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The Final RISE rule has been set aside and stayed as to the Department’s extra-statutory requirements for a “professional degree” designation. The statutory loan limits remain and took effect July 1, with the Department determining whether a program meets the “professional degree” definition based on the three-part statutory test only.  The Department has released a list of programs that do meet the three-part test, and a list of programs that do not meet the three-part test. Update to List of Professional Degree Programs Due to Court Order (Updated July 10, 2026) | Knowledge Center. Many programs are not on either list, remaining in purgatory.

The cases presented strong textual arguments, and it is no surprise that the District Court for the District of Columbia stayed the Department’s extra-statutory requirements for a “professional degree.” Note, however, that even with this ruling, the government likely has an immediate right to appeal,[1] and may seek a stay of the ruling from the circuit court. All of these cases could create an eventual circuit split, creating a path for the Supreme Court to resolve the issues. 

In the meantime, the decision leaves the determination of whether a program meets the three-part test in the hands of the Department. The Department, in the Final Rule’s preamble, has already decided whether certain programs meet the three-part test, and it included those programs on the list of professional degrees in its updated guidance. If the Department concluded in the preamble that programs did not meet the three-part test, but used extra-statutory reasons in reaching that conclusion, then those programs may want to seek clarification from the Department. If the Department determines that programs do not meet the three-part test, then institutions with those programs may wish to consider legal options to challenge that determination.  

It also remains uncertain what would happen if an appeals court disagrees with the District of Columbia District Court, possibly leaving some students beginning their programs with the belief that it meets the higher loan limits, only to discover later that it does not. If you have questions about a program’s status or what to disclose to students, we would be happy to assist your institution.  

[1] See 28 U.S.C. § 1292(a)(1) (granting immediate right to appeal from an injunction); Make the Road New York v. Noem, 2025 WL 3563313, at *8 (D.C. Cir. Nov. 22, 2025) (holding that 28 U.S.C. § 1292(a)(1) and its immediate right to an appeal likely applies to a stay entered under 5 U.S.C. § 705). 

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). On May 27, 2026, the Eleventh Circuit dismissed the appeal as moot and vacated the district court’s order denying a preliminary injunction. In accordance with the Eleventh Circuit’s order, Defendants filed a notice of voluntary dismissal on May 29, 2026.

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.

On June 30, 2026, the U.S. Supreme Court issued a single, consolidated opinion resolving both cases. In a 6-3 decision, the Court rejected challenges brought under both Title IX and the Equal Protection Clause to Idaho’s and West Virginia’s laws limiting participation in girls’ and women’s school sports to biological females. The court upheld both laws and concluded that States may classify eligibility for girls’ and women’s school sports based on biological sex.

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. The Supreme Court held that the case was not moot and proceeded to decide the merits of the case.

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 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. While the Court has not ruled on the motion to dismiss, any constitutional claims are effectively foreclosed by Supreme Court’s in Little v. Hecox and B.P.J. v. West Virginia.

The cases have significant implications for transgender students across the country and the interpretation of antidiscrimination laws, with lower courts bound by the Supreme Court’s holding regarding the interpretation of Title IX and the Equal Protection Clause.

On May 18, 2026, the Supreme Court granted review of Crowther v. Board of Regents of the University System of Georgia, in which the Eleventh Circuit Court of Appeals ruled that Title IX does not contain an implied private cause of action for sex discrimination for employees of federally funded educational institutions. A private right of action allows individuals to sue in court to enforce a federal statute. Following Cannon v. University of Chicago, 441 U.S. 677 (1979), the Supreme Court recognized that students could bring an implied private right of action under Title IX even though the statute did not expressly authorize private lawsuits. The Court reasoned that Congress intended Title IX to protect individuals from sex discrimination in federally funded educational programs, and that allowing private lawsuits was consistent with the statute’s purpose and legislative history.

The Eleventh Circuit’s decision highlights a circuit split on the question of whether Title VII preempts Title IX employment claims. The Eleventh Circuit now joins the Fifth and Seventh Circuits, holding that Title VII preempts Title IX. In contrast, the First, Second, Third, and Fourth Circuits have held that Title IX provides a private cause of action for employees of federally funded educational institutions.

