education is funded at $66.7 billion, which is $12.1 billion (15%) below the FY25 enacted level. It is worth noting that the bill is similar to last year’s House Republican LHHS funding bill and does not include many of the significant cuts and consolidations proposed in the President’s Budget Request.
Key highlights pertaining to higher education are the following:
- Maintains the Maximum Pell grant level;
- Level funds Federal Student Aid administrative expenses;
- Extends the National Advisory Committee on Institutional Quality and Integrity’s authority through FY26; and
- Prescribes that Workforce Pell grants and “hereafter known and designated” as “Trump Grants.”
While not immediately evident from the bill text, the Committee minority has publicly stated that the bill would also significantly cut Federal Work Study funding and eliminate funding for the Supplemental Education Opportunity Grant (SEOG) program. AASCU expects a Full Committee markup to take place next week. Customarily, the day before the markup, the Committee will release its report, which includes more program-by-program funding details. AASCU will follow up with more information once it is released.
New Unified Regulatory Agenda Released
The Trump Administration has released the first Unified Regulatory Agenda of its current term. The Spring 2025 agenda for the U.S. Department of Education includes several new additions that will likely impact institutions of higher education, including:
- Accreditation Issues – Changes to current regulations pertaining to accreditation of institutions of higher education. The agenda lists this month for a projected initial notice of negotiated rulemaking on this topic.
- Title IV Eligibility Issues – Changes to current Title IV eligibility issues focused on mergers, sales, and transfers of institutions. The agenda lists October as the time of projected initial notice of negotiated rulemaking on this topic and also states that regulations pertaining to change in ownership, cash management, administrative capability standards, and financial responsibility standards could be addressed.
- Foreign Gifts and Contracts – Regulations regarding institutional reporting of gifts and contracts from foreign sources. The agenda lists this month for a notice of proposed rulemaking.
- Public Service Loan Forgiveness – As previously reported, the Administration has already begun its regulatory effort on this topic.
- Disparate Impact – Removing regulations that permit the disparate impact theory of race-based discrimination. The agenda lists last month for a notice of proposed rulemaking.
- Title VI Investigations – Amending procedural regulations that govern administrative enforcement of Title VI and Title IX. The agenda lists this month for a notice of proposed rulemaking.
- FERPA – Changes to Family Educational Rights and Privacy Act regulations. The agenda lists January for an NPRM on this regulation. A FERPA-focused item has been listed on the unified agenda of the past four Administrations without a proposed rule being issued for comment.
An Administration is required to update its projected regulatory agenda twice a year. These updates are published as part of a federal government-wide unified regulatory agenda. The date of regulatory actions in a unified agenda is a projection and doesn’t guarantee or require an agency to move forward with a regulatory action on the published timeline. AASCU will continue to update on the progress of these regulatory efforts.
Administration Makes Announcement Regarding Pocket Rescission
On Friday, the Office of Management and Budget announced a cancellation of foreign aid funding, which they are citing as a “pocket rescission.” A pocket rescission is generally referred to as a situation in which the President requests the cancellation of appropriated funds so late in the fiscal year that the funds expire before Congress can act on the request, effectively bypassing congressional authority.
In early August, the U.S. Government Accountability Office (GAO) published a resource explaining that pocket rescissions are illegal under the Impoundment Control Act. It wrote, “Congress holds the power of the purse—approving a budget and appropriating funds. Presidents and executive branch agencies are responsible for administering those funds.”
The Administration’s latest move indicates an intent to proceed with such rescissions regardless of GAO’s assessment of pocket rescissions. This approach complicates ongoing negotiations over a FY25 Continuing Resolution (CR), raising concerns about whether the Administration will uphold congressional funding decisions, such as level-funding through a CR, or continue attempting to reclaim funds already appropriated. It also creates uncertainty around federal education funding in particular, as there were rumors this summer that a rescission request targeting education could soon be sent to Congress.
DOJ Sues Illinois Over Tuition and Scholarships for Undocumented Students
On Tuesday, the U.S. Department of Justice (DOJ) filed a lawsuit against Illinois seeking to block the state from offering in-state tuition rates and scholarships to undocumented students. The DOJ argues that Illinois is violating federal law by “providing benefits to illegal aliens that they do not provide to U.S. citizens,” since the state allows undocumented students to access in-state tuition and scholarships while denying the same benefits to U.S. citizens from other states. Illinois is the latest state targeted in a broader effort by the Trump Administration to challenge similar policies in Texas, Minnesota, Kentucky, and Oklahoma. The DOJ has already reached agreements with officials in Texas and Oklahoma to roll back such laws, while litigation remains ongoing in Minnesota.
U.S. District Court Rules in Favor of Harvard
On Thursday, U.S. District Court Judge Allison Burroghs ruled that the Federal Government violated Harvard University’s First Amendment rights and the U.S. Civil Rights Act when it withheld billions in research funding due to alleged campus antisemitism. While Administration officials have already signaled that they will appeal this decision, the finding has implications for how the Administration will proceed with its actions against Harvard and other public and private universities. AASCU will continue to update on the progress of this case and how it impacts the Administration’s actions on these issues.
