Jon Fansmith: Hello everyone, and welcome to the June 26th episode of dotEDU Live. I am Jon Fansmith, senior vice president for Government Relations here at ACE. We’re going to talk about a bunch of things today, but especially reconciliation, which is blowing up as we join you, but also international students, what’s happening on the legal front. There’s probably a few other things we’ll sneak in there as well because, as usual, a whole lot’s happening and a lot of it’s of real meaning and importance to higher education. But before we jump into all that, Sarah and Mushtaq, great to see you guys.
Sarah Spreitzer: Hey, everybody surviving the heat?
Mushtaq Gunja: I just got back from Phoenix where it was 112 every day that I was there, and so the merely 98 degrees with high humidity here in DC feels... no, it feels terrible. I was going to say it feels better.
Jon Fansmith: It’s a dry heat though out there, right? Isn’t that what you’re supposed to say?
Sarah Spreitzer: Oh yeah, a dry heat, that’s going to make it so much better.
Mushtaq Gunja: You have a jacket on. I’m impressed. Not easy to do in this heat.
Jon Fansmith: Well, we do have mostly functional air conditioning in this building, so that helps.
Mushtaq Gunja: All right, friends, I’m going to moderate this as I typically do. Thank you for the almost, well, for the hundreds of you who have joined us on this live podcast. Thank you for those of you sent questions in advance. We use those to be able to help create an outline for this discussion. Please, as you’re listening to this podcast, please put questions in the Q&A. We will be monitoring the chat as well, but Q&A is a wonderful place to be able to get some of those questions answered. As Jon said, three big topics today. I want to spend quite a bit of time talking about reconciliation and what is happening in that process.
Second, as always, Sarah, there seem to be ongoing developments in the world of international students, and then there’s no shortage of developments on the lawsuit side too. So maybe we can dive into all three of those and maybe start with reconciliation.
And Jon, I’m going to turn to you first. So the last time we were all together, I noted for the audience that you were as depressed as I had ever seen you with the developments of the House bill on reconciliation. So first remind us what is reconciliation? Where are we in the process? And then tell me why you have every once in a while a little bit more of a smile on your face than you did two weeks ago.
Jon Fansmith: First of all, thank you, Mushtaq, for being so attentive to my emotional health. I will guarantee you Sarah does not fill that role, so it’s much appreciated. Reconciliation, for those of you who are just checking in on this now, it’s a process Congress uses to pass bills that are intended to address budgetary issues. And the main importance of it is that it allows you to pass a bill in both chambers with a simple majority vote, so it gets you past the Senate filibuster. It gets used a lot. The pattern of late has been a new president’s first term is one-party control and they do lots of big, complicated, and often very partisan legislative packages in reconciliation at the start of the new administration. We’re repeating that pattern again here. The current bill started in the House. It is a multi-trillion dollar package primarily of extensions of existing tax cuts as well as new tax cuts.
A whole lot of other things thrown in there, including changes to Medicaid and, particularly important for higher ed, a large range of higher ed changes. When last we met, which seems like forever ago to be talking about where we stood then and where we stand now, the Senate had essentially indicated they would take up what the House did, and that was a problem. The House bill was incredibly bad for higher education. It would make changes to Pell eligibility that would kick hundreds of thousands of students out of Pell, cost millions more, the majority of Pell recipients, a significant chunk of their aid. It would get rid of subsidized undergraduate loans. It would do a lot of things including a massive endowment tax expansion up to rates as high as 21%, all of which we’re strongly opposed to.
And part of the reason you see a smile on my face every once in a while, Mushtaq, is because we’ve been asking our community to turn out and raise those concerns, and you all really did because the Senate heard about the concerns the higher education community has. And when they introduced their version of the bill, things were markedly better. Now to be clear, we don’t want them doing a lot of what they’re doing in reconciliation. We are not supportive of this bill moving forward, but the Senate bill moved what the House had proposed into a far, far better place. The Pell changes were scrapped. The money for Pell shortfall is included. The workforce Pell for Pell eligibility for short-term programs, that remained in the bill. Subsidized Stafford Loans returned, so students would still get those. The loan changes were better in a number of ways. The endowment tax rates were significantly lower than what was in the House provision. Just really across the board, this is a much better bill, with the one exception of Medicaid. The Senate actually went farther than the House had on Medicaid, but even that, as we sit here right now, is very much in doubt and it’s worth mentioning.
It is Thursday afternoon, at least on the East Coast. The plan for the Senate was to move their bill starting tomorrow. We are still, or not we, but everyone I guess, but particularly the Senate is getting rulings from the parliamentarian... As we are meeting, those are coming in, and I just mentioned one of the biggest ones was large portions of the Medicaid changes we’re ruled ineligible under the Byrd Rule. Not exactly sure at this point the details of that other than they have been identified as nine-figure savings that would be identified. We’ve also seen, particularly for our area, the inclusion of workforce Pell was ruled to be subject to a Byrd Rule order as well as changes to the loan programs.
Mushtaq Gunja: Let me interrupt you just for a quick second. For those of us who don’t know what the Byrd Rule is and why we are talking about the Senate parliamentarian, would you explain?
Jon Fansmith: Sure. So I started off by saying that reconciliation exists to make budgetary changes. It was created essentially to help Congress make the politically difficult decision of cutting spending in areas, especially around entitlements, with this idea that it’s really hard to get all of Congress to agree at those higher levels of votes to do stuff, but because it gives them enormous power, this ability to bypass the filibuster, it was always intended to be limited in how it could be used. And so a number of provisions are in place around how it works that are different than regular legislative order. One of those is this Byrd Rule idea. It’s named for former Senator Bobby Byrd, who was really the author of this provision, and it’s both complicated and simple. Essentially the idea is that you can only put things forward that are germane to the idea of increasing revenues or reducing spending and significant impacts to the federal budget. If these are primarily policy positions, just because they might save money or generate money, that doesn’t necessarily mean they are appropriate for reconciliation.
