REGucation

ED under the Obama Administration published a new BDR rule in 2016, effective July 1, 2017. The 2016 BDR Rule set new standards for student borrowers to assert defenses to repayment of loans based on institutional misconduct. After granting an initial wave of loan discharges under the 2016 BDR Rule, ED under the first Trump Administration quickly paused adjudications. That led to a class of student borrowers suing ED in 2019 for delaying and failing to process their claims under the 2016 BDR Rule. Sweet v. Cardona, No. 19-cv-3674(N.D. Cal.), No. 23-15049 (9th Cir.). In June 2022, a settlement was reached between ED and a class of students who had attended 151 schools identified as having likely engaged in substantial misconduct, resulting in $6 billion in discharges for these students. The settlement required ED to also adjudicate applications of borrowers who filed BDR claims after the settlement agreement date, but before court approval, by January 28, 2026 (“post-class applications”). Post-class applications not adjudicated by January 28, 2026 required ED to provide a full discharge.

Four schools opposed the settlement, but the court approved it. Three of the four schools appealed the settlement approval, but in November 2024, the Ninth Circuit dismissed their appeal, ruling the schools lacked prudential standing. In October 2025, one of the appealing schools, Everglades College, petitioned the Supreme Court for a writ of certiorari. No. 25-492 (U.S.). On February 23, 2026, the Supreme Court denied the petition.

Meanwhile, back in district court, ED in November 2025 moved for an 18-month extension of its January 28, 2026 deadline to adjudicate the post-class applications. ED explained that this number of “post- class applications” (approximately 250,000) was higher than anticipated and that it could not process all their applications by January 28, 2026.

In December 2025, the district court largely denied the requested extension, finding it “totally unacceptable.” The court required ED to adjudicate post-class applications of borrowers that attended one of the 151 schools listed in the settlement agreement by the original January 28, 2026 deadline, but extended the deadline for all other post-class applications to April 15, 2026.

On January 22, 2026, ED filed a Motion requesting that the court reconsider ED’s request for an 18-month extension to adjudicate all post-class applications. On February 24, 2026, the court denied ED’s the motions, emphasizing that “[ED] waited until the eleventh hour … to seek the relief now requested.” ED appealed to the Ninth Circuit and moved for an emergency stay. The Ninth Circuit denied the stay request on March 27, 2026. ED filed its opening brief in the Ninth Circuit on April 9, 2026.

In September 2019, ED published the 2019 BDR Rule, which went into effect July 1, 2020. 84 Fed. Reg. 49788. Among other things, the 2019 BDR Rule revised standards under the 2016 BDR Rule for the assertion and resolution of borrower defense claims. The 2019 BDR Rule also established a three-year limitations period for borrowers to raise their claims as part of collection proceedings against them.

New York Legal Assistance Group sued ED in 2020, claiming the 2019 BDR Rule was arbitrary and capricious, and that the three-year limitations period was procedurally invalid because it was not a “logical outgrowth” of ED’s notice of proposed rulemaking that preceded it, and thus violated the APA. NYLAG v. McMahon, No. 20-cv-01414 (S.D.N.Y.), No. 21-0888 (2nd Cir.). In 2021, the district court granted summary judgment to ED on the arbitrary and capricious claims, but ruled that the limitations period violated the APA. The court entered judgment but instead of severing and vacating the limitations provision, remanded to ED “for further proceedings.” NYLAG appealed to the Second Circuit.

The Second Circuit in 2024 partially remanded to the district court and directed it to consider whether it could sever and vacate the limitations provision while leaving the rest of the 2019 BDR Rule intact. In March 2025, the district court severed and vacated the limitations provision in an amended judgment. NYLAG then reinstated its appeal from the district court’s ruling denying its arbitrary and capricious claims.

Then, in September 2025 ED asked the Second Circuit to dismiss NYLAG’s appeal, arguing that it was “moot” because the 2019 BDR Rule had been “codified” by Congress in the One Big Beautiful Bill (“OBBB”). OBBB provided that “regulations relating to borrower defense to repayment that took effect on July 1, 2020, are restored and revived as such regulations were in effect on such date.” ED argued that OBBB had the effect of placing the 2019 BDR Rule beyond the reach of arguments challenging it as arbitrary, capricious, or contrary to law under the APA, since it had been incorporated by reference into law.  NYLAG, however, contended in response that OBBB merely “restored” and “revived” the status quo as of July 1, 2020, but did not codify” the 2019 BDR Rule into law such that its challenge to the 2019 BDR Rule remained a “live controversy.” ED filed a supplemental letter brief responding to NYLAG. The Second Circuit has not ruled yet.

In November 2022, ED published a final BDR Rule (“2022 BDR Rule”). The 2022 BDR Rule created a new borrower-defense adjudication system and established new closed-school loan discharge provisions.

In February 2023, Career Colleges & Schools of Texas (“CCST”) sued ED over these provisions and moved for a preliminary injunction. Career Coll. & Schs. of Texas. v. U.S. Dep’t of Ed., No. 23-cv-00433 (W.D. Tex.), No. 23-50491 (5th Cir.), No. 24-413 (U.S.). The district court denied CCST’s motion, but the Fifth Circuit reversed in April 2024 and enjoined the challenged provisions on a nationwide basis.

In October 2024, ED petitioned the Supreme Court to review the Fifth Circuit’s injunction, which the Supreme Court agreed to hear in part. Upon OBBB’s enactment in July 2025, however, the parties jointly requested to dismiss the petition. OBBB delayed the provisions in the 2022 BDR Rule that CCST challenged, providing they “shall not be in effect” for loans originating before July 1, 2035. OBBB further provided that “any regulations relating to borrower defense to repayment that took effect on July 1, 2020, are restored and revived as such regulations were in effect on such date.” Thus, ED’s petition to the Supreme Court no longer presented a time-sensitive question.

But the litigation is not over. On January 28, 2026, the district court entered the preliminary injunction directed by the Fifth Circuit and further directed CCST to file their proposed First Amended Complaint. In March 2026, CCST Filed the First Amended Complaint that renewed its challenge to the 2022 BDR Rule’s provisions, asking the district court to declare them unlawful, such that they would not become effective again in 2035. Importantly, CCST also challenged provisions in the 2019 BDR Rule that were “restored and revived” by OBBB, and which CCST claimed “suffer from many of the same defects” as the 2022 BDR Rule’s Provisions. Thus, CCST is now challenging the broader BDR regulatory framework. ED’s deadline to respond to the First Amended Complaint is in early May 2026.

For now, BDR applications are not being adjudicated by ED under the 2022 BDR Rule, as its provisions remain both enjoined by the 5^th Circuit and delayed by OBBB until 2035.  Earlier BDR rules (1994, 2016, and 2019) remain mostly in effect, but the legality of the 2019 BDR Rule is now being addressed by not only the Second Circuit but also the federal district court in Texas. Thus, two separate courts are now tasked with deciding overlapping questions concerning the scope of ED’s BDR authority. In the meantime, in a recent Electronic Announcement, ED announced that it has “resumed adjudicating borrower defense applications that are not impacted by the Sweet v. McMahon settlement,” noting that BDR claims “may fall under a combination of three borrower defense regulations” (citing the 1994, 2016, and 2019 BDR Rules), depending on the timing of enrollment and loan disbursement.

ED recently issued notices of BDR claims to hundreds of institutions. Importantly, these applications are not impacted by the Sweet v. McMahon settlement and fall under the 1994 and 2016 borrower defense regulations. Our contacts estimate that ED has sent notifications for approximately 70% of claims. Please let us know if you need any assistance in responding to your BDR claims or if you have questions about the applicable regulations.

In early 2025, President Trump issued two executive orders targeting diversity, equity, and inclusion (DEI) initiatives: Ending Radical and Wasteful Government DEI Programs and Preferencing; Ending Illegal Discrimination and Restoring Merit-Based Opportunity (“DEI Executive Orders”). On March 26, 2026, President Trump signed a new executive order addressing DEI:  Addressing DEI Discrimination by Federal Contractors (the “2026 DEI Executive Order”). 

The 2025 DEI Executive Orders directed federal agencies to excise DEI practices from federal government, including by terminating “equity-related” grants. As soon as agencies began implementing the directives, litigation commenced.

The first case challenging the 2025 DEI Executive Orders is National Assoc. of Diversity Officers in Higher Educ. et al. v. Donald J. Trump, et al., No. 25-cv-00333 (D. Md.), No. 25-1189 (4th Cir.). Plaintiffs include higher education officials and others. The district court issued a preliminary injunction, finding likely First and Fifth Amendment violations, but on February 6, 2026, the Fourth Circuit on appeal vacated the injunction, holding that Plaintiffs did not meet the high bar for a facial challenge to the termination and certification provisions, and the Plaintiffs had no standing to challenge the enforcement threat provision. The DEI Executive Orders thus remain in effect as to the Department of Education. Plaintiffs have 90 days from February 6, 2026 to file a petition for writ of certiorari with the Supreme Court. 