The consequences of the Supreme Court’s potential ruling are significant. Title IX enables plaintiffs to immediately access judicial review and circumvent Title VII’s detailed, multi-step procedure through which the Equal Employment Opportunity Commission otherwise administratively enforces the prohibition on workplace discrimination and retaliation. A ruling that upholds the Eleventh Circuit’s decision could potentially stand in contrast to Jackson v. Birmingham Board of Education, 544 U.S. 167 (2005), where the Supreme Court held that Title IX provides a private right of action to employees for retaliation claims.

The ruling in Crowther narrows how Title IX operates for employees in the Eleventh Circuit. In Crowther, the Court emphasized that recognizing a Title IX employment remedy would create overlapping and inconsistent enforcement schemes with Title VII, which already provides employees a right of action for asserting sex discrimination claims. This underscores that Crowther’s reasoning functions as a boundary-setting doctrine, rather than a rollback of Title IX as a whole. This could ultimately lead the Court to cabin the ruling in Jackson to retaliation claims tied to student protection, creating a sharper boundary between Title VII and Title IX.

The Little v. Hecox and B.P.J. v. West Virginia decision signals that the Supreme Court will review Title IX and Equal Protection challenges based on biological sex. For now, that means states may ban transgender athletes from participation in biological girls’ and women’s school sports. Whether the administration can force states to ban transgender athletes is still an open issue that will be determined in cases pending in California and Connecticut. That said, it appears the Supreme Court could allow a national ban based on the B.P.J. holding.   

As far as extending the Eleventh Circuit’s decision in Crowther to students, Cannon is still controlling precedent. However, more than 20 years after it was decided, the Supreme Court in Alexander v. Sandoval, 532 U.S. 275 (2001) narrowed the test to imply a private cause of action by focusing only on the text of the statute. In light of Alexander, it is possible—though unlikely—that the Supreme Court may revisit Cannon in the future, which allows students to sustain a private right of action under Title IX. 

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, 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 BDR applications filed 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 those schools appealed the settlement approval, but the Ninth Circuit dismissed their appeal. One school unsuccessfully petitioned the Supreme Court for a writ of certiorari. No. 25-492 (U.S.).

In November 2025, ED moved the district court for an 18-month extension of its January 28, 2026 deadline to adjudicate approximately 250,000 pending post-class applications. ED explained that it did not anticipate such a high volume of applications and that it could not process them all by its deadline. In December 2025, the court largely denied the extension request, 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 January 28, 2026, but extended the deadline for all other applications to April 15, 2026.

On January 22, 2026, ED filed a motion to reconsider, which the court denied on February 24, 2026, noting “[ED] waited until the eleventh hour … to seek the relief now requested.” ED appealed and also moved for an emergency stay. The Ninth Circuit denied the stay on March 27, 2026. The parties have since briefed the merits of the appeal. (opening brief; response; reply). On July 17, 2026, the Ninth Circuit denied ED’s appeal.

In 2019, ED published the 2019 BDR Rule, effective July 1, 2020. Among other things, the 2019 BDR Rule revised standards under the 2016 BDR Rule for the assertion and resolution of borrower defense claims. It 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 its limitations period was procedurally invalid because it was not a “logical outgrowth” of the proposed rule that preceded it, in violation of 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, and vacated the limitations provision. NYLAG appealed to the Second Circuit.

In September 2025, ED asked the Second Circuit to dismiss NYLAG’s appeal, arguing it was “moot” in light of 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 shielded the 2019 BDR Rule from APA claims since it had been “codified” and incorporated by reference into law. NYLAG, 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 remained a “live controversy.”