Now drawing that line is really hard. Is it mostly about policy or is it mostly about savings? And the process the Senate has is there is currently a woman who works as the Senate parliamentarian, and her job is to interpret every one of the provisions that’s put forward in reconciliation, at least the ones that are challenged, and make a determination as to whether they conform with the Byrd Rules. She and her predecessors rely heavily on precedent where other parliamentarians have ruled, but a lot of it is their own interpretation, and so it’s subject to second guessing and criticism. It also makes it really hard going in to say we know with great certainty what will be appropriate, what won’t be appropriate. Other thing to keep in mind is that only applies in the Senate. The House passed lots of stuff that they knew would never pass the Byrd Rule but was helpful within their chamber to move it. The parliamentarian’s decisions are fundamentally, and this is always the pattern, sort of at the last minute reshaping what this bill looks like.
Sarah Spreitzer: So Jon, the example I always think of with the parliamentarian is that when they passed the Inflationary Reduction Act under reconciliation during the Biden administration, there was an attempt to move Deferred Action for Childhood Arrivals because they argued that it would end up saving money. And the parliamentarian ruled that it didn’t have the type of budgetary impact that would make it allowable to move on a reconciliation bill. And I am not sure if you mentioned this, but the reason that they really like reconciliation is you only need 50 votes in the Senate. For most bills you need 60 votes. And so when you have these very thin majorities like the Republicans in the House and the Senate, this is how you get big pieces of legislation passed.
Jon Fansmith: Yep, and it’s worth clarifying too because I mentioned this, that a couple of the provisions we’ve been following, including the workforce Pell provision that we’re supportive of actually seeing passed in reconciliation, were found to have been in violation of the Byrd Rule. That does not necessarily mean those provisions will not be in the final bill. What it means is they can’t move under a simple vote of a simple majority. So you can, and we will see this when the Senate eventually gets to bringing the bill to the floor, certain provisions that the parliamentarian has said are not in order for reconciliation, the Senate can hold a vote and if 60 senators, essentially at the filibuster level, rule that, “Yes, we want to include that,” then there is the possibility of those being included. Essentially what it’s saying is they don’t get the special reconciliation protections because they’re not under reconciliation, but they can still be moved in a final bill so long as a vote that conforms to the general voting practices of the Senate is held.
And workforce Pell is one where at least the ruling was very recent, within the last day. There has been strong bipartisan support for that concept. So there may be a possibility where you could see a bipartisan effort to include that even as you see Democrats voting to strike down other provisions that they’re opposed to.
Mushtaq Gunja: Do they do that on a vote-by-vote basis, on an issue-by-issue basis, they take up the issue and then see if they’ve got 60 votes? Because that would take forever, no? If-
Jon Fansmith: Well, so they are time-limited, and maybe you were going to say this, Sarah, I don’t...
Sarah Spreitzer: No, I was just going to say the Senate has all these weird rules, and they do have to allow for a certain amount of time for debate. I think Jon’s going to talk about that.
Jon Fansmith: They do. There’s a couple of things that make reconciliation crazy, and part of it is this idea that it has to move under an expedited timeframe, so there’s 20 hours of debate are allowed. The one exception to that is that there’s a relatively unlimited amount of time in which amendments can be introduced, although the vote time comes out of the 20-hour total. So you get a process where there’s essentially a—reverse that, but there’s essentially a vote-a-rama where a number of amendments can be introduced and debated if done quickly and then wait to do a series of votes later. Normally what you see in this case is that this is where areas, either things where you require a 60-vote threshold to be included or things where certain members want an amendment to what the final text looks like and there’s agreement with leadership and a knowledge of enough support, that they’ll be included in that bill. So it’s even up until the final vote in the Senate, the bills are being modified.
Mushtaq Gunja: I want to come back to the process and what are we likely to see, but can I just dig in on a couple of quick questions about differences between the Senate bill and the House bill? So on the whole, I see smiles on your face every once in a while, Jon. Sarah’s always smiling, so she’s sort of hard to read.
Sarah Spreitzer: Because I don’t have to worry about reconciliation. That is why I am smiling, Mushtaq.
Mushtaq Gunja: Jon, there are a couple of things that the Senate did that I just want to make sure that the audience is aware on, and one is around loan limits, and there are differences in the House version and the Senate version on especially graduate loan limits. Would you talk a little bit about that?
Jon Fansmith: Sure. As they did in a couple other areas, the House introduced an incredibly complicated approach to trying to limit how much students could borrow through federal lending programs. And the House’s approach was essentially to say instead of setting a fixed aggregate and annual amount, what you can borrow in any given year is tied to what program and what level of credential you are studying for. So I always use the example of a BA in history, which is what I received as an undergrad. If you are taking a BA program in history, what you can borrow up to is the median cost of attendance for all BA in history programs across the country. Understandably, that’s a problem for 49.9% of students in BA programs in history across the country because they will not have their full cost of attendance available to them under borrowing. It’s also a problem because if you’re a financial aid officer and you are trying to package loans and everything else and every year those median numbers are shifting, it’s really hard to plan around that, especially across the possibly hundreds of programs you may be offering.