Additional challenges to the DEI Executive Orders are pending in other jurisdictions. In National Urban League v. U.S. Dep’t of Ed., No. 25-cv-471 (D.D.C.), the district court denied the plaintiffs’ motion to enjoin the DEI Executive Orders, citing both plaintiffs’ lack of standing and failure to establish a likely constitutional violation. ED’s motion to dismiss is pending.

In San Francisco Aids Foundation v. U.S. Dep’t of Ed., No. 25-cv-01824 (N.D. Cal.), No. 25-4988 (9th Cir.), the district court granted, in part, the plaintiffs’ motion for a preliminary injunction, prohibiting ED and other agencies from enforcing the DEI Executive Orders against them. The government appealed to the Ninth Circuit. On February 5, 2026, the Fourth Circuit ordered that the case would be held in abeyance pending the outcome of the Ninth Circuit’s decision in Thakur v. Trump, No. 25-4249, the Supreme Court’s decision in Little, Governor of Idaho v. Hecox, No. 24-38, or further order of the court. 

The 2026 DEI Executive Order requires, inter alia, executive departments and agencies to include the following clause in all contracts and contract-like instruments: “In connection with the performance of work under this contract, [the contractor] agrees as follows: 1. The contractor will not engage in any racially discriminatory DEI activities.” It broadly defines “racially discriminatory DEI activities” as “disparate treatment based on race or ethnicity in the recruitment, employment (e.g. hiring, promotions), contracting (e.g. vendor agreements), program participation, or allocation or deployment of an entity’s resources.” It thus imposes a certification requirement similar to what had been imposed in the 2025 DEI Executive Orders, but to fend off the vagueness attack that was made on the 2025 DEI Executive Orders, defines “discriminatory DEI activities.” This 2026 DEI Executive Order threatens the canceling/terminating/suspension of contracts, and, given the inclusion of “contract-like instruments,” likely grants, as well as False Claims Act actions for non-compliance.  

As Yogi Berra once said, “it’s like déjà vu all over again.” Just this week, the same group that challenged the 2025 DEI Executive Orders – the National Association of Diversity Officers in Higher Education, filed a lawsuit challenging the 2026 DEI Executive Order in the same court as the 2025 challenge. National Assoc. of Diversity Officers in Higher Educ. et al. v. Donald J. Trump, et al., cv-26-01532 (D. Md). Plaintiffs, represented by Democracy Forward, again allege that the 2026 DEI Executive Order is unconstitutionally vague and violates the First Amendment. The complaint asks for a preliminary and permanent injunction of the order. 

The 2025 DEI Executive Orders remain in force as to the Department of Education, with the limited exceptions noted above. The 2026 DEI Executive Order is in force, for now, pending the outcome of a recent court challenge.   

Following the DEI Executive Orders, ED released a February 14, 2025 Dear Colleague Letter (DCL) to institutions and other entities receiving federal funding.

Several lawsuits were filed seeking to vacate the DCL, and after the government withdrew its appeal in Am. Federation of Teachers v. U.S. Dep’t of Ed., et al., No. 25-cv-00628 (D. Md.), No. 25-2228 (4th Cir.), the DCL is now dead. The Government, however, is continuing its efforts to eliminate illegal DEI through, among other actions, enforcement of the DEI Executive Orders, the new executive order Addressing DEI Discrimination by Government Contractors, enforcement actions, and continued broad interpretation of the SFFA decision. 

The DCL has been permanently vacated under the APA. No further appeal is pending. 

On July 29, 2025, the Department of Justice issued a memorandum to all federal agencies regarding Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination (“DOJ Guidance”). The DOJ Guidance reiterated the Trump Administration’s position that various DEI practices by funding recipients likely violate federal antidiscrimination laws, including Title VI, Title VII, and Title IX, and identified “Best Practices” as “non-binding suggestions to help entities comply with federal antidiscrimination laws and avoid legal pitfalls.” The DOJ Guidance was notable because it emphasized that funding recipients may not use “unlawful proxies” – practices that rely on “neutral criteria that function as substitutes for explicit consideration of race, sex, or other protected characteristics.”  Although this DOJ Guidance is non-binding, the government cited it and used examples from it in its proposed revisions to the existing Financial Assistance General Certifications and Representations in the System for Award Management, which will be binding if implemented. 

DOJ’s Guidance is not binding, and courts have acknowledged that. The DOJ Guidance does, however, offer the Government’s view on what constitutes illegal discrimination, sparking a possible investigation and loss of Title IV funding.

Since the SFFA decision, several cases have been filed challenging federal statutes and programs related to higher education that give preferences to persons based on race or ethnicity. Plaintiffs in these cases, like the Trump Administration, have interpreted SFFA broadly to apply not only to admissions, but to all areas of institutional life. We highlight a few examples below.  

In State of Tennessee v. Dep’t of Educ., No. 25-cv-270 (E.D. Tenn.), the State of Tennessee and Students for Fair Admissions sued ED in June 2025, alleging the Hispanic-Serving Institutions (HSI) program is unconstitutional. In the HSI program, Congress directed ED to award funds to colleges whose undergraduate student body is comprised of at least 25 percent Hispanic students. 20 U.S.C. § 1101a(a)(5). Plaintiffs argue the statutory quota is unconstitutional under SFFA; the complaint’s first sentence states that “The Department of Education cannot discriminate based on race or ethnicity—even when Congress orders it to.” Although DOJ announced that it would not defend the lawsuit, the Hispanic Association of Colleges and Universities intervened as a defendant and has moved for judgment on the pleadings on several grounds, including lack of standing and mootness, and has also moved to dismiss for lack of jurisdiction. The Court has not yet ruled on these motions. 

In American Alliance for Equal Rights, No. 25-cv-04207 (D.D.C.), the American Alliance for Equal Rights (AAER), an organization describing itself as “dedicated to ending racial classifications across America” and founded by Edward Blum, who also founded SFFA, filed a suit in December 2025 against the Hispanic Scholarship Fund, a nonprofit organization that provides millions of dollars in scholarships to Hispanics and Latinos pursuing higher education, alleging discrimination claims based on 42 U.S.C. § 1981, Title VI, and state law. AAER alleges that the HSF’s Scholars Program “flatly bars all non-Hispanic students,” and requires any applicant to have at least one Hispanic grandparent from certain identified countries. AAER also alleges that it has non-Hispanic members who are “ready and able to apply for the program today, but are ineligible to apply because of their ethnicity.” AAER seeks an injunction barring HSF from knowing or considering the ethnicity of applicants, and “equitable relief to undo HSF’s past discrimination.”  Defendant filed a Motion to Dismiss the Plaintiff’s Amended Complaint, arguing that Plaintiff lacks standing and that it fails to state a claim under federal or state law.  The Court heard oral argument on that motion on February 12, 2026 and took it under submission.    

In American Alliance for Equal Rights v. Congressional Black Caucus Foundation, No. 1:26-cv-1123 (D.D.C.), AAER has recently challenged the legality of scholarships awarded only to students who are African American and Black. The complaint cites the SFFA decision. Defendant has not yet filed a responsive pleading.  

In Students Against Racial Discrimination v. The Regents of the University of California, No. 8:25-cv-00192 (C.D. Cal.),  Plaintiff, a nonprofit organization formed and existing “for the purpose of restoring meritocracy in academia,” sued the University of California (“UC”) system and its individual institutions and Chancellors, alleging the UC system uses unlawful racial preferences in student admissions, discriminating in favor of Black and Hispanic applicants and against Asian American and white applicants, in violation of Title VI, 42 U.S.C. § 1981, the Equal Protection Clause, and California law. On December 16, 2025, the district court dismissed the organization’s claims against the UC medical schools for lack of standing, dismissed claims arising under Section 1981 and the Equal Protection Clause, and dismissed claims against the Chancellors of the various UC schools. The court, however, determined that other claims (involving the nine undergraduate UC campuses and five law schools) were sufficiently pled. The case continues to be litigated, with the Court setting a May 8, 2026 hearing on Defendant’s motion to dismiss the third amended complaint. 

The SFFA decision leaves a large wake. Lawsuits attacking racial and ethnic preferences will continue to be filed, with lower courts grappling as to how wide SFFA’s application should be. Guidance from the Supreme Court on this breadth is needed.

For the next three years, the Administration’s anti-DEI efforts are here to stay. A circuit split on the validity of the DEI Executive Orders, prompting Supreme Court review is possible. For now, the DEI Executive Orders remain effective as to ED and other federal agencies (except DOL), but their status may ultimately be irrelevant given the fact that the Administration is waiving the SFFA decision like a sword.

With the Administration withdrawing its DCL appeal, it appears the government is heavily relying on the SFFA decision on its own, the DEI Executive Orders that remain in effect and the DOJ Guidance, which is not binding and thus not subject to legal attack, but which states the position of the Administration on antidiscrimination law. It has also proposed revisions to the existing Financial Assistance General Certifications and Representations in the System for Award Management, which require any recipient of a federal award to certify its compliance with federal law and executive orders prohibiting unlawful discrimination, and which, if adopted, likely will face litigation challenging them.  The government will rely on the newest DEI executive order, Addressing DEI Discrimination by Federal Contractors, which may face litigation challenging it.     

