Note: this transcript was created by a third party.
Mushtaq Gunja: All right. Welcome to dotEDU, the public policy podcast from the American Council on Education. I'm your host, Mushtaq Gunja here as always with my favorite co-host, Sarah Spreitzer and Jon Fansmith. How are you Sarah, Jon?
Sarah Spreitzer: I'm good. I have an issue with this week's title, All Quiet At The Department of Education, because I thought this was going to be quiet. We're in a government shutdown. So I'm blaming Jon for, I don't know, just everything going on.
Jon Fansmith: I think there's plenty of people to blame. I'm not sure I'm on that list.
Sarah Spreitzer: Okay, fair enough.
Jon Fansmith: But I share your dissatisfaction with the current state of affairs, Sarah.
Sarah Spreitzer: Don't you think our title should have been All Quiet At The Department Of Education Except For The Grenade They Just Threw?
Jon Fansmith: I feel so bad for our marketing people who have to decide two weeks out what are we going to highlight. Because in this environment, it's basically admitting this is our best guess.
Mushtaq Gunja: We should ask for recommendations from the audience about what we should title the podcast two weeks from now, because we're just guessing. We have no idea what's coming.
Hey, before we get started, tell the audience three big stories that we're going to try to cover today. One, the grenade that Sarah referenced, this higher education compact that the Department of Education released late last week. Talk of course about the government shutdown and its impacts on our institutions now and what happens if this thing lasts for a few weeks. And then we'd love to spend a little bit of time on negotiated rulemaking and where we are on that. Also, not so quite on the Department of Education front.
So three big topics. We'll maybe get to a couple of assorted other topics. Thank you in advance for all the Q&A that came from the audience. Very, very helpful, including the question, which is my favorite question, which was, can they do that? With no other reference to anything. And I may just ask you guys that a couple of times, wait, can they do that?
But first, just a quick plug and congratulations, Jon, Sarah, and to the whole government relations team, especially Emmanual Guillory, for a great event at Howard University yesterday on this new economic impact tool that ACE put together. Sarah, Jon, do you want to just describe what it is in a couple words and where folks might be able to find it?
Jon Fansmith: Yeah. And I also want to call out Danielle Melidona at ACE too, on our research team who is huge driver of this work. But it is a searchable online tool that allows you to pull some very basic economic indicator data around the impact of institutions across the country, both by state and by congressional district level.
And two things I would note. One, the event really was amazing. We had a lot of participation. Howard University hosted us, and Dr. Frederick the interim president there, showed up and spoke. So a huge thank yous to Howard, great host and great partners in this work. But also, the information is one of the things that's really responsive to what we've been hearing from members, from policymakers, this sort of disconnect about how higher education policy is kind of argued here in DC and how it actually translates out among all the people on our chat, the actual impact our institutions have in their communities.
And this is our first effort to capture that and relate that to policymakers in the public. And as you know, Mushtaq, we're going to... This is iteration one. We're going to keep adding to it, we're going to expand it. We want this to be a really comprehensive tool. And we're building out a great launch, a lot of great energy around it and a lot of kudos to people involved.
Mushtaq Gunja: Yeah, and thank you for reminding me to thank Danielle and the great research team here at ACE for that wonderful work. And John Riskind has put a link in the chat. So while you are listening to us blather on about this compact, please look up your institution, look up your congressional district, see how much impact higher ed is having in these communities where we are.
All right, let's talk about this compact. Jon, what is it? What did the administration roll out? And well, let's just start there. What is it?
Jon Fansmith: Yeah. I guess the shortest summary I could give is the administration last week sent letters to nine institutions, Arizona, UT, Austin, Vanderbilt, UVA, Brown, MIT, Dartmouth, and the University of Pennsylvania. And there was a cover letter and attached to it was a 10-page memo.
The cover letter briefly talked about the idea that the administration is seeking to improve the academic quality of higher education and alluded to some benefits institutions might receive for participating in this effort. And then the attached 10-page memo identified what the administration is calling the Compact for Academic Excellence in Higher Education. And it just laid out a large number of conditions. And the Chronicle of Higher Education I think did a really good job of breaking it out. They had an eight different categories of requirements with 23 separate categories. Or 23 separate requirements total, some of which have multiple elements.
So you can see a lot of requirements the administration's going forward. We can talk about those in a little bit more detail, but essentially it's this idea that those nine institutions will sign a deal by November 21st. And in exchange for some benefits that may be accorded to them, they have to meet all of these terms that the Department of Education is laid out.
Mushtaq Gunja: And Sarah, the benefits are noted I think in just a couple of sentences as Jon referenced, but what are those potential benefits?
Sarah Spreitzer: Yeah. I mean, they're really broad. They talk about perhaps being prioritized for federal funding. They talk about perhaps better overhead costs, which I think is a reference to our indirect cost rates. But I was also going to say about the compact, I think it's really interesting that a lot of the provisions included in there are things that we've already seen in some of the investigations and letters going to schools that might be under Title VI or Title IX investigations, but it's all packaged into a one neat compact now.
Mushtaq Gunja: Well, and one of the additional benefits theoretically, and it's a little bit hard to know how this would actually play out is potential release from some of these Department of Education investigations. So you sign onto this compact and all of a sudden your civil rights investigations may go away, which, in the vein of the can they do that, I'm not sure they can do that exactly.