The Senate, and a part that we certainly preferred, basically modified the existing system, which is to say there’s a fixed amount you can borrow in a given year and there is a fixed amount you can borrow over the lifetime of you as a student. They also did not address undergraduate borrowing at all. They took that entirely out of their bill. They only focused on graduate borrowing, and what they essentially said was there’s two real levels of graduate borrowing. One is called graduate borrowing is the term they used, and they’re thinking there of master’s programs and other programs, basically three years or less of standard course time, and then professional programs, which would be more than three years of standard course time and setting different annual and aggregate limits.
These are generally reasonable, but we have some areas of concern with what those limits are, and I’ll start with the one that’s gotten the most attention recently, the professional level, which would include programs like dentistry programs, medical programs, veterinary programs, which tend to be very expensive programs for all the reasons you would expect, right?
You want doctors learning on the most up-to-date technology, doing a lot of very intensive training with specialized experts who have valuable skillsets. If the cap for the Senate put in place is $200,000 for those programs, that’s 50,000 higher than what the House had as a lifetime cap. It’s also below the average of a medical student in this country and what they need to borrow. These are expensive programs, and there will clearly be a gap if this is the final levels.
Current law says there’s an exception for health professions, essentially to address this idea that we don’t want everybody able to borrow up to what doctors need to borrow, but we want to make sure that low-income people can also afford to be doctors and they don’t have to rely on personal wealth or going into a private loan market that could be incredibly expensive or closed off to them if they don’t have good credit. So that’s one area that’s gotten a lot of attention. We are hopeful when we see final text there may be some like a health care exemption for that, but we’ll see.
The other area is around that graduate level where the annual limit is $20,500. That’s a significant amount of money to borrow for graduate programs, but currently you can borrow up to cost of attendance through grad PLUS. The Senate bill would get rid of grad PLUS entirely. It would eliminate the program. And $20,500 will certainly be sufficient for some master’s programs. It will not be sufficient for other master’s programs, and certainly students will face the same dilemma I just talked about with the professional level. If you are low-income student, if you have poor or no credit history, you will be forced into a private market that may not be available to you. You may not be able to afford that.
Add to that, there’s some caps on cumulative lifetime borrowing for the Parent PLUS program. The House caps it at 50,000; the Senate would cap it at 65,000. And you really begin to start to see an overlapping effect where low-income students, and particularly for Parent PLUS, we see disproportionate borrowing levels at HBCUs and other institutions that enroll larger percentages of students of color, who tend to have less family wealth to bring to the financing equation. And you have now lower caps on how much they can borrow through the federal loan program as a student, hard caps on the lifetime they can borrow as parents to support those students, and you start to see this combined effect that especially for low income students, the availability of credit starts to become a real issue for graduate education.
Mushtaq Gunja: Can you talk a little bit, Jon, and Sarah too, if you have thoughts, on the risk-sharing components? So the House bill had some very concerning risk-sharing language. The Senate’s shifted away from that to thinking about accountability in a different way. Do you want to just spend 90 seconds talking through at a high level what the Senate’s version of accountability looks like?
Sarah Spreitzer: I would just-
Jon Fansmith: I don’t know if I can do it in 90 seconds, but if you can, Sarah, go right ahead.
Sarah Spreitzer: I mean, probably not. I was just going to say I believe I predicted that risk-sharing was going to get kicked out by the Senate, so I don’t know if we had a bet or anything, but I win. No, I’m-
Jon Fansmith: Look, I made the same prediction.
Sarah Spreitzer: Oh, you made the same prediction. I mean, well, Jon, you talk about the Senate version.
Jon Fansmith: Okay, well first risk-sharing, what Sarah and I are talking about was the House’s accountability approach, and much like the loan caps, it was an incredibly complicated structure that involves making calculations on a program-by-program basis of cohorts of students based on their completion status and what amount of their loans they should have repaid at a certain period of time versus what they did actually repay, and then assessing a penalty to the institution on an annual basis based on that calculation. It is more complicated than even that makes it sound, but the numbers are probably more important. According to the committee, 90% of schools would have to pay a penalty. The amount of penalties would be about 1.8 billion annually schools would have to pay back to the government. The repayment requirements about when you’d find out how quickly you have to turn around and make that check payable to the government would throw institutional budgets into upheaval since there’d be no way to predict what your penalty would be. And then the penalties would accumulate over time; they would only grow. So a lot to dislike about this philosophically, structurally, operationally, a really, really problematic approach.
The Senate went in a very different direction again here, and what they said was, we want to look at accountability basically on the simple foundation that if you go do higher education, you should be able to make more than a comparable person who did not. And what they did was they looked at students in bachelor’s, associate’s, and certificate programs and compared their earnings after leaving the program to the average earnings of 25- to 34-year-old high school only graduates within their states, or maybe nationally depending on some factors. And then for graduate programs, comparing them to bachelor’s degree recipients in the state, same thing, the earnings window. And if your program’s outcomes in two out of three years do not exceed that for your comparison group, whether high school or bachelor’s students, then that program, not the institution, but that program loses access to Title IV aid, would only be able to come back into Title IV eligibility after at least two years away from that.
There are a lot of concerns we had about this approach. We’ve expressed some of those. We think some of them might be addressed. I will say I think the Senate is working with the right ideas in mind and with an openness to trying to improve their process. It’s been a much more, I think, reasonable process and approach than what we saw from the House’s approach. That said, I still have a lot of concerns. There are things that we know will be problems that aren’t intended consequences, and there’s a lot of stuff that we frankly don’t know, and we’re doing this in a very fast compressed timeframe without a lot of time to analyze this.