While courts work through the various legal challenges to the government’s DEI policies, there is no question that the Administration will continue its efforts to rollback DEI initiatives in higher education. The government maintains several powerful enforcement tools at its disposal, including initiating investigations and suspending Title IV funding, and it has shown no hesitation in taking aggressive action against institutions that do not conform to its policies. If an institution has no appetite for litigation with the government and does not want to jeopardize continued access to federal funds, following the DEI Executive Orders, DOJ Guidance, and related agency guidance may simply be the palatable option, at least for the next three years, irrespective of lower court decisions. 

Meanwhile, numerous private parties have jumped on the anti-DEI charge, seeking termination of any race- or ethnic-based preferences, even if grounded in statute. This may eventually set the stage for a separation of powers showdown in court as to Congress’ right to create programs that create race- or ethnic-based preferences, and the Executive Branch’s authority to declare them unconstitutional and unenforceable.    

The constitutionality of the qui tam, or whistleblower, provision of the False Claims Act (“FCA”) has been the subject of several recent challenges.

In United States ex rel. Zafirov v. Florida Medical Associates LLC, No. 19-cv-01236 (M.D. Fla.), originally filed in 2019, the defendants challenged whether whistleblowers could represent the federal government in FCA actions—where the government has not intervened in the case—without violating the Constitution’s Appointments Clause. In September 2024, the district court agreed, issuing its decision declaring the qui tam provision of the FCA unconstitutional, raising significant questions about the future of whistleblower litigation. The government appealed to the Eleventh Circuit (11th Cir. 24-13581, 24-13583).

In U.S. ex rel. Penelow et al. v. Janssen Products LP, the whistleblowers alleged that defendants violated the FCA, the federal Anti-Kickback Statute, and various state False Claims Acts in connection with the sale of certain medications. In 2016, the government declined to intervene in the lawsuit. The case went to a jury, which found in favor of the whistleblowers. The award, including treble damages, totaled $1.64 billion. The defendants appealed to the Third Circuit arguing, among other things, that the qui tam provision of the FCA was unconstitutional (3rd Cir. 25-1818).

In U.S. ex rel. Phillips et al. v. Los Angeles Film School, LLC et al., two relators/whistleblowers, who were former management executives for Los Angeles Film School, LLC, allege that two institutions violated federal gainful employment requirements and incentive compensation bans, despite certifying compliance with those provisions. The government declined to intervene and the complaint was recently unsealed. Because the government has not intervened, the case presents the potential for the defendants to challenge the constitutionality of the False Claims Act’s qui tam provisions should they face an unfavorable outcome.

In In re TriHealth, Inc., et al., the Sixth Circuit reviewed appeals from two cases where the federal district court in the Southern District of Ohio issued a pair of orders dismissing related whistleblower cases under the False Claims Act: United States ex rel. Murphy v. TriHealth, Inc., et al., No. 1:19-cv-168 (S.D. Ohio) (Murphy); and United States ex rel. Shahbabian v. TriHealth, Inc., et al., No. 1:20-cv-67 (S.D. Ohio) (Shahbabian).  In both Murphy and Shahbabian, defendants sought interlocutory review after the district court denied their motions to dismiss on constitutional grounds. The government declined to intervene in both cases.

In United States ex rel. Taylor v. Healthcare Assocs. of Texas LLC, No: 3:19-CV-2486 (N.D. Tex.) (5th Cir. 25-10842) the Fifth Circuit is reviewing the Defendant’s appeal on, among other things, constitutionality grounds, of the $16.5 million Medicare fraud judgment entered against them.

In Zafirov, the government’s appeal to the Eleventh Circuit is pending and oral argument was held on December 12, 2025.

In Penelow, the parties have filed their briefs and the Court’s review is underway. The DOJ filed an intervenor and amicus brief arguing that the qui tam provision is, in fact, constitutional. Oral argument is scheduled for March 20, 2026.

In U.S. ex rel. Phillips et al. v. Los Angeles Film School, LLC et al., on May 6, 2025, the United States declined to intervene “at this time,” and the court partially unsealed the case. The relators filed an amended complaint on October 14, 2025. All defendants moved to dismiss the amended complaint, but no ruling has been made.

In Taylor, the parties have filed their briefs and the Court’s review is underway. The DOJ filed an intervenor and amicus brief arguing that the qui tam provision is, in fact, constitutional.

In In re TriHealth, Inc., et al., the Sixth Circuit denied the defendants’ petitions for permission to appeal. The court held that binding circuit precedent in United States ex rel. Taxpayers Against Fraud v. General Electric Co., 41 F.3d 1032, 1041 (6th Cir. 1994), squarely forecloses constitutional challenges to the FCA’s qui tam framework and leaves no substantial ground for difference of opinion. Emphasizing that published panel decisions remain controlling unless overturned en banc, the Sixth Circuit declined to revisit the issue at this stage.

If the other appellate courts disagree with the Sixth Circuit and conclude that the qui tam provision is unconstitutional, it could either foreclose FCA whistleblower claims altogether (if a broader application), at least in that circuit, or substantially limit them to cases only where the government intervenes (a narrower application). The ruling could have broad implications, particularly in higher education, where FCA suits are prevalent. Depending on the outcome of the litigation, Congress could seek a legislative fix due to the substantial federal revenue generated by these suits.

On May 19, 2025, the United States Deputy Attorney General circulated a memo within the Department of Justice announcing the launch of the Civil Rights Fraud Initiative, a new effort aimed at leveraging the FCA and its qui tam provisions to pursue entities that “defraud the United States by taking its money while knowingly violating civil rights laws.” Co-led by the Fraud Section of the Civil Division and the Civil Rights Division, this initiative marks a shift in the government’s traditional FCA enforcement and could expose corporations, universities, and nonprofits to civil and criminal investigations. The announcement encourages private citizens to file qui tam suits, which will likely be filed under seal as required, allowing the government time to investigate and decide whether to intervene.

Recent statements by senior DOJ officials underscore how this initiative is expected to operate in practice. The DOJ has made clear that FCA enforcement premised on alleged noncompliance with federal anti-discrimination laws will receive expedited priority, particularly where defendants certify compliance with civil rights statutes as a condition of receiving federal funds. While the DOJ has emphasized that the existence of diversity, equity, and inclusion programs alone does not create FCA exposure, it has signaled an intent to pursue cases involving alleged systemic discrimination, such as preferential hiring or training practices, demographic-based targets, or compensation structures tied to protected characteristics, where such practices allegedly render payment certifications false.

Consistent with broader FCA enforcement trends, the DOJ expects whistleblowers to remain the dominant source of these cases, supplemented by increased use of data analytics to identify potential violations.

The Department’s first public resolution under the Civil Rights Fraud Initiative provides an early illustration of how these theories are likely to be enforced. In April 2026, the DOJ announced that International Business Machines (IBM) Corporation agreed to pay approximately $17 million to resolve allegations that its DEI practices violated the False Claims Act by failing to comply with anti-discrimination requirements incorporated into its federal contracts. The government alleged that IBM certified compliance with federal civil rights laws while maintaining employment practices that impermissibly considered race, sex, and other protected characteristics, including the use of demographic targets, “diverse slate” hiring practices, and incentive compensation tied to diversity metrics.

Notably, the settlement—while not an admission of liability—marks the first successful FCA enforcement action premised on alleged civil rights violations tied to DEI programs and signals the DOJ’s willingness to treat such practices as rendering contractual payment certifications false. The case also suggests that the government will take an expansive view of what constitutes actionable “noncompliance,” reaching beyond traditional exclusionary conduct to include internal employment initiatives that incorporate protected characteristics into decision-making. For entities receiving federal funds, the resolution underscores that FCA exposure may arise not only from express misrepresentations, but also from certifications of compliance where underlying policies or practices are later characterized by the government as discriminatory.

Recent constitutional challenges place the future scope of whistleblower-led FCA litigation in question, with courts considering whether private relators may pursue claims absent government intervention. Depending on how broadly any adverse ruling is applied, FCA actions could be substantially narrowed or limited to government-intervened cases.

At the same time, the Department of Justice is defending the statute and signaling continued reliance on the FCA through expanded enforcement initiatives, underscoring the need for institutions to closely monitor appellate outcomes and potential legislative responses. Specifically, the DOJ is actively soliciting whistleblowers in areas of importance for the administration like DEI and certain funds/grants provided to institutions from foreign governments.

If you are concerned that your institution’s policies may draw scrutiny under the Administration’s DEI crackdown, please let us know if we can be of assistance.

In October 2023, ED under the Biden Administration published a new Gainful Employment Rule. The GE Rule uses two measures of program value: a debt-to-earnings test that ensures graduates are not left with unmanageable loan payments, and an earnings premium test that compares graduates’ incomes to state averages for high school graduates. Programs failing either measure twice within three years lose Title IV eligibility. After a first failure, schools must issue a warning to students disclosing their failure to meet the criteria.