On May 20, 2026, the Second Circuit ruled in favor of ED, agreeing that NYLAG’s appeal of the district court’s judgment rejecting its APA arbitrary-and-capricious claims was “moot,” because Congress in OBBB had “restored” the 2019 BDR Rule. It explained that APA review only authorizes “courts to review agency action … not statutes themselves,” and that “by implementing and restoring the 2019 Rule through the Act, Congress immunized the 2019 Rule from a challenge by NYLAG of the 2019 Rule as arbitrary and capricious under the APA.” Further, the Second Circuit vacated the district court’s amended judgment in which it had severed and vacated the three-year limitations period in the 2019 BDR Rule; the court explained that OBBB “restored the 2019 Rule, as it was on July 1, 2020, including the three-year limitations period that the district court vacated.” In sum, the Second Circuit stated: “As the 2019 Rule is now a part of a codified statute, it is beyond the scope of our judicial review under the APA, and we therefore conclude that this appeal is moot.” The Second Circuit vacated the district court’s judgment, remanded the case to the district court with “instructions to dismiss the case as moot.” Because NYLAG did not petition for rehearing, the district court formally dismissed the case on July 17, 2026.   

In 2022, ED published the BDR Rule, which became effective July 1, 2023. The 2022 BDR Rule created a new borrower-defense adjudication system and established new closed-school loan discharge provisions.

In 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 nationwide.

In October 2024, ED petitioned the Supreme Court to review the injunction, which the Supreme Court agreed to hear in part. After OBBB’s enactment, however, the parties jointly requested to dismiss the petition. OBBB delayed provisions in the 2022 BDR Rule that CCST challenged, providing they “shall not be in effect” for loans originating before July 1, 2035. Thus, ED’s petition to the Supreme Court no longer presented a time-sensitive question.

But the 2022 BDR Rule litigation is not over. In March 2026, CCST (joined by co-plaintiff Career Education Colleges and Universities), filed a First Amended Complaint renewing its challenge to the 2022 BDR Rule’s provisions, asking the district court to declare them unlawful, such that they would not become effective in 2035. Importantly, plaintiffs also challenged provisions in the 2019 BDR Rule that OBBB “restored and revived.” Plaintiffs claimed these provisions “suffer from many of the same defects” as the 2022 BDR Rule. ED moved to dismiss the First Amended Complaint in May 2026. As it did in NYLAG, ED argued that the 2019 BDR Rule was “codified” into law by OBBB, and thus was immune from attack. As for the 2022 BDR Rule, ED argued that plaintiffs’ claims were premature because it would not be enforced, if at all, until 2035. Plaintiffs filed their opposition brief on July 6, 2026. Among other things, Plaintiffs argued that the Second Circuit’s ruling in NYLAG “carries no precedential weight.”

For now, BDR applications are not being adjudicated by ED under the 2022 BDR Rule, as its provisions remain both enjoined by the Fifth Circuit and delayed by OBBB until 2035. Earlier BDR rules (1994, 2016, and 2019) remain in effect. The Second Circuit has now ruled that because it was codified into law by OBBB, the 2019 BDR Rule enjoys the status of a federal statute, immunizing it from APA claims.This same question – whether the 2019 BDR Rule was in fact codified into law by OBBB – is the subject of the pending litigation in federal district court in Texas. Although the Second Circuit ruling is not binding on the Texas court, and the Plaintiffs have argued that point, the likelihood that the Texas court will take a different position seems unlikely. For the time being, the Second Circuit ruling means the 2019 BDR Rule – including the three-year limitations period – is in place. 

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.” These applications that ED has resumed adjudicating “fall under” the 1994 and 2016 BDR Rules.

ED’s Electronic Announcement further stated that “when ED begins notifying institutions of cases that fall under the 2019 [BDR Rule], we will issue a future announcement with additional details around the notification and adjudication process.”

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.

Those 2025 DEI Executive Orders remain in effect as to the Department of Education following the Fourth Circuit’s decision in National Assoc. of Diversity Officers in Higher Education, No. 25-1189 (4^th Cir.) There are additional challenges pending in the Seventh and Ninth Circuits. 

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.” 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 Court has set a zoom conference for July 24, 2026 for Plaintiffs’ motion for preliminary injunction and Defendants’ motion to dismiss. 

On June 10, 2026, 19 states plus D.C. filed a second lawsuit challenging agencies’ implementation of the 2026 DEI Executive Order.  See State of Maryland, et al. v. Pete Hegseth, et al., cv-26-2322 (D. Md.) That lawsuit names as defendants numerous federal agencies and their heads, including the Department of Education and Secretary Linda McMahon, and challenges defendants’ implementation of the 2026 DEI Executive Order. Plaintiffs request as relief a preliminary and permanent injunction against all defendants preventing implementation of the challenged actions with respect to Plaintiffs only. No motion for preliminary injunction has yet been filed.   