One of the things we looked at some of the data trying to model what the impact of this would be here at ACE, and our great research team did some pretty fantastic work on this and it reaffirmed something that is somewhat intuitive. If you look at the programs where you worry about them failing this test, they tend to be programs like social work or types of education short of being a teacher, lots of things in the health fields, short of being a nurse or a doctor, where states have licensure requirements. You need to get some level of graduate education to do this, but you’re going into a field that is not very well compensated, and that’s not the school’s fault; that’s society’s fault. We don’t pay social workers very well. And so you have this sort of clash of people who are entering a field in which we have high demand and high need, and there’s a huge social benefit and critical importance of people entering these fields, but they are not highly compensated. And so they know they’re going into this, their programs may be the best in the world, but that doesn’t mean they’re going to lead to high earnings outcomes.
And so you look at something like that and you say, “We do not want to implement policy that’s going to make it even harder to have counselors and social workers and teacher’s aides and medical and dental assistants and medical and dental data analysts and things like that.” That is something we could address if we were going through the more deliberative regular legislative process. Reconciliation doesn’t really allow us to do that. Senate staff are working to do a lot of things to improve their bill. They’re sincere about trying to do the right thing. It’s worth acknowledging that, but again, they’re working in a format that doesn’t lend itself to necessarily good policymaking.
Mushtaq Gunja: I want to come back to this timing question, how much time the Senate has to be able to improve on some of these more nitty-gritty questions. Just a second, but one more question about what’s in the Senate bill. We get this question a lot. What’s the state of the TRIO programs in the Senate bill?
Sarah Spreitzer: So I was going to point out, Mushtaq, and I see a lot of questions in the chat about some of these programs that are funded under the discretionary side of the budget. So those are all appropriated on an annual basis from Congress. This reconciliation bill is tied to extending President Trump’s tax package because that’s all on the mandatory budget side. So the mandatory budget side are things that the government has to pay out, that they’re mandated to pay out or take in, like taxes, Social Security, Medicaid, or for the purposes of the education programs, federal student loans, the Pell Grant, because it acts like a mandatory program, but programs like TRIO or the Title III, Title V programs, those are all in the annual appropriations process. And I think it starts to get very confusing for advocates because while we’re going through this reconciliation process and we’re dealing with these historic changes to these loan programs and to the Pell Grant program, we are also under attack by programs being terminated or defunded through the annual appropriations process.
Mushtaq Gunja: What comes next? So President Trump put a July 4th deadline on the table and it feels to me like Speaker Johnson, Majority Leader Thune are operating as if that’s a real thing and are trying to move this thing really quickly. What’s the timeline here, and then what? So the Senate has their version. The House has their version. It means I’m reading the articles on this. It feels like most of the disagreement, unfortunately, it’s not about these higher ed issues that I think they’re probably working out in the background potentially, but the big picture, top-line issues seem to be around clean energy and around Medicaid, of course the SALT deduction. And then the impacts the parliamentarian rulings are going to have on things like Medicaid and the top-line costs of this bill. What’s next? What happens here? Now the Senate’s done their thing, or is doing their thing. Now what?
Jon Fansmith: And I said the Majority Leader Thune’s goal was to put the bill before the Senate starting tomorrow, pass it over the weekend. And in the ideal world for Republican leadership, the bill that the Senate passes is one that could easily be taken up in the House and passed, and then a final bill is delivered to the president’s desk sometime next week in advance of July 4th. There was always a fair amount of skepticism about meeting that timeframe, and you saw a lot of reports about senators privately and sometimes even publicly saying, “July 4th isn’t really our timeframe, even if it’s the president’s timeframe.” What has happened, particularly today and yesterday with the parliamentarian’s rulings, has exacerbated a significant problem that was already there.
If you started where we did in the House, House conservatives, to support this process, required a $2 trillion in savings to be generated. So $2 trillion in cuts across the entire bill. They were very worried, as has been pointed out by the CBO and others, even with $2 trillion in cuts, this bill will add trillions of dollars to the national debt. It is a hard vote to take if you are a fiscal conservative to say, “I’m adding trillions of dollars to the national debt,” especially when most of the provisions relate to tax provisions that are by almost everyone’s analysis deeply weighted at the wealthiest end of the spectrum, right? The beneficiaries tend to disproportionately be a small percentage of very high-income people and corporations in this country.
That makes it a tough messaging bill to do, but they at least had sort of rules of what was an acceptable level. The Senate, as we’ve gone through it, particularly the ruling about Medicaid today, even the ruling about student loans, the loan repayment plans, not entirely clear but could wind up costing savings of 160 or so billion dollars coming out of the bill as well. As you keep chopping those savings out of the bill and you keep adding other elements to the cost to get support of people, the bill becomes a lot more expensive and you save a lot less. You’re adding more to the deficit. You move farther from what passed the House on a one-vote margin, right? It was not overwhelmingly popular even among Republicans in the House. So this has gotten to be a very, very difficult process to foresee where it’ll go.
Certainly what the Senate is now looking at would not pass the House in its current form. What they will do to replace savings that they have lost because of the parliamentarian’s ruling, entirely unclear. I mean the nine-figure Medicaid changes is not something you just easily make up by reaching into the other giant pile of savings that’s available to you. The reason Medicaid’s on a block at all—no senator wants to do Medicaid cuts, but that’s where the money is; that’s what they can do. So the dynamics become very, very difficult to predict. You’ve seen some talk about the idea of going back to basics, stripping it down to a more tax-focused bill, paring some of these other things out. All of that’s a conversation for tomorrow.