The cosmetology school community challenged the GE Rule in two separate lawsuits, which the Court consolidated. American Association of Cosmetology Schools v. U.S. Dep’t of Ed., No. 23-cv-01267 (N.D. Tex.); Ogle School Management v. U.S. Dep’t of Ed., No. 24-cv-00259 (N.D. Tex.), No. 25-11303 (5th Cir.). Plaintiffs in both cases argued the GE Rule was unlawful because Congress’s definition of “gainful employment” in the HEA did not contemplate ED using debt and earnings metrics. Plaintiffs argued the GE Rule was therefore in “excess of statutory authority” and was “arbitrary and capricious,” in violation of the APA.

In May 2025, in a surprising move, ED (under the Trump Administration) filed a brief defending the Biden-era GE Rule—notwithstanding that ED stripped a similar Obama-era GE rule from the books in 2019 during the first Trump Administration. ED specifically defended both the financial value transparency framework, which applies to all Title IV-participating programs at all Title IV-participating institutions of higher education, and the gainful employment framework, which applies solely to “gainful employment” programs (non-degree programs at private, non-profit and public institutions, and all programs at proprietary institutions). A detailed analysis of ED’s filing is available here.

In October 2025, the district court granted ED’s motion for summary judgment and upheld the GE Rule. The court concluded that the GE Rule was not in excess of statutory authority because “gainful employment” reasonably means profitable employment. The court also held that the GE Rule was not arbitrary and capricious because ED’s reliance on IRS earnings data and chosen debt thresholds was justified, and because ED’s cost-benefit analysis—including projected taxpayer savings of $14 billion—was rational. With respect to Equal Protection Clause claims asserted by the AACS plaintiffs, the court found they had been abandoned, that the GE Rule did not unconstitutionally burden or compel speech, and that plaintiffs had no property interest in potential Title IV funding. The plaintiffs appealed the decision to the Fifth Circuit. Plaintiffs’ opening brief was filed on March 23, 2026. ED’s response is due on May 27, 2026.

Although plaintiffs are appealing the court’s ruling to the Fifth Circuit, the GE Rule remains intact nationwide at this time.

The Fifth Circuit is widely viewed as one of the more conservative courts of appeal, and it is possible that the appellate panel may give more credit to the cosmetology appellants’ statutory interpretation arguments and apply Loper-Bright to the GE Rule and ED’s interpretation of the statute in a more critical manner than the district court. The GE Rule nevertheless remains intact nationwide for now. Institutions should be assessing compliance under the debt-to-earnings and earnings premium metrics and timely implement the required student warnings. However, because of OBBB and the recent AHEAD negotiated rule making session, ED’s Do No Harm proposed rule will make significant changes to GE. See Thompson Coburn’s materials on Do No Harm Accountability Framework here.

In the wake of the DEI Executive Orders, ED terminated over 100 grants that had been awarded to colleges during the Biden Administration to support teacher education and development. ED claimed that the grants promoted “illegal” DEI and were “inconsistent with, and no longer effectuated, Department priorities.” Two notable lawsuits challenged the terminations. American Ass’n of Colleges for Teacher Educ. v. McMahon, No. 25-cv-00702 (D. Md.), No. 25-1281 (4th Cir.) (“AACTE”); California v. U.S. Dep’t of Educ., No. 25-cv-10548 (D. Mass.), No. 25-1244 (1st Cir.), No. 24A910 (U.S.) (“California”).

Initially, the district court in both cases entered preliminary injunctions and ordered the grants be reinstated. ED appealed and moved to stay the injunctions pending appeal, and after the First Circuit in California denied a stay, ED sought an emergency stay in the Supreme Court.

In April 2025, the Supreme Court granted ED’s stay request and ordered the grants be re-terminated pending a future decision on the merits. The Court held that the district court likely lacked jurisdiction because the plaintiffs sought “money damages” (i.e., grant funds) under a “contract” with the government. Under the Tucker Act, the Court of Federal Claims (“CFC”) has exclusive jurisdiction over claims against the United States seeking money damages owed under a contract.

Because the Supreme Court ruled only on ED’s emergency stay request, it was not a “final” decision. The California case therefore returned to district court, and ED moved to dismiss all claims based on the same jurisdictional argument. (ED brief; plaintiffs’ brief). On November 13, 2025, the district court granted ED’s motion in part, finding the states’ claims seeking reinstatement of their grants were claims for retrospective, monetary relief and thus belonged in the CFC. However, the court held that the states’ claims seeking to vacate the termination decisions sought prospective, nonmonetary relief, and thus belonged in district court. The court will now proceed to determining the merits of these prospective relief claims. The state plaintiffs filed their motion for summary judgment on April 16, 2026.

Meanwhile, in AACTE, after the Supreme Court’s ruling, the Fourth Circuit granted a stay of the injunction. The parties have since briefed ED’s appeal of the injunction in the Fourth Circuit (ED opening brief; plaintiffs’ response; ED reply). The Fourth Circuit, however, placed the appeal on hold pending its decision in two related appeals, and the parties stipulated to the dismissal of the case in March 2026 after the Fourth Circuit decided the related cases.

NIH also has terminated hundreds of research grants on the basis that they promoted illegal DEI and therefore “no longer effectuated” NIH’s “priorities.” Several lawsuits have challenged the terminations under the APA and the Constitution, and sought injunctions to have the grants reinstated. American Public Health Ass’n v. Nat’l Institutes of Health, No. 25-cv-10787 (D. Mass), No. 25-1611 (1st Cir.), No. 25A103 (U.S.) (“APHA”); Massachusetts v. Kennedy, No. 25-cv-10814 (D. Mass), No. 25-1611 (1st Cir.), No. 25A103 (U.S.) (“Commonwealth”); President & Fellows of Harvard College v. U.S. Dep’t of Educ., No. 25-cv-11048 (D. Mass), No. 25-2230 (1st Cir.) (“Harvard”); American Ass’n of Univ. Professors v. U.S. Dep’t of Justice, No. 25-cv-02429 (S.D.N.Y.), No. 25-1529 (2nd Cir.) (“AAUP”); Thakur v. Trump, No. 25-cv-04737 (N.D. Cal.), No. 25-4249 (9th Cir.); American Ass’n of Univ. Professors v. Trump, No. 25-cv-07864 (N.D. Cal. 2025).

In APHA and Commonwealth, which were consolidated, the district court initially rejected NIH’s Tucker Act argument and found that it had jurisdiction (Commonwealth; APHA). ). It further ruled that the terminations violated the APA. After the court entered a partial final judgment for plaintiffs, NIH appealed and sought to stay the judgment. The district court and First Circuit denied NIH’s stay request, and NIH filed an emergency application to stay the judgment in the Supreme Court.

In August 2025, the Supreme Court granted in part and denied in part NIH’s application. A five-justice majority held that plaintiffs’ APA claims challenging the terminations were “contract” claims that sought to enforce an “obligation to pay money” and thus were within the CFC’s jurisdiction. The Supreme Court majority reiterated its reasoning from the Teacher Grant case California v. U.S. Department of Education. The parties are now briefing the same issue regarding the Tucker Act (and other issues) in the First Circuit. (NIH opening brief; plaintiffs’ response brief). Oral argument took place on January 6, 2026; a ruling is expected later this year.

Subsequently and separately, the parties agreed to settle the plaintiffs’ separate claims that NIH unreasonably delayed deciding applications for new grants. In a stipulation, NIH agreed to decide the applications by December 29, 2025, and plaintiffs in exchange dismissed their corresponding claims.  

In AAUP, the plaintiffs filed a motion for preliminary injunction in the Southern District of New York in April 2025. In June 2025, the district court both denied the plaintiffs’ motion for a preliminary injunction and dismissed the plaintiffs’ claims, after finding the plaintiffs lacked standing because the terminated NIH grants had been awarded to Columbia, not to the plaintiff organizations or researchers. The court also found the organizational plaintiffs lacked standing to sue on their own behalf because they had not demonstrated injuries to themselves. Plaintiffs appealed to the Second Circuit and filed an opening brief in October 2025. NIH responded in January 2026, and the Plaintiff’s reply brief is due in March. A ruling is expected later this year. On March 12, 2026, the parties filed a stipulation to dismiss the appeal and vacate the district court’s ruling due in part to an agreement between Columbia and the federal government.

In Harvard, the university sued ED and other agencies over the “freeze” of $2.2 billion in funding (including NIH grants). The government paused funding after finding Harvard violated Title VI. Harvard alleged that the freeze violated the APA, the First Amendment, and Title VI. In September 2025, the district court mostly granted Harvard’s motion for summary judgment. The court found that withholding Harvard’s funding violated the APA, the First Amendment, and notice and hearing procedures under Title VI. The court also rejected the defendants’ jurisdictional argument that Harvard’s claims belonged in the CFC. The government in December 2025 appealed to the First Circuit, and the government filed its brief on April 15, 2026.