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.   

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.

On July 21, 2026, the U.S. Department of Education’s Office for Civil Rights (OCR) announced Title VI investigations into five medical schools’ admissions practices, alleging the schools may have engaged in racial discrimination in violation of Title VI of the Civil Rights Act of 1964. The five schools named are Geisel School of Medicine at Dartmouth, Brody School of Medicine at East Carolina University, Saint Louis University School of Medicine, Western University of Health Sciences, and William Carey University College of Osteopathic Medicine.  

These investigations follow related enforcement by DOJ and HHS’s Office for Civil Rights against higher education institutions, consistent with the Administration’s broader push to eliminate race-based admissions. Notably, DOJ separately announced on June 4, 2026 that it was investigating 15 medical schools after concluding that UCLA and Yale had “illegally used race” in medical school admissions.

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 v. Hispanic Scholarship Fund, 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. 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. Plaintiff filed an amended complaint on June 3, 2026, seeking, inter alia, a declaratory judgment that the CBC Spouses Education Scholarship violates 42 U.S.C. § 1981 and a preliminary injunction that bars the Foundation from closing the application window or selecting winners. Plaintiff has not yet filed a motion for preliminary injunction but Defendants have filed a motion to dismiss. 

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. After an order dismissing the organization’s claims against the UC medical schools, the case continues to be litigated as to the nine undergraduate UC campuses and five law schools.

SFFA has filed a similar lawsuit alleging an unlawful race-based admissions process at the David Geffen School of Medicine at UCLA. See Do No Harm, et al. v. David Geffen School of Medicine at UCLA, 2:25-cv-04131 (C.D. Cal.). Plaintiffs seek a class action certification in that case on behalf of all individuals who applied to the school, do not identify as black, and were denied admission. In addition to a permanent injunction prohibiting the school from considering race when making admissions decisions, Plaintiffs seek “the appointment of a monitor to oversee all decisions relating to admissions at Geffen, to ensure compliance with federal law.” It also ups the ante in the relief sought, seeking “punitive damages . . . to . . . the class from the individual defendants in their personal capacities.” Gene Block, the former Chancellor of UCLA, and Jennifer Lucero, the Associate Dean of Admissions at UCLA Medical School, are defendants sued in their personal capacities. The United States of America has intervened as a plaintiff-intervenor, also requesting the monitor for admissions decisions requested by Plaintiffs.

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 2025 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 July 29, 2025 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 remains in place for now.      

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 (including multiple investigations already initiated into possible race-based admissions at several medical schools) 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—which allows private individuals to sue on behalf of the government—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.), the district court issued a 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, after the government declined to intervene, a jury found for the whistleblowers, awarding $1.64 billion (including treble damages) on FCA and Anti-Kickback Statute claims. 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., No. 2:24-cv-05214 (C.D. Cal.), two former executives allege the defendant institutions falsely certified compliance with gainful employment and incentive compensation requirements. The government declined to intervene, and the complaint was recently unsealed. Because the government has not intervened, this case presents a potential vehicle for a qui tam constitutional challenge if defendants 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.

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

In Penelow, briefing is complete and the Court’s review is underway. DOJ filed an intervenor/amicus brief defending the qui tam provision’s constitutionality, and after oral argument the case was referred to mediation.

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’ request to file a third amended complaint is set for a hearing on July 24, 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’ request to file a third amended complaint is set for a hearing on July 24, 2026.

In Taylor, briefing is complete and the Court’s review is underway. DOJ filed an intervenor/amicus brief defending the provision’s constitutionality.

In In re TriHealth, Inc., et al., the Sixth Circuit denied defendants’ petitions for permission to appeal, holding 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. The court emphasized that published panel decisions remain controlling unless overturned en banc, and declined to revisit the issue at this stage.

If other circuits split with the Sixth Circuit and find the qui tam provision unconstitutional, FCA whistleblower claims could be foreclosed entirely or, more narrowly, limited to cases where the government intervenes — a result with significant implications for higher education, where FCA suits are common, and one that could prompt a legislative response given the federal revenue these suits generate.