Right now leadership is desperately trying to get a sense of what they’re left with, what’s feasible, what members would vote in support of, where the opposition will come from, and they’re doing it in an environment where these things are changing. I mean, they are being notified about the same time we are of the parliamentarian’s rulings and what that means. It is very, very difficult. And if I had to guess, I think probably especially the events of the last 48 hours means we’re going to push past July 4th and there might have to be some serious structural changes to the reconciliation bill. We’ll see. As Sarah will probably delight in saying, I was wrong multiple times about the ability to move a reconciliation package through the House and they were able to do it, but this is getting down to the crunch time and the votes mean more now.
Sarah Spreitzer: Yeah, I was too. I think a lot of people have underestimated Speaker Johnson’s ability to keep his caucus together and to working with the White House to sell something that you wouldn’t otherwise think would be able to pass. So I mean, I don’t know if they will actually start the Senate vote tomorrow, on Friday. It seems a little late for that, but I think that they might get it passed by maybe July 6th. I mean, I think they could keep them in session, but we’ll see.
Mushtaq Gunja: I mean, Sarah, what do you guys think? I mean, is Senator Thune just going to put the bill, just a much, much more expensive bill, on the floor, have it pass on a 53 to 47 vote or something like that with Susan Collins saying she’s very concerned and that they’ll work it out during some sort of conference? I mean, is that likely to happen or do you think that they’ll just hold on this for some amount of time?
Sarah Spreitzer: I think it’s going to be a negotiation between the leadership, between the House and the Senate to get something that they know that they have all the votes for. They’re going to really have to closely count the votes, but I think they will eventually get it through. Somebody asked in the chat what happens if the rescission package or sorry, not the rescission, reconciliation doesn’t pass. Nothing. Congress is not required to pass a reconciliation bill, but this is the number one legislative priority for the White House.
Jon Fansmith: I will say there is one big consequence if they don’t pass it. A number of the tax provisions that-
Sarah Spreitzer: Right, the tax package.
Jon Fansmith: ... were passed 2017 and have been extended on a short-term basis would expire, which part of the reason they’re doing this bill in the first place is they do not want going into a midterm election year to have both corporate and individual taxes go up significantly, especially again under Republican leadership of all branches of government. So they do, certainly you can question as a citizen whether this is a critical thing, but the view of Republican leadership is extending those tax provisions, even beyond adding the other ones, is a must-do by the end of this year.
Mushtaq Gunja: Well, thanks to the audience for hanging with us on this topic. I know we spent, gosh, more than 30 minutes talking about reconciliation, but just given the impacts on borrowing, on the risk-sharing, on Pell, on everything, this is incredibly important. And as Jon said, thank you to everybody for leaning in on this topic because as Jon said, I think the Senate bill, not perfect, not even close, but the House bill was a catastrophe. So we’re potentially moving in a little bit of the right direction.
Hey, Sarah, you mentioned rescission, and I did want to ask about what is happening in the world of... Maybe we start with appropriations and would love to talk about rescission and impoundment and what is happening there. So where are we on the appropriations calendar, which as you noted is on a different timeline, a different thing than the Big Beautiful Bill in reconciliation?
Sarah Spreitzer: And it’s something that has to be done on an annual basis by Congress. If they don’t pass money to keep the federal government going by October 1st, we go into a government shutdown, and otherwise they have to do a continuing resolution, which is what we’re in. So the president sent up a skinny budget request about a month ago. The House has started considering their bills. There is a lot of concern because I think the FY26 budget request would put into statute some of the cuts that the White House has already made.
So the grant terminations that you’ve seen at NSF and the National Institutes of Health, the cuts you’ve seen at the Department of Education over the seed grants, the Teacher Quality Partnership grants, the cuts that you’ve seen to IES, those kinds of things are included in the president’s budget request, but obviously it’s a process. The House has to mark up the bill, the Senate has to mark up their versions of the bill, they then have to conference it. I think it’s been several decades since they’ve actually finished the process on time. And so what we’re used to is these continuing resolutions, but we are in a continuing resolution right now.
However, we also have an administration that has been terminating grants and not spending out money that’s been appropriated by Congress for this fiscal year, for 2025. And so in order to address that, the White House has started sending up rescission packages, which would basically, although Congress did pass a continuing resolution that says agencies should be spending the same amount of money that they spent in 2024 on the same programs, the rescission package would allow them to claw back some of those funds. And so the first rescission package we have would put into place the cuts to NPR, to PBS, and then USAID, which USAID was the agency that the Trump administration has really been seeking to eliminate. I’m not sure, did it pass the House yet, Jon? I believe it’s going to pass the House, but it’s-
Jon Fansmith: I believe it already has passed the House, but I could be wrong about that.
Sarah Spreitzer: It’s really unclear what the Senate is going to do because they have not been completely on board with some of the cuts. And I think this rescission package, the White House has said, is the first of many. They’re going to see how this one does, and then they might send up a second rescission package, and that may include the cuts that have been made to places like the National Science Foundation, National Institutes of Health, the Department of Education. If they’re unable to pass those rescission packages, the closer we get to the fall, the more way the White House starts flirting with the Impoundment Control Act, which was put in place that says the executive branch has to spend out the money that’s been appropriated by Congress. And I think then we’re really in uncharted territory.
Mushtaq Gunja: Yeah. Charted way back in the Nixon years, when Congress had to pass the Impoundment Control Act of 1974, which, Jon, why did they do that and what’s the purpose of trying to control impoundment?
Jon Fansmith: So the reason they did it in, I think it was ‘74; it was passed in response to Nixon. President Nixon had a hobby of essentially saying, “I don’t agree with what Congress has provided money for, so I’m just not going to use that. In fact, I have other priorities that are more important to me, so I’m going to redirect that money to these other purposes.” Very clearly not what Congress intended, and historically, constitutionally Congress’s say on how money is allocated and spent has the final word. And so Congress pretty jealous protected the power of the purse and passed the Impoundment Control Act to put very strict restrictions on what the president can do. And it established the modern rescission process that Sarah talked about, partly as a way of saying, “Look, we can make adjustments, but you still need Congress to sign off on that.”