In Thakur, a district court in September 2025 granted a motion for preliminary injunction filed by researchers at institutions whose NIH grants were terminated for DEI and other reasons, and ordered the grants be reinstated. The court found the Tucker Act inapplicable because the researchers did not themselves “contract” with NIH, reasoning that “non-parties to the contracts cannot bring claims in the CFC.” The government appealed the injunction to the Ninth Circuit. In the meantime, NIH reinstated the grants covered by the injunction. The Ninth Circuit ruled that certain claims brought under the APA must go to the Court of Federal Claims and denied the plaintiffs’ motion for reconsideration. The plaintiffs subsequently filed a third amended complaint and the district court denied the plaintiffs request for a preliminary injunction. The parties are currently briefing motions for summary judgment, which are due on June 5, 2026, for the plaintiffs, and July 2, 2026, for the defendants.

In another case involving American Association of University Professors, the Northern District of California in November 2025 entered a preliminary injunction and ordered multiple agencies including ED to stop freezing and threatening to withhold grant funds to the University of California as part of a pressure campaign to impose a raft of policy changes on elite colleges, finding the government infringed on their First Amendment rights and Title VI and Title IX procedural safeguards. In December 2025, the court set a schedule for production of an administrative record in advance of summary judgment. In January 2026, the government filed an appeal, which it dismissed after the district court indicated that it would modify the preliminary injunction in accordance with a stipulation between the parties. The parties are currently conducting discovery with a deadline to complete document production of June 30, 2026, and the court intends to set a summary judgment briefing schedule once discovery has concluded.

ED has also terminated and discontinued thousands of grants awarded to K-12 schools and to postsecondary institutions under federal grant programs that are designed to support students. Litigation over these decisions followed. See Washington v. Dep’t of Educ., No. 25-cv-1228 (W.D. Wash. 2025), No. 26-510 (9th Cir.); Council for Opportunity in Education v. Dep’t of Educ., No. 25-cv-3491 (D.D.C.).

In Washington, following its earlier preliminary injunction, which the Ninth Circuit declined to stay, a district court in Washington granted summary judgment in December 2025 to states claiming ED prematurely discontinued grants awarded to K-12 schools that support students’ mental health. The court found the Tucker Act did not apply because the states did not ask the court to reinstate the grants but instead asked that ED be ordered to reconsider its decisions. The court directed ED to reconsider by December 31, 2025, but on that deadline, ED asked for more time. ED on January 7, 2026 awarded five weeks of interim funding to affected grantees and represented that it would make reconsideration decisions by February 2026. ED appealed and sought an emergency stay, which the Ninth Circuit denied.

On March 6, 2026, ED filed a status report stating that it issued new continuation determinations and that 118 grantees received notices of continuation. 12 grantees received notices of noncontinuation. On March 17, the plaintiff states filed a motion to enforce the court’s summary judgment order with respect to the length and conditions of funding. The Court will hear oral argument on the motion to enforce the preliminary injunction on April 22, 2026.

In Council for Opportunity in Education, ED in summer 2025 prematurely discontinued dozens of TRIO program grants on the basis that grantees violated Title VI and Title IX, and denied applications for new grants on the same basis. A national membership association sued ED in September 2025 and moved for a preliminary injunction. Oral argument took place in December 2025. On January 16, 2026, the court granted the motion for preliminary injunction and ordered ED to reconsider the affected grants using a process that complies with all federal laws, including Title VI and Title IX. On January 30, ED filed a status report outlining its intent to reconsider previously denied applications and continuation awards, and on March 9 filed a status report stating that it issued new decisions, including one noncontinuation decision. On April 13, 2026, the court entered a proposed order expanding the preliminary injunction to additional declarants who are members of the plaintiff association.

The wave of grant litigation in 2025 has continued into 2026, although the frequency of plaintiffs filing new cases has slowed. Appellate courts have already ruled on a number of cases, and many cases are now proceeding to a ruling on the merits as part of summary judgment briefing. Yet several important rulings from appellate courts remain on the horizon. So far the results have been mixed on the central question in all these: whether the district court or the CFC has jurisdiction to decide the claims. The Administration certainly enjoyed major successes in convincing the Supreme Court in California and APHA that claims seeking the reinstatement of terminated grants are “contract” claims seeking “money damages” that belong in the CFC. Yet plaintiffs continue to press grant-related claims in federal district courts, and in several instances have successfully convinced courts that the two Supreme Court rulings are distinguishable. But these successes with respect to distinguishing California and APHA have been temporary as the Department has used other methods to avoid making grant awards, highlighting the practical issue with this jurisdictional distinction.

Historically, ED only required that a PPA be signed by an authorized representative of an institution or the institution’s operating entity. In October 2023, ED amended 34 C.F.R. § 668.14(a)(3)(ii) with respect to proprietary or private nonprofit institutions to require “an authorized representative of an entity with direct or indirect ownership of the institution” to sign the PPA “if that entity has the power to exercise control over the institution.” 34 C.F.R. § 668.14(a)(3)(ii)(A)–(D) lists a number of examples of circumstances in which an entity has such power, including:

(A) If the entity has at least 50 percent control over the institution through direct or indirect ownership, by voting rights, by its right to appoint board members to the institution or any other entity, whether by itself or in combination with other entities or natural persons with which it is affiliated or related, or pursuant to a proxy or voting or similar agreement.

(B) If the entity has the power to block significant actions.

(C) If the entity is the 100 percent direct or indirect interest holder of the institution.

(D) If the entity provides or will provide the financial statements to meet any of the requirements of 34 CFR 600.20(g) or (h) or subpart L of this part.

This new rule and the owner-entity signature requirement became effective July 1, 2024. Subsequently, ED determined that 34 C.F.R. § 668.14(a)(3) required religious groups that are affiliated with schools and that have the ability to select trustees to sign the affiliated school’s PPA.

In May 2025, Hannibal-LaGrange University (“Hannibal-LaGrange”), a Christian school affiliated with the Missouri Baptist Convention (“MBC”), sued to challenge ED’s application of 34 C.F.R. § 668.14(a) that attempted to require MBC to cosign Hannibal-LaGrange’s PPA. See Hannibal-LaGrange Univ. v. McMahon, 2:25-cv-00042 (E.D. Mo.). ED refused to extend Hannibal-LaGrange’s Pell Grant funding for a new program and refused to process Hannibal-LaGrange’s PPA update without MBC’s signature. The school contended in part that nonprofit institutions do not have owners, and that without an ownership interest, ED could not require that party to sign the PPA. Hannibal-LaGrange additionally argued the rule was unconstitutional and impermissibly burdened its exercise of religion in violation of the First Amendment by forcing the MBC into unwanted legal and financial involvement with the federal government. Hannibal-LaGrange filed a motion for preliminary injunction in July 2025.

After months of extending the deadline for ED to respond to Hannibal-LaGrange’s motion, on January 16, 2026, Hannibal-LaGrange voluntarily dismissed its complaint pursuant to a settlement agreement.

As part of the settlement agreement, ED agreed to process and approve Hannibal-LaGrange’s substantial change application for its PPA without the MBC’s signature. ED agreed not to enforce the owner-entity signature requirement in 34 C.F.R. § 668.14(a)(3)(ii), but preserved its ability to rely on the financial guarantee requirements in 20 U.S.C. § 1099c(e) on a case-by-case basis as limited by 20 U.S.C. § 1099c(e)(4)(A)–(D).

Additionally, ED stated that it would not determine that a financial guarantee requirement is in the financial interest of the United States (which is necessary under 20 U.S.C. § 1099c(e)(1)) when an owner of an institution of higher education has no assets or de minimis assets, such as MBC. ED stated that if circumstances indicate a parent owner pretextually withdraws assets in an intentional attempt to evade liability, it may enforce a financial guarantee requirement.

Simultaneously, ED published new guidance announcing the settlement and decision to no longer enforce the owner-entity signature requirement in 34 C.F.R. § 668.14(a)(3)(ii).

Per ED’s guidance, it will no longer enforce the owner-entity signature requirement and will instead rely on the more limited statutory authority in 20 U.S.C. § 1099(e) to require financial guarantees from institutions. We expect that ED will engage in rulemaking to rescind the owner-entity signature requirement.

On May 22, 2025, the Department of Homeland Security (DHS) announced that it would be revoking Harvard University’s certification in the Student and Exchange Visitor Program (SEVP), which gives them the ability to sponsor F and J visas for international students. DHS’s announcement claimed Harvard had failed to comply with an April 16 demand for records on international students, including disciplinary, legal, and academic information.

On May 23, 2025, Harvard filed a lawsuit against DHS and several other executive branch agencies and moved for a temporary restraining order to enjoin the revocation of Harvard’s certification under the SEVP. See President and Fellows of Harvard College v. United States Department of Homeland Security, et al., No. 1:25-cv-11472 (D. Mass.). The complaint alleges that DHS’s action violates the First Amendment, the Due Process Clause, and the APA, among other things. The same day, the court granted Harvard’s motion for a TRO, allowing Harvard to continue enrolling international students and scholars as the case proceeds. The government filed a motion to dismiss the case on August 8, 2025. Harvard opposed the motion to dismiss on September 5, 2025.

