Inside Year One: Education Developments Under a New Administration

Federal education policy underwent significant changes in 2025, driven primarily by executive action and litigation rather than legislation. Executive Orders (EOs), restructuring of the Department of Education (ED), new regulations, and enforcement actions have created a complex compliance environment for institutions. With the ED operational reorganization underway, institutions must navigate an expanded field of regulators and stakeholders in the higher education landscape.

Organizational changes began with a March EO directing the Secretary of Education to initiate the process of closing the ED and transferring authority over education to states and local communities. Secretary McMahon subsequently worked to transition the ED’s operational functions. By November, agreements had been executed transferring core ED responsibilities to other agencies. Educational institutions now interface with the Department of Labor on elementary and secondary education matters, the Department of the Interior on Native American education, the Department of State on international education and foreign language programs, and the Department of Health and Human Services for on-campus childcare support programs. These reassignments represent a fundamental shift in the administrative structure governing education. Secretary McMahon has been very public about her views that these re-assignment efforts are an essential piece of the ED’s final mission.

Beyond organizational changes, recent policy developments have impacted institutions’ internal policies and student relations. Two January 2025 EOs altered the compliance landscape under the Civil Rights Act.

The first EO established a federal policy recognizing two biological sexes: male and female, and directed agencies to rescind contradictory guidance, with immediate implications for Title IX interpretation. This change has bearing on ongoing legal proceedings, as the Supreme Court is scheduled to hear Little v. Hecox and West Virginia v. B.P.J. on its January 2026 docket. These cases examine state laws restricting transgender female participation in women’s college track and girls’ middle school sports teams, respectively. In the West Virginia case, the appellate court found the law violated Title IX, meaning the Supreme Court’s decision will shape how the statute is interpreted and applied going forward.

The second January 2025 EO directed agencies to address what the order characterizes as discrimination and race-based preferences, affecting Title VI enforcement in education. The EO made receipt of federal funds contingent on certification that recipients do not operate programs promoting DEI, with false certification potentially resulting in contract cancellation, rescinded funds, and treble damages. Concurrently, the Administration ramped up enforcement efforts to remedy alleged existing civil rights violations at colleges and universities

Meanwhile, enforcement efforts to address alleged civil rights violations have intensified. Multiple federal agency investigations into alleged violations of federal anti-discrimination laws at Columbia University resulted in a three-year, $200 million settlement between the university and the federal government. Columbia will also pay an additional $21 million to settle investigations brought by the U.S. Equal Employment Opportunity Commission. The settlement agreements restored most of the school’s previously awarded federal grants, which had been terminated or paused during the investigation, and will allow Columbia to access current and future grant funds. As part of the settlement, Columbia agreed to: (1) review its portfolio of Middle East-focused programs; (2) appoint new faculty with joint positions in the Institute for Israel and Jewish Studies and economics, political science, and SIPA; (3) add an administrator to serve as a liaison to students concerning antisemitism issues and support Jewish student wellbeing; (4) discontinue programs that promote efforts to achieve race-based outcomes, quotas, diversity targets, or similar efforts; and (5) maintain merit-based admissions policies.

When faced with similar federal funding freezes and investigations, Harvard University chose to litigate, challenging the government’s actions as unlawful. The U.S. District Court for the District of Massachusetts agreed, granting Harvard summary judgment on constitutional grounds in early September. The government has appealed, subjecting the matter to additional judicial review. The outcome will determine whether federal funding freezes remain available to the government as an enforcement mechanism or whether alternative approaches will be necessary.

Students face evolving considerations regarding financing post-secondary education due to changes in federal financial aid policy. A March EO modified the Public Service Loan Forgiveness (PSLF) Program to ensure that the definition of “public service” excludes organizations that engage in activities with a “substantial illegal purpose.” The order specifically identifies as examples: (1) illegal discrimination; (2) surgical castration of children; (3) violations of federal immigration laws; and, (4) violations of state tort laws such as trespassing, disorderly conduct, public nuisance, vandalism, and obstruction of highways.

The ED promulgated final rules implementing this order at the end of October. Questions remain about how these definitions apply to various organizations, such as those which resettle immigrants under Biden-era policies or advocate for transgender youth. Students utilizing the PSLF program must consider whether their prospective employers will qualify under the modified criteria.

Additionally, the OBBBA affects federal loan availability for certain programs. Its passage prompted draft regulations from the ED establishing loan caps for graduate degrees and redefining “professional degrees” to exclude nursing, public health, and accounting, among others. This may affect enrollment in programs no longer classified as professional degrees if students cannot secure alternative funding sources, creating pressure on private funders and institutional scholarships.

Educational institutions face a complex compliance environment as they move into 2026. Policy changes, along with shifting regulatory and enforcement approaches, have led some entities to enter settlements while others have undertaken litigation. Students must confront financing decisions with modified options for public loans and loan forgiveness. As the ED continues to transfer its operational functions, institutions must engage with an evolving array of regulatory bodies. With federal funding now contingent on certification regarding DEI programming, federal grant recipients must evaluate their programs and compliance obligations. Educational institutions must carefully navigate the numerous changes in federal education policy implemented in 2025 and anticipate continued developments in 2026.