The other thing that Sarah alluded to, which is important to note, the one loophole in the Impoundment Control Act is there’s a provision that says essentially if you get to within 45 days of the end of a fiscal year, essentially as the administration, if you haven’t spent that money, you can pocket impound it. Basically just say, “Look, we’re almost at the end of the fiscal year. We just don’t have the time or the ability to get this money out. Therefore, just count it as impounded. We’re not going to file for it.” It’s always intended to be just for that purpose, that something’s happened within this window where it’s unreasonable to say, “We’re going to try to get it in under the deadline.”
Russ Vought, who is the head of the Office of Management and Budget, has since prior to this administration taking office dismissed the merits of the Impoundment Control Act, talked about using the pocket impoundment process to subvert the Impoundment Control Act. He’s just a true believer that the president should be able to spend money the way the president intends and doesn’t want to yield that authority. So there’s a lot going on here. The biggest thing frankly though, is that the Impoundment Control Act only works if Congress is willing to enforce it. And what has been abundantly clear, we may not get support for these rescissions. I don’t think they will pass in the Senate. I think they’re unlikely to maybe even get a vote in the Senate. But regardless, they’re not going to do the work necessary to force the administration otherwise to, say, spend out the remaining $3 billion in NIH research funding that has not been allocated. So it’s not good news. It’s not as bad as it could be, but it’s certainly not good news.
Mushtaq Gunja: Yeah, I mean, in this sense, we are in some uncharted waters because I think it’s really difficult for us to know who’s going to be able to have standing to be able to sue if Congress doesn’t want to take the power of the purse and the administration does not spend all the dollars that Congress has allocated. And that’s going to happen, it looks like, right? As we see in NIH and NSF, these are the places. The reason we’re talking about this is because this impacts so many of our institutions and the grants that are supposed to be going out.
I mean PBS and NPR, they’re very important, but we’re really talking about billions of dollars that are due to our institutions that Congress has allocated, and we will have to see how that legal process is going to play out. The administration’s been swearing up and down that they’re not exactly looking for this fight. They’re going to do it all through a rescission package. But I think also if you read the tea leaves at all, they have been itching for this fight with this court, and I think they are hoping that the court will continue under some version of a unitary executive theory that just allows all control to be levied with the executive branch. So stay tuned. We’ll be talking about this quite a bit.
Sarah Spreitzer: Yeah. And I just think for our advocates that come every year and go up to the Hill to talk about funding for GEAR UP, funding for TRIO, funding for the National Institutes of Health, what does that mean if the administration just doesn’t even follow what Congress has allocated? It’s almost like the appropriations process just isn’t even relevant anymore.
Mushtaq Gunja: That will be the argument that will be made in court at some point. Plus that beautiful separation of powers and balance of powers that are in the Constitution. We’ll just have to see how that plays out. I’m going to move us, if that’s okay, over to international students.
Sarah Spreitzer: Yeah, I think there’s a lot of legal questions on that front too, Mushtaq.
Mushtaq Gunja: Well, Sarah, let me just start with where we are with the visa process. So two weeks ago when we met last, it looked like visa interviews had been potentially paused. We were looking at a new social media screening process. Where do we stand now, Sarah?
Sarah Spreitzer: Yeah, so about a month ago, the State Department had said that they were pausing all of our student visa interviews for the time being while they implemented a new social media vetting policy. This is based on in executive order that came out, I think was signed in February by the president, that just called for more vetting of non-immigrant visas, including F, M, and J visas, which are used for our students. And so this is really the height of the time when we see our prospective international students applying for their student visas for the fall. So we’ve been very concerned about what that delay is going to mean. They have now restarted the interviews, or at least we’ve heard that many of the consulates have started scheduling the visas, but we’ve also received information about this new social media vetting, and we’re very concerned about whether or not this is going to delay the processing of student visas and/or if it’s going to lead to an increase in denials.
And so basically the vetting procedure that they’re going to follow, which isn’t like anything I’ve ever seen before, is that you present yourself at the U.S. consulate or embassy, you sit for your interview, you qualify for your student visa. Consular officers are being told that they then have to deny the visa and put the visa application into administrative processing, which is basically an additional request for evidence. Consular officers, the same ones who actually did the interview, are then being charged with reviewing the applicant’s social media. The applicant is being told that they have to make all their social media accounts public for that review. And then they can be denied if their social media indicates that they are not supportive or perhaps working counter or supportive of groups that are counter to U.S. policy.
Again, we haven’t seen how this is going to be implemented. We haven’t seen how much time this is going to take. We haven’t seen whether somebody’s going to perhaps sue on this new policy because it’s not something that’s ever been done before. Social media was being checked in the first Trump administration, but it was mostly being used at the border for when people were entering, Customs and Border Protection could search social media at that time. They were sometimes turning people away at the border. This is the first time it’s being applied in the actual vetting procedure for a student visa. So we’re watching it very closely. I think we’re pleased that the visa interviews are starting again. It’s just, there’s a lot of questions out there about how is this going to impact our international students?
Mushtaq Gunja: Seems like it’s a little bit too early to know who’s going to be able to make it through, how long the process is going to take, but we’ll be keeping an eye out for it. And I would imagine it would be really helpful for us to be able to collect stories to the extent that our campuses can help us amalgamate the numbers on whose been able to get through and who hasn’t been able to, that would be useful. And if I’m an administrator, if I’m doing enrollment management, if I’m working with international students on campus, I mean, Sarah, what do we think? Are the vast majority of our students gonna be able to get visas to be able to come to our campuses in the fall?