On June 4, 2025, President Trump issued a Proclamation titled “Enhancing National Security by Addressing Risks at Harvard University” which suspends entry to the United States for any international student studying at Harvard University on an F or J visa. The next day, Harvard amended its Complaint and moved for a TRO as to the June 4th Proclamation. On June 5, the court granted Harvard’s motion for a TRO, holding that both the TRO related to SEVP certification and the Proclamation were necessary to preserve the status quo until a hearing could be held. Both TROs were in effect until June 20, 2025 “or such earlier time as a preliminary injunction order can be issued.”

Harvard then moved for a preliminary injunction on June 12. Following expedited briefing and a hearing on June 16, the district court granted the motion on June 20. The preliminary injunction enjoins defendants from implementing or otherwise enforcing the May 22 revocation of Harvard’s SEVP certification, and requires the defendants to restore every Harvard international student on an F or J visa, and such international student applicants, to the position they would have been in but for the May 22 revocation notice.  

On June 27, the government appealed the Court’s preliminary injunction order (Appeal No. 25-1627, 1st Cir.). On August 6, 2025, Defendants stipulated that the May 22 letter will not be used to revoke Harvard’s SEVP certification or Exchange Visitor Program designation.

Harvard’s brief in response to the government’s appeal of the preliminary injunction order was filed on January 12, 2026. The government’s brief was filed February 9, 2026. The briefing is underway.

The litigation illustrates how federal actions affecting SEVP certification and international student visas can have immediate and far-reaching consequences for higher education institutions. The district court’s orders clarify the availability of emergency judicial relief to maintain the status quo while legal challenges proceed. The case remains ongoing on appeal, and its resolution may inform how similar disputes involving agency authority and institutional procedural protections are addressed in the future. However, institutions should be mindful that the issuance of foreign student visas will be an area of emphasis for this administration.

The Public Service Loan Forgiveness (“PSLF”) program was created by Congress in 2007. 20 U.S.C. § 1087e(m). PSLF’s purpose is to encourage students to pursue public service by promising to discharge their loan debt if they work in a “public service job” – including employment by the government or by select nonprofit organizations – for 10 years and make 120 monthly payments under an accepted repayment plan. 

In October 2025, ED published a final rule that prohibits borrowers from qualifying for PSLF forgiveness if they are employed by organizations that engage in “illegal activities,” such as by “engaging in a pattern of aiding and abetting illegal discrimination.” 90 Fed. Reg. 48966 (Oct. 31, 2025). ED explained that the rule would “ensure that taxpayer dollars are not misused by preventing PSLF benefits from going to individuals employed by organizations that have a substantial illegal purpose.”

On November 3, 2025, several states, cities, labor unions and nonprofit organizations initiated two lawsuits against ED challenging the PSLF rule: National Council of Nonprofits, et al., v.U.S. Dep’t of Ed., No. 25-cv-13242 (D. Mass.); Commonwealth of Massachusetts, et al., v.U.S. Dep’t of Ed., No. 25-cv-13244 (D. Mass.). Both lawsuits argue the rule violates the APA and the First Amendment because it unlawfully rewrites PSLF eligibility as a means to advance the Administration’s policy goals, contrary to Congress’s intent.

In both cases, Plaintiffs filed an amended complaint on February 10, 2026, and motions for summary judgment on February 13, 2026. On March 16, 2026, ED filed its consolidated opposition to Plaintiffs’ motions for summary judgement and cross motions to dismiss. On April 6, 2026, Plaintiffs filed their reply in support of their motion for summary judgment. Plaintiffs’ motion for summary judgment is now fully briefed. Also on April 6, 2026, Plaintiffs filed their oppositions to ED’s motion to dismiss or in the alternative summary judgment, filed on April 16, 2026.

In April 2024, in the midst of the SAVE Plan litigation, ED published a notice of proposed rulemaking (“Proposed Rule”) that, like the SAVE Plan, proposed to forgive loan balances for qualifying borrowers. Eligibility for forgiveness mirrored the criteria under the SAVE Plan, but ED claimed authority to forgive loans under a different statute—20 U.S.C. § 1082(a)(6).

Several states filed a lawsuit and a motion for an injunction in September 2024, challenging ED’s authority for the Proposed Rule. State of Missouri et al. v. U.S. Dep’t of Ed., et al., No. 24-cv-01316 (E.D. Mo.). In fall 2024, like in the SAVE Plan cases, the district court enjoined the Proposed Rule, again citing ED’s lack of statutory authority. ED did not appeal. Instead, in December 2024, ED withdrew the Proposed Rule. The case was then stayed while the parties “conferred about possible paths toward a negotiated resolution of this litigation.”

On December 22, 2025, ED filed a motion to dismiss and asserted that the case should be dismissed, in its entirety, on mootness grounds. On January 5, 2026, the states filed an opposition to ED’s motion. They argued that even though ED withdrew the Proposed Rule and is not expected to reinstate during the Trump Administration, it remained possible that under a future Administration it would seek to reinstate the same (or similar) loan forgiveness plan. The states therefore seek to continue litigating so they can obtain a final judgment declaring the Proposed Rule unlawful. ED filed its reply to states’ opposition on January 15, 2026. The hearing on ED’s motion to dismiss is scheduled for April 28, 2026.

Major Biden-era student loan repayment proposals (including the SAVE Plan and Proposed Rule) have been blocked by courts and have been sunset by ED. The courts’ rejection of these plans reflects a hostility to Executive Branch efforts to overreach in areas where Congress has not given agencies clear authority to regulate. While income-driven repayment forgiveness and PSLF remain, the Trump Administration is restructuring these programs and forgiveness opportunities are narrower than before. Legal challenge to the new PSLF rule is pending and future challenges to scale-backs are likely, making the future of student loan forgiveness deeply political and unclear.

On April 29, 2024, ED published a new Title IX rule (“2024 Title IX Rule”), which went into effect August 1, 2024. The 2024 Title IX Rule, among other things, expanded the definition of “discrimination on the basis of sex” to include discrimination on the basis of “sex stereotypes, sex characteristics, pregnancy or related conditions, sexual orientation, and gender identity.” Twenty-six states and private parties filed or joined lawsuits seeking to block the implementation and enforcement of the 2024 Title IX Rule. However, on January 9, 2025, the Eastern District of Kentucky vacated the 2024 Title IX Rule on a nationwide basis. ED did not appeal the Eastern District of Kentucky’s decision.

Only one appeal related to the 2024 Title IX Rule remains pending in Alabama v. Cardona, No. 24-cv-00533 (N.D. Ala.) (11th Cir. 24-12444) where briefs have been submitted and review by the Court is underway.

The Supreme Court agreed to hear two cases, Little v. Hecox and B.P.J. v. West Virginia, which challenge state laws banning transgender athletes from girls’ and women’s sports teams. The court will decide if these state bans violate the Fourteenth Amendment’s Equal Protection Clause or Title IX, which prohibits sex-based discrimination in educational programs.

In Little v. Hecox, the respondent challenged Idaho’s Fairness in Women’s Sports Act, which was preliminarily enjoined by the district court. The Ninth Circuit affirmed the injunction in part and vacated in part (as applied to non-parties). The State of Idaho petitioned the Supreme Court to hear the appeal. After certiorari was granted, respondent filed a suggestion of mootness based on her attempt to voluntarily dismiss the lower court proceedings, which is being opposed by the State of Idaho. Briefing on the suggestion of mootness is underway.

In B.P.J. v. West Virginia, a middle school student was banned from participating in school sports under a West Virginia law, HB 3293. B.P.J. argues that the state’s categorical ban violates Title IX and the Constitution’s equal protection clause by targeting transgender people. The district court ruled against B.P.J., but on April 16, 2024, the U.S. Court of Appeals for the Fourth Circuit reversed the decision. The ruling directed the lower court to grant summary judgment to the plaintiff on the Title IX claim and remanded the case for further proceedings on the equal protection claim. The decision was appealed, and the Supreme Court has agreed to hear the case. 

In another case brought by the State of California against the United States Department of Justice, No. 25-cv-04863 (N.D. Cal.), California sued the DOJ after receiving a letter from the DOJ that demanded the state “certify in writing” that it would not implement a rule allowing students to participate in school sports based on students’ gender identity. The DOJ filed a motion to dismiss which is pending.

The cases could have significant implications for transgender students across the country and the interpretation of antidiscrimination laws. 

With the 2024 Rule effectively sidelined, attention has shifted to the impact of President Trump’s January 20, 2025, Executive Order 14168. The Executive Order directs the administration to define “sex” as male or female based on biological sex assigned at birth, and the Department of Education is likely to rely on this definition in future investigations, particularly in light of its decision not to appeal the nationwide vacatur of the 2024 Rule. Nonetheless, forthcoming Supreme Court decisions are expected to provide the most authoritative guidance, shaping the future regulatory and legislative landscape.

Although still on the books, the Bare Minimum Rule is not currently being enforced since a federal court enjoined it in June 2024. And the litigation challenging it is stayed as a result of ED representing to the courts that the rule is going to be reconsidered through the negotiated rulemaking process.