On May 19, 2025, the Deputy Attorney General announced the DOJ’s Civil Rights Fraud Initiative, co-led by the Civil Division’s Fraud Section and the Civil Rights Division, aimed at using the FCA to pursue entities that “defraud the United States by taking its money while knowingly violating civil rights laws.” The initiative exposes universities, corporations, and nonprofits to potential civil and criminal liability and actively encourages qui tam filings.

Senior DOJ officials have since confirmed that cases premised on noncompliance with anti-discrimination laws—particularly where compliance is certified as a condition of federal funding—will receive expedited priority. While DEI programs alone do not create FCA exposure, DOJ has signaled it will pursue systemic discrimination theories, such as preferential hiring/training, demographic-based targets, or compensation tied to protected characteristics, that render compliance certifications false. Whistleblowers, supplemented by data analytics, remain DOJ’s primary enforcement tool.

The initiative’s first public resolution illustrates this approach: in April 2026, DOJ announced that IBM agreed to pay approximately $17 million to resolve allegations that its DEI practices—including demographic hiring targets, “diverse slate” requirements, and diversity-linked incentive compensation—rendered its federal contract compliance certifications false. The settlement (without an admission of liability) is the first FCA resolution premised on DEI-related civil rights violations and signals that DOJ will take an expansive view of “noncompliance,” reaching internal employment practices, not just express misrepresentations or exclusionary conduct.

Pending constitutional challenges could substantially narrow—or even eliminate—whistleblower-led FCA litigation absent government intervention, even as DOJ simultaneously defends the statute and expands enforcement, particularly around DEI practices and foreign government funding to institutions. Institutions should monitor these appellate outcomes and potential legislative responses closely.

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. 4:24-cv-00259 (N.D. Tex.), No. 25-11303 (5th Cir.). Plaintiffs in both cases argued the GE Rule was unlawful because the “gainful employment” language in the HEA does not contemplate ED using debt and earnings metrics or an earnings premium test. 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 was filed on May 27, 2026, and the plaintiffs filed their reply brief on June 17, 2026. The plaintiffs’ reply highlighted inconsistencies between ED’s current and prior positions, its arguments and the controlling statutes, and its defense of the debt-to-income test despite being abandoned in the new Accountability Framework. The plaintiffs also continued focusing on how the GE Rule improperly seeks to hold institutions accountable for situations that are outside of their control.

Although plaintiffs are appealing the court’s ruling to the Fifth Circuit, the GE Rule remains intact nationwide insofar as it remains on the book in the Accountability Framework 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.

Moreover, and significantly, Congress in OBBB established a new Accountability Framework resembling parts of the existing GE Rule but applying it more broadly to cover undergraduate degree programs, and graduate and professional degree and graduate certificate programs that participate in Title IV direct loans. Among other things, the Accountability Framework includes an earnings premium test that covered programs must meet to retain Title IV direct loan access. Notably, the Accountability Framework in OBBB does not by its terms apply to undergraduate certificate programs. The Department of Education publish a final rule implementing the new Accountability Framework this summer, and that final rule is likely to face legal challenges of its own. See Thompson Coburn’s materials on the 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”). The plaintiffs in AACTE have since dismissed the case.

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. ED filed its consolidated motion for summary judgment and opposition to the plaintiffs’ motion for summary judgment on June 1, 2026.

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 (2d 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. Harvard filed its opposition brief on July 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. The plaintiffs filed their motion for summary judgment on July 15, 2026, and the defendants motion for summary judgment is due on August 11, 2026.

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 a deadline to file motions to compel discovery of August 28, 2026. 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. 2:25-cv-1228  (W.D. Wash. 2025), No. 26-510 (9th Cir.); Washington v. Dep’t of Educ., No. 2:26-cv-2409 (W.D. Wash. 2026); 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 held oral argument on the motion to enforce the preliminary injunction on April 22, 2026, and denied the motion to enforce without prejudice on May 21, 2026. On June 10, 2026, ED filed a motion to clarify the injunction with respect to whether ED is permitted to terminate the grants in question. A hearing regarding the motion to clarify is scheduled for July 24, 2026.