Sarah Spreitzer: Yeah, I hope so. And the State Department has messaged that they don’t believe that this will lead to any delay in someone who they’re ultimately going to grant a visa in entering the United States. I think that I’ve heard from some institutions about how they should be advising their international students, and I think the best advice to give is to understand that it may take longer than usual, and so don’t wait until the last minute to apply or assume that it’s going to be the same as it was in previous years, where you go, you do the interview, you’re granted your visa. It may take some more time after that to actually get through the system.
Mushtaq Gunja: And there’s a comment in the chat about being curious about which students are going to be able to obtain these visas, what they might be studying, and yes, ditto. I’m really curious too. I think we’d like to know that.
Sarah Spreitzer: Yeah, I’m curious too, and I’ve heard there’s not in the cable that was sent to U.S. embassies and consulate offices, there’s nothing about the amount of time that they expect this to take a consular officer, and there’s no instructions about which social media or how broadly to look at social media. So will it be unevenly applied? So for example, is it going to be are consular officers in certain countries going to be told we expect you to spend a certain amount of hours doing these reviews and others will just kind of be a Google search?
Mushtaq Gunja: Well, is it going to be unevenly applied? Well when there’s this much discretion and where the standards for review are opaque? Yeah, I think probably.
Sarah Spreitzer: Yeah.
Mushtaq Gunja: And maybe that’s part of the nature of a little bit of discretion here, but yes, I think we probably are going to see that. We’ll have to see how this plays out. Can I just ask one more question on international students? Last we were together, I think we were in a little bit of flux as it related to Harvard being able to enroll international students. And I think that the Trump administration tried to, if I recall correctly, prevent any international students from attending Harvard. Where are we in respect to that litigation, Sarah?
Sarah Spreitzer: I mean, I think that there was an injunction issued. And so the Trump administration, what they were trying to do was to revoke the certification for Harvard through the Department of Homeland Security to accept and to educate international students. So it was also going to impact those international students that were already enrolled in Harvard. And because it was going to take effect immediately, Harvard took that to court right away and it was paused. And again, that’s not something I’ve ever seen actually applied in that way, that certification. So yeah, that was good. And I think overall, Mushtaq, I mean you follow this a little closer, it doesn’t seem like the Trump administration is winning on many of these cases.
Mushtaq Gunja: I think that’s right. I mean, the administration has suffered a series of losses at the preliminary injunction or the TRO, temporary restraining order stage, where federal judges are saying in a series of areas, let’s just keep the status quo as we let a trial play out. So I’m going to put my glasses on just to... I took a couple of notes. I mean, on research funding, a federal judge in the district court in Massachusetts asked NIH to restore 800 grants that had been canceled, saying that the process by which those grants had been canceled were discriminatory and politically motivated. That’s one judge in Massachusetts. We, ACE, have filed a separate lawsuit along with a bunch of partners challenging the DoD’s new cap on indirect cost reimbursements at that 15%. Judge Talwani has that, I think in Massachusetts. There’s another lawsuit that’s out on the NSF 15% cap on indirect research costs. A judge put a temporary stop on that, calling that process, and those cuts arbitrary and capricious. The arbitrary and capricious standard basically says that the administration needs to act according to the Administrative Procedures Act in ways that are standardized in some way. And actually so many of the things that we have seen in the last couple of months, the slapdash manner targeting particular types of particular institutions, I mean by definition are not going through the standardized process, so in a place after place.
There are some things that are happening on the legal front that are a little bit more concerning. So Judge Gallagher in the district of Maryland, somebody I used to work with at the U.S. Attorney’s Office there, declined to block the Trump administration’s cuts to IES. So there was a lawsuit asking for a temporary restraining order for those cuts, and the judge there declined to issue a TRO, saying, “We’ll just deal with these cuts at the trial stage.” So that’s a ruling in favor of the Trump administration.
Then there’s a whole set of things that have happened, including yesterday, as it relates to undocumented students. And Jon, maybe, I know you’ve been following this, but DOJ just sued Minnesota, I think yesterday, over their in-state tuition policies that allow undocumented students that are residents of Minnesota to be able to qualify for in-state tuition under the DACA program. This follows similar moves in Kentucky and in Texas with the Texas Dream Act. I wondered if you might be able to tell our audience a little bit about that.
Jon Fansmith: Yeah. And it follows the pattern we’ve seen from the administration, where there was an executive order that was issued that essentially said that funding provided to states from the federal government, if it’s used in some way to essentially provide benefits to undocumented students, or undocumented residents in this case, would subject those states to a loss of federal funding. And that is the sort of pent-hook around a lot of this is being hung on.
It really kicked off... Florida on their own initiative a while back, had removed eligibility for in-state tuition for undocumented students. And then what we saw more recently was Texas, there was a lawsuit against the state of Texas’s policy providing in-state tuition for undocumented students, what seems to have been clearly coordinated with the government of the state of Texas. They chose not to defend, instead to settle by stripping that out of state law. And we have seen, I think, the Florida and Texas examples being used as not legally a precedent, but as the precedent for the administration to now aggressively start to target. And Kentucky, who has a Democratic governor in place. Certainly Minnesota is a Democratic state, a blue state.