Overview

In October 2023, as part of a broader final rulemaking, ED promulgated the so-called “Bare Minimum Rule” (BMR”). Effective July 1, 2024, the BMR restricted Title IV aid to only gainful employment (“GE”) programs with lengths that did not exceed the minimum number of hours a state mandates for licensure in a given field. If a program’s length exceeded a state’s minimum hours, students are ineligible for Title IV aid for that program. The BMR departed from ED’s prior “150% Rule” which restricted Title IV aid to GE programs that did not exceed 150% of a state’s minimum hours. Two lawsuits challenged the BMR under the APA: 360 Degrees Education, LLC v. U.S. Dep’t of Ed., No. 24-cv-00508 (N.D. Tex.); American Massage Therapy Association v. U.S. Dep’t of Ed., No. 24-cv-01670 (D.D.C.).

Status

In 360 Degrees, the Northern District of Texas entered a preliminary, nationwide injunction in June 2024. The court held that the BMR was likely “arbitrary and capricious,” emphasizing that it “represents a sea-change from thirty years of established practice.” The next month, ED announced that it would revert to enforcing the 150% Rule while the injunction remained in place.

Meanwhile, in American Massage, plaintiff AMTA and ED filed cross motions for summary judgment in November 2024. However, the case has been stayed since February 2025, and remains stayed through July 21, 2026. In a July 2025 status report, ED explained that it intends to reconsider the BMR through a negotiated rulemaking process that it expects to take place in 2026.

Following ED’s stated plans to undergo negotiated rulemaking, the parties in 360 Degrees in August 2025 jointly requested a continued stay of the case, pending resolution of the rulemaking.  

TC’s Take

or now, the BMR remains enjoined nationwide and will not be implemented in its current form. The fate of the BMR will likely involve one or more of the following actions:

• ED could reconsider the BMR through negotiated rulemaking, the outcome of which would likely resolve the ongoing litigation.
• ED could withdraw its defense of the BMR and rescind the BMR.
• Congressional legislation could formally nullify the BMR and reinstate the 150% Rule.

Overview

In July 2023, ED published a final rule creating a new plan to expand federal student loan borrowers’ eligibility for loan forgiveness. Effective July 1, 2024, the “SAVE Plan” would have made borrowers eligible for forgiveness if they made repayments for 10 years, as opposed to 20 or 25 years under prior plans, and at substantially lower amounts compared to prior plans. ED claimed authority for the SAVE Plan under 20 U.S.C. § 1087e(d)(1).

Two groups of states challenged the SAVE Plan, arguing that its early forgiveness and lower payment provisions were not authorized under the HEA and violated the APA. State of Missouri et al. v. Biden et al., No. 24-cv-00520 (E.D. Mo.), No. 24-2332 (8th Cir.); State of Kansas et al. v. Biden et al., No. 24-cv-01057 (D. Kan.), No. 24-03089 (10th Cir.).

Status

In Missouri, the district court in June 2024 preliminarily enjoined the 10-year loan forgiveness provision but did not enjoin the lower payment provision. Both the states and ED appealed; the states also moved for a temporary injunction against the entirety of the SAVE Plan pending appeal. In August 2024, the Eighth Circuit granted the states’ temporary injunction motion. ED immediately asked the Supreme Court to vacate that injunction but it was denied.

In Kansas, the district court also entered a preliminary injunction in June 2024 against the SAVE Plan. ED appealed, but the Tenth Circuit stayed the appeal.

The Eighth Circuit in February 2025 dismissed ED’s appeal of the district court’s preliminary injunction, holding that the HEA did not authorize either the SAVE Plan’s 10-year loan forgiveness provision or the lower payment provision. ED did not challenge that ruling.

On July 4, 2025, the One Big Beautiful Act (“OBBB”) was signed into law. OBBB phases out a number of federal student loan repayment plans, including the SAVE Plan.

In August 2025, the parties in Missouri stated that they “are currently evaluating that legislation, and discussing the effect (if any) that it may have on the remainder of this litigation.” On December 9, 2025, the parties in Missouri reached a settlement agreement and filed a joint motion for entry of final judgment, consistent with the decision of the Eighth Circuit. The settlement provides that ED will not enforce the SAVE Plan (with minor exceptions) and will formally withdraw the rule creating it. On March 10, 2026, the district court entered an Order, as directed by the Eighth Circuit, vacating the SAVE Plan Final Rule excepting “the provision concerning the periods of deferment or forbearance that are eligible for income-driven repayment plans, which is codified at 34 C.F.R. § 685.209(k)(4)(iv), which took effect on July 1, 2024, and the legality of which was never challenged in this case,” which remains in effect.

As it stands, the SAVE Plan remains enjoined, and given the settlement, the SAVE Plan is effectively off the books. ED has announced that borrowers under the SAVE Plan will be prompted to move to new repayment plans offered under OBBB.

The Plaintiffs, in Kansas, filed a joint status report on March 16, 2025, providing that they intend to dismiss this suit, without prejudice, as well as three appeals pending in the Tenth Circuit (Nos. 24-3089, 24-3093, and 24- 3094), in light of 119-21 of the OBBB.

After President Trump took office in 2025, several federal agencies announced a Rate Cap Policy of a standard 15% reimbursement of indirect  “facilities and administration” or “F&A” costs (i.e., costs that are not necessarily tied to one research project but are nonetheless necessary for any given project—utility bills, building and maintaining a laboratory, purchasing technology used across many projects, etc.) associated with research grants, which is a substantial reduction from what had historically been individually negotiated. The Rate Cap Policy does not affect the other type of costs associated with research grants: direct costs attributable to a single research project, such as the salary for the researcher or the costs of the materials for that project. Litigation challenging the Rate Cap Policy ensued.     

Member associations and several institutions of higher education filed several cases after federal agencies announced a new Rate Cap Policy of paying 15% across-the-board for reimbursement for facilities and administrative costs associated with grants.  Reimbursement rates previously had been substantially higher. The Rate Cap Policies of NIH, HHS, and DOE have all been vacated or self-paused. The Government voluntarily dismissed its appeal in the NSF case, making the NSF policy vacated for good.

In Massachusetts, et al. v. NIH, the First Circuit issued a big ruling on January 5, 2026 affirming the Massachusetts district court’s judgment and permanent injunction as to the Rate Cap Policy of HHS and NIH, and vacatur of the Policy under 5 U.S.C. § 706(2) of the Administrative Procedure Act. In its opinion, the First Circuit first rejected the hot jurisdiction argument that the case belonged in the Court of Federal Claims. Citing the controlling opinion in NIH v. Am. Public Health Assoc., —U.S.—, 145 S.Ct. 2658, (2025), the court notes that such opinion “plainly distinguishes between challenges to agency-wide policies, which belong in district court, and challenges to the withholding of contractually awarded funds that result from those policies, which belong in the CFC.” The First Circuit held that plaintiffs’ challenge of the agency guidance setting the Rate Cap Policy was not a challenge to any agency withholding grant money, but rather “a precise analog to the agency-wide guidance in APHA” which the Supreme Court’s controlling opinion concluded belonged in district court. Thus, the claims were properly filed in district court. 

In addition to addressing the jurisdictional question presented, the First Circuit reached the merits of the claims, holding that the agency guidance establishing the Rate Cap Policy violated Congress’s Appropriations Rider, enacted in 2018 and reenacted in every subsequent appropriations cycle, which “direct[ed] NIH to continue reimbursing institutions for F&A cost reimbursements” and prohibited NIH from using appropriated funds “to implement any further caps on F&A cost reimbursements,” and which was passed by Congress in rejecting the administration’s request for Congress to institute a 10% rate of reimbursement on F&A costs. It further held that the agency guidance establishing the Rate Cap Policy violated HHS’s own regulations, which required the individualized negotiation of F&A reimbursement and required that the negotiated rate generally be accepted by all federal awarding agencies.

In Ass’n of Am. Univ., et al.. v. Dep’t of Energy, et al., No. 1:25-cv-10912 (D. Mass.), on May 15, 2025, the district court entered a nationwide preliminary injunction prohibiting the DOE from giving effect to its Rate Cap Policy with respect to any institution of higher learning until further order, and used 5 U.S.C. § 706(2) of the Administrative Procedure Act to vacate in its entirety the notice setting the rate cap. The government has appealed to the First Circuit (No. 25-1727), and while briefing is underway, there is no reason to expect that the First Circuit will enter a ruling different from that entered in the NIH case above.

In Ass’n of Am. Univ., et al. v. Nat’l Science Found., No. 1:25-cv-11231 (D. Mass.), the Court granted Plaintiffs’ summary judgment motion on June 20, 2025, and vacated the NSF’s 15% rate cap policy.  The government appealed to the First Circuit (No. 25-1794), but on September 26, 2025, without giving a reason, the NSF filed an unopposed motion to dismiss the case. The Court did so on September 30, 2025, making the NSF Rate Cap Policy vacated permanently. 