On July 10, 2026, Washington, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, New Mexico, New York, Oregon, Rhode Island, and Wisconsin filed a second case seeking to enjoin ED from issuing notices of termination.

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. COE filed a motion to enforce the injunction in June after ED issued a number of termination decisions rather than decisions regarding continuation as the Court ordered. The Court held a hearing regarding the motion to enforce on July 14, 2026.

The wave of grant litigation in 2025 has continued into 2026, although the frequency of new cases has slowed. Appellate courts have 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 Court of Federal Claims has jurisdiction to decide the claims. The Administration certainly enjoyed major successes last year 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 Court of Federal Claims. 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 it would revoke Harvard University’s SEVP certification, which gives them the ability to sponsor F and J visas for international students. DHS claimed Harvard had failed to comply with an April 16 demand for records on international students, including disciplinary, legal, and academic information.

Harvard sued the next day and obtained a same-day 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 suspending entry for Harvard-affiliated F and J visa holders. Harvard amended its Complaint and secured a second TRO on June 5 preserving the status quo of both the certification and revocation and the Proclamation 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.”

On June 20, following a June 16 hearing, the district court granted Harvard a preliminary injunction, enjoining enforcement of the May 22 revocation and requiring defendants to restore all affected Harvard international students and applicants to their prior status.

On June 27, the government appealed the Court’s preliminary injunction order (Appeal No. 25-1627, 1st Cir.), and 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.

Separately, on July 16, 2026, DHS published a final rule, effective September 15, 2026, eliminating the decades-old “duration of status” policy for F, J, and I nonimmigrants in favor of a fixed period of admission, which DHS Secretary Markwayne Mullin described as necessary to curb visa fraud and enable more regular vetting—underscoring the administration’s continued regulatory focus on SEVP even as the Harvard litigation proceeds.

Oral argument is scheduled for October 6, 2026.

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 administration’s July 2026 final rule targeting foreign student visas further signals that visa issuance and SEVP oversight will remain areas of significant regulatory emphasis, and institutions should monitor both the Harvard appeal and this new rule closely.

For institutions specifically, the final rule shifts significant administrative burden away from designated school officials and back to the federal government, while narrowing the flexibility students and institutions have historically relied on. Beginning September 15, 2026, F and J nonimmigrants will generally be admitted only for the length of their program, up to a four-year maximum, rather than for the duration of their status, and students needing additional time will have to file for a formal Extension of Stay directly with USCIS, subjecting them to biometric vetting, background checks, and fraud screening that were previously handled at the institutional level. The rule also shortens the post-completion departure grace period from 60 to 30 days and imposes new restrictions on changing programs or transferring schools, particularly during a student’s first year. Institutions should expect higher compliance costs, increased demands on international student and designated school official (DSO) offices, and a greater need to track Form I-94 expiration dates and counsel students proactively on Extension of Stay deadlines to avoid unlawful presence issues.

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 judgment 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. ED filed its reply to the Motion to dismiss or in the alternative for summary judgment on April 27, 2026. The Court held a hearing on all pending motions on June 3, 2026.

On June 30, 2026, the district court held that the ED’S final rule governing eligibility for the Public Service Loan Forgiveness program was unlawful and set it aside under the Administrative Procedure Act. The district court concluded that ED had exceeded its statutory authority, acted arbitrarily and capriciously, and imposed restrictions that violated the First Amendment.

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 was held on April 28, 2026. On June 25, 2026, ED filed a supplemental brief for lack of subject matter jurisdiction.

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.

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.

The Plaintiffs, in Kansas, filed a notice of a voluntary dismissal as their claims are now moot in light of the OBBB.

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.

“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 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 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. The court denied that motion on May 8, 2026.

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 case was transferred to the District of Massachusetts on June 22, 2026 where it was assigned No. 1:26-cv-12838-MJJ (D. Mass.). The parties intend to ask the Massachusetts court to consolidate this case with the Victims Rights Law Center case.

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.

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.

Following the 2025 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 2025 DEI Executive Orders, the 2026 DEI Executive Order, enforcement actions, and continued broad interpretation of the SFFA decision. 

Status

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

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.     

Overview

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.

Status

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.