It is one thing certainly you worry about when you see these benefits being rolled back in places like Texas and Florida that are deeply red states and where you worried about whether those provisions would survive. Far more concerning to me is the federal government attempting to get involved in how state benefits are determined and awarded and try to force states to do things that this administration in particular sees... Always worth remembering, executive order is not a law. There has been no change in the status of law. There certainly has been no change in the status of the Constitution and the rights of states to determine state policy for themselves without unjust interference by the federal government. We will see, I would expect certainly Minnesota, probably Kentucky to robustly defend their ability to make those determinations for themselves. And we will see what the courts determine. But again, the problem here is not so much what the legal basis is but this expansion of efforts by the administration.
Sarah Spreitzer: And I think to that point, Jon, is what we’ve seen is when something doesn’t work, they try something slightly different. So we’ve seen this in the indirect cost caps, that NIH was a sudden 15% cost cap across everything. I think NSF was only for new grants going forward. Then the DoD processes, 15% on new grants, but 15% that would be negotiated by the beginning of November. And so even though we have these injunctions, there continue to be efforts to reach the same goal but in a slightly different way. And so it is very overwhelming to see these things and then think, “I thought there was just a court case that said you can’t do that,” but it’s being tried in a different way for the same purposes.
Mushtaq Gunja: Yeah, I think that’s very right, Sarah. And I think it is overwhelming, and I think we also cannot get overwhelmed. I mean, we are in, as somebody in the comments noted, I mean, are we getting tired of being in these unprecedented situations, these uncharted waters? Yeah. And also we can’t be because we have to see all the ways in which these things are going to be challenged and just keep at it. And I think our institutions have done really a nice job being able to raise up all of these issues.
I know we only have a couple more minutes. Jon, can I ask you a question that I know you wanted talk about a little bit, which is as we talk about new ways for the administration to get involved potentially in state policy, I noticed that Tennessee sued the Department of Education over some HSI funding. Can you quickly tell us about that?
Jon Fansmith: Yeah, and I think to some extent that minimizes what’s really at stake here. This is something that I am particularly concerned about. And what is at the root of this is that the state of Tennessee partnered with Students for Fair Admissions, which is the group that charted the cases that eventually took away the consideration of race in admissions, the SFFA v. Harvard and UNC cases a couple years ago. And what they are saying, and people may be familiar with this, there are programs under law, under Title III and Title V of the Higher Education Act, that provide direct support to institutions to serve students. And those funds are made eligible, those grants are made eligible, on the basis of representation among the student population of a certain percentage of historically underrepresented categories of students.
In the Tennessee case, they’re going after Hispanic-Serving Institutions. That’s Title V; those are institutions with at least 25% of their student body being Hispanic. And the lawsuit essentially says, “Look, the only criteria for receiving this federal benefit, a grant to support the institution, is that you have a certain percentage of students of a specific race. And if you look at SFFA and the opinions in SFFA, you should take away considerations of race from federal policy determinations. Therefore, all of Title V is inherently discriminatory and should not stand.”
Part of the problem with this, of course, is that they are suing the Department of Education, which through executive orders and through public statements has made very similar statements about what they view as discrimination. They would be the ones expected to defend it. Much like the Texas example we just talked about, If you agree with a suit that’s being brought against you, you are probably not going to defend that.
So the question is really who will step up and defend the Title V programs, and is there time to do that? It is a concerning issue, not just for HSIs. And let’s point out, there are a lot of HSIs in this country. It’s a substantial pool of funding that’s needed at those schools. But there’s a whole category of other institutions, predominantly Black institutions, Alaska, Native American-serving, Pacific Islander institutions, a number of categories under Title III that would similarly be stripped out. Plus programs across a number of other federal agencies where they have awards for minority students in STEM fields or other things that a decision here would certainly be cited as a precedent by this administration to strike those programs as well. We are early stages. The suit has just been filed, but it is one that I think with everything else going on, it probably has fallen off a few people’s radar and never really got on it. It is very much worth paying attention to.
Mushtaq Gunja: Well, we’ll keep monitoring this and the other approximately 473 lawsuits and try to summarize them as best we can. And I have no doubt that we will be, the three of us and hopefully the hundreds, almost a thousand of you on the call, will hopefully be back together in a couple of weeks after we see what this reconciliation situation ends up with. But really, thank you so much for joining us. Jon, Sarah, any last words, any other asks we’re going to make of the audience today? What can folks do that are worried about what’s happening in Washington right now?
Jon Fansmith: I mean, I will say, I’ll pick up something you said, Mushtaq, about its easy to feel overwhelmed, but we need to keep pushing. It’s working. Honestly, it may not feel like that. It may feel overwhelming. It may feel troubling. Someone shared a statistic earlier this week, 93% of the cases against the administration have been successful at whatever stage they’re at. The courts are holding the line, overwhelmingly. We are seeing public opinion turning against this administration, how they approach international students, how they approach research, how they approach higher education generally.
And Sarah talked about what does it look like to come up to the Hill and argue for TRIO If the appropriations process is corrupted or weakened. It means a lot because the voices you have all put into reconciliation, the voices you’ve all put into so many other places, it’s actually making a real difference in the policies. We’re seeing what’s being allowed to happen and what that looks like. So keep doing what you’re doing. It’s more important than ever that you keep speaking up, that we don’t back down. This is how we win, and things are moving in the directions we want them to do, even if it’s hard to read a newspaper on a day-to-day basis.
Sarah Spreitzer: No, that’s exactly right, Jon. I was up on the Hill this week. I saw a lot of people up there talking about the reconciliation bill. I heard a couple senators actually talk about higher education priorities in the reconciliation bill. Our messages are getting out there and it is really important.
Mushtaq Gunja: All right, friends, thank you. I know we’re a couple minutes over. Thank you all. Stay cool, and we’ll see you in a couple of weeks. Thanks all.
Jon Fansmith: Bye all.
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