In Ass’n of Am. Univ., et al. v. Dep’t of Defense, No. 1:25-cv-11740 (D. Mass), Plaintiffs challenged the DOD’s proposed 15% rate cap policy. On October 10, 2025, the district court granted the Plaintiffs’ motion for summary judgment. The district court held the Rate Cap Policy was arbitrary and capricious and contrary to law, and vacated the DOD Rate Cap Policy in its entirety under the APA.  On December 9, 2025, the government appealed to the First Circuit (No. 25-2184).  Briefing is underway, but again, there is no reason to expect that the First Circuit will enter a ruling here different from that entered in the NIH case above.

None of the Rate Cap Policies are in effect currently. 

TC’s Take

Unless the Supreme Court accepts one of these cases and surprises us, or unless Congress is somehow convinced to pass the rate caps, the Rate Cap Policies are done.

“Universal” or “nationwide” injunctions are orders that broadly enjoin the enforcement of presidential executive orders on constitutional grounds. Although this form of broad relief did not exist until the early 1960s, in recent years, federal district courts have increasingly used nationwide injunctions to enjoin enforcement of executive orders that typically involve controversial political topics such as immigration, climate change, DEI programs, and healthcare. Courts issued an average of 1.5 nationwide injunctions per year against the Reagan, Clinton, and George W. Bush administrations, and 2.5 per year against the Obama administration. During President Trump’s first administration, however, courts issued approximately fifty-five nationwide injunctions, and during President Biden’s administration, courts issued approximately twenty-eight nationwide injunctions. Nationwide injunctions are particularly controversial because they permit a single district court judge to grant broad relief to parties that are not before the court.

In Trump v. CASA, 606 U.S. 831 (2025), the U.S. Supreme Court held that universal or nationwide injunctions exceed lower courts’ authority and are unlawful. Trump v. CASA involved a challenge to President Trump’s Executive Order No. 14160, titled “Protecting the Meaning and Value of American Citizenship” that sought to redefine birthright citizenship for children of non-U.S. citizens. The Supreme Court clarified that federal courts may only enter injunctions that prevent the government from enforcing a challenged statute or Executive Order against the specific plaintiffs in the case (and those with standing who the plaintiffs sue on behalf of) and cannot order relief that accrues to parties not before the court. As a result, individuals adversely affected by an unlawful statute or Executive Order must file their own lawsuits to obtain injunctive relief.

Because Trump v. CASA involved a constitutional challenge to an executive order rather than a challenge to an administrative agency’s action under the APA, the Court’s decision specifically excluded APA-based claims from its holding. The Court noted that it was not addressing whether the APA permits courts to issue preliminary injunctions or “vacate federal agency actions:”

Nothing we say today resolves the distinct question whether the Administrative Procedure Act authorizes federal courts to vacate federal agency action. See 5 U.S.C. § 706(2) (authorizing courts to “hold unlawful and set aside agency action”).

Accordingly, Trump v. CASA does not affect the use of “universal vacaturs” under the APA, which in practice may have a similar effect as a nationwide injunction by granting relief to parties not before the court.

Since the Supreme Court decided Trump v. CASA, several district courts have considered whether to certify a nationwide class of plaintiffs to grant relief similar to that of a universal or nationwide injunction. On the same day the Supreme Court decided Trump v. CASA, the CASA plaintiffs moved in the District of Maryland to certify a class and requested immediate injunctive relief. After the Fourth Circuit dismissed and remanded the case, the district court certified a class of plaintiffs and granted the plaintiffs’ motion for a class-wide preliminary injunction. On October 7, the Administration filed a notice of appeal in the Fourth Circuit. See No. 25-2188 (4th Cir.). The government moved to hold the appeal in abeyance pending the outcome in Washington v. Trump and Barbara v. Trump.

In Washington v. Trump, No. 2:25-cv-0127 (W.D. Wash.), the Western District of Washington declined the individual plaintiffs’ emergency motion to lift the stay that it previously entered pending appeal to rule on the plaintiffs’ attempt to seek class certification, stating that the Ninth Circuit had already begun to determine the scope of the previously entered preliminary injunction. Subsequently, the Ninth Circuit upheld the scope of the universal, nationwide injunction as necessary to grant the state plaintiffs complete relief. On September 29, the Administration petitioned for a writ of certiorari in the Supreme Court seeking a review on the merits of whether Executive Order No. 14160 complies with the Citizenship Clause and its enacting statute. See No. 25-364 (U.S.). The case has been distributed for conference.

In Barbara v. Trump, No. 1:25-cv-244 (D.N.H.), the District of New Hampshire certified a nationwide class and granted preliminary injunctive relief to enjoin the same executive order regarding birthright citizenship that was at issue in Trump v. CASA. In September 2025, the DOJ appealed the preliminary injunction to the First Circuit and subsequently petitioned for a writ of certiorari before judgment in the Supreme Court also seeking review of whether Executive Order No. 14160 complies with the Citizenship Clause and its enacting statute. See No. 25-365 (U.S.). The case has been distributed for conference.

Two courts separately entered orders prohibiting the government from implementing the funding freeze and pausing all activities related to federal financial assistance impacted by various executive orders, including funding for foreign aid, DEI programs, and the Green New Deal. The government is seeking to overturn the orders through the appellate courts.

Several nonprofit organizations filed one of the lawsuits, National Council of Nonprofits, et al. v. Office of Management and Budget, No. 1:25-cv-00239 (D.D.C.), challenging the funding freeze in Washington D.C. Twenty-two states and the District of Columbia filed the other lawsuit, New York v. Trump, No. 1:25-cv-00039 (D.R.I.), in Rhode Island. The D.C. court entered its preliminary injunction on February 25, 2025 and the Rhode Island court entered its preliminary injunction on March 6, 2025. The government timely appeal both orders, and the appellate courts have heard oral arguments on the merits of the cases so rulings could be issued at any time.

The First Circuit issued its ruling in New York on March 16, 2026. It affirmed the entry of the preliminary injunction issued by the district court in all parts but one. The appellate court vacated the preliminary injunction insofar as it required the agencies “to make ‘disbursements to the States on awarded grants’ and ‘executed contracts.’” Briefing and oral argument on the merits of the appeal is complete in the D.C. case. An order could come out at any time.

The administration’s reductions in force and executive order directing the closure of ED have been heavily litigated. While the Supreme Court has indicated a willingness to allow the reductions in force and executive order to remain in place, the challenges have continued working their way through the court system.

In NAACP v. United States, No. 25-cv-00965 (D. Md.), the NAACP, education advocacy groups, and three children sued challenging Executive Order 14242 on the basis that it violates the Constitution’s take care and spending clauses, the separation of powers, and the APA. The court denied Plaintiff’s motion for a preliminary injunction on August 19, 2025. It also denied Defendant’s motion to dismiss the claims asserted against it on the same day. The administration has since moved to dismiss the case in its entirety again. That motion has not yet been ruled on.

Two cases challenging the RIF and executive order, Somerville Public Schools et al. v. Trump et al., No. 1:25-cv-10677 (D. Mass.) and State of New York et al. v. McMahon et al., No. 1:25-cv-10601 (D. Mass.), are pending in federal court in Massachusetts. These cases have been consolidated under the State of New York case number. The district court initially granted the plaintiffs’ motions for preliminary injunction preventing ED from 1) carrying out the RIF; 2) implementing the March 20, 2025, executive order directing ED to take all legal steps necessary to facilitate ED’s closure; and 3) carrying out President Trump’s announcement regarding the transfer of management of the student loan and special education programs from ED to the Small Business Administration and Department of Health and Human Services. But the Supreme Court subsequently granted the administration’s motion to stay the enforcement of the injunction, which led to the district court vacating the preliminary injunction and the administration being able to continue implementing the RIF unless otherwise enjoined while the case proceeds on the merits.

A separate case, Victims Rights Law Center, et al. v. U.S. Dep’t of Ed., et al., No. 1:25-cv-11042 (D. Mass), was filed in Massachusetts challenging the RIF as it relates to employees in the Office of Civil Rights. The district court entered a preliminary injunction on June 18, 2025 requiring that ED bring affected OCR employees back to active duty. ED appealed, but all briefing deadlines in the case have been stayed and the district court has since vacated and dissolved the injunction at the parties’ request. Appeal was dismissed at the parties’ request on January 15, 2026.

Finally, several students and the Council of Parent Attorneys and Advocates filed a lawsuit, A.W., et al. v. U.S. Dep’t of Ed., No. 1:25-cv-00744 (D.D.C.), seeking to enjoin ED’s reduction in force and “decimation” of its Office of Civil Rights. The court denied plaintiffs’ motion for preliminary injunction on May 21, 2025. In denying the motion, the court determined that the plaintiffs were not likely to succeed on their claims because there was no evidence that OCR has failed to perform its duties and “broad programmatic attacks” are not viable claims under the Administrative Procedures Act. The court entered an order staying the case pending further order of the court and the parties have periodically submitted status reports.

ED, in an unprompted move, informed certain OCR employees in December 2025 that they were expected to return to work while the RIF cases were litigated. The notice sent to employees highlighted the importance of utilizing OCR staff in handling OCR’s existing complaints.