The benefits are big, but potentially quite important. And there are then 10 pages, as you noted, Jon, of requirements to be able to access those benefits. Do you want to talk us through broadly? I know that we can't get to probably each one of the 23 separate demands that are in this letter, but sort of broadly speaking, what's in there?
Jon Fansmith: And I think Sarah made a really important point as we talk about these. A lot of these directly reflect what we've seen in terms of the negotiations or the demands made to institutions individually. So if you think about what was in the Columbia agreement, what was in the Brown agreement, what was in the Penn agreement, what was sought from Harvard, you won't be surprised by a lot of what's in this letter, in this memo.
There are things essentially requiring institutions, when it comes to admissions and hiring, to treat race and other factors the way this administration would like you to. Certainly there are things like adhering by this administration's definition of gender as they encompass in the executive order just to genders.
There's a lot of things around viewpoint diversity on college campuses. They take it a step further in line with what they asked of Harvard, that you not only commit to viewpoint diversity, which of course institutions are doing in many, many ways, but that you also do an annual assessment objective third party and publish the results of that publicly.
I think the other thing that's really interesting, and there's a lot within all of those, about essentially asking institutions to be institutionally neutral, not to comment on any happenings that don't directly impact that institution, requirements around staff those regards. But they also lay out a lot of very specific requirements that are new.
The one that probably got the most attention is a five-year freeze on tuition. But there's a lot more beyond that. You have requirements that you have to fully refund to tuition to students who drop out in the first term. One of the more interesting ones, if you are one of the institutions who is paying the top endowment tax rate, you have to provide free undergraduate tuition to all students who are studying the hard sciences. Sort of an odd request.
There's other things around there. You have to accept military training for credit across your programs. And I know one, Sarah's spent a lot of time focusing on you can have no more than 15% of your undergraduate enrollment be international students and no more than 5% of your undergraduate enrollment can be international students from any one country.
You think about China and India each being roughly a third of international students, you're really running right up against the cap for those two countries if you're just have a proportional representation. A lot of things that are very, very specific in ways we haven't seen in these previous settlements with individual institutions.
Sarah Spreitzer: Well, and also Jon, there's things in there that we already comply with. There's a whole section on Section 117 and reporting like foreign partnerships, which we already do through Section 117, through reporting to NSF and Department of Defense, and things like that. So it is an odd mixture of kind of throwing everything together into this large compact.
I thought reading it that an institution's general counsel will be reading it very carefully because there's things likely that they're already doing to be in compliance with Title VI, or be in compliance with Section 117, or these other requirements. And then there's things that are just, like you were saying, nothing that would be expected, like a 15% cap on your international students. What does that mean? I would bet that some of those institutions that received the letter are at 15%. They're not likely much higher, but that 5% cap on a specific country would likely cause some pain.
Mushtaq Gunja: Well, the thing that jumps out at me immediately is this potential carrot for getting prioritized in research funding if you comply with these demands. But what's so odd about it is the mismatch between the demands and the prioritization for the research funding, right?
Sarah Spreitzer: Yeah.
Mushtaq Gunja: I mean, why should it matter what your international student body composition is for whether or not you're able to be the best institution at doing some version of cancer research? I mean, those things are inapposite and that's potentially a very significant problem because the federal government can condition funds, but the conditioning of the funds has to be rationally related to the purpose of the funding.
So I'm not sure that they're going to be able to fully get away with this. On the other hand, if they think about this as sort of a voluntary contract, then you might be able to... I don't know. We will have to see how the legality of this plays out. Hey, Sarah, can I ask you a question?
Sarah Spreitzer: Yeah.
Mushtaq Gunja: This was sent out just to nine institutions.
Sarah Spreitzer: Yes.
Mushtaq Gunja: Why do you think just nine? And do you think that this is likely to be limited to those nine? Why should our audience who are not at 98% of them are not at those nine institutions? Why should they care about this?
Sarah Spreitzer: Well, I definitely think, and it's written in a way that it will be applied more broadly, that these are kind of the initial institutions that are being invited to consider this compact. So I wouldn't be surprised if every institution doesn't start receiving this.
I think it's a mix of the types of institutions. You have institutions like University of Texas, University of Virginia, you have large privates like USC, but then you also have a mixture of blue and red states, right? And so I think it's really an attempt to get at many different types of institutions in this first kind of try of sending out this compact.
But I was also going to say, Mushtaq, you talked about the research funding and whether or not it could be contingent on this compact or this letter. The letter signed by Secretary McMahon and by two folks from the White House, it's unclear how the Secretary of Education could oversee grant competitions at the National Institutes of Health or the National Science Foundation.
I mean, obviously there's overlapping. Like we've seen with Title VI, you have Title VI responsibilities, whether you're talking about the Department of Education or the National Science Foundation. But I think that's another question, how closely is this being coordinated with the research agencies?
Mushtaq Gunja: Jon, what's your take on this approach? So why a compact about higher education? Why to these nine? How did the administration pick these nine and why are they going in this way, you think?
Jon Fansmith: So I feel I say this every episode, I don't claim to necessarily know or to be able to speak for their motives. I will say there's a lot of things that to my mind indicate that a lot of this is very political, right? We're talking about an effort that, yes, they've targeted nine institutions, but the administration officials behind it have been very clear in media interviews since by saying, "We expect all institutions will fall under this effort. We would expect all institutions to be talking to us about this and participating in this effort." Which, I'll also say, makes the idea of prioritization pretty nonsensical as well. But if everybody's doing it, then what priority do you have?
I think what we have tended to see is that, while from the higher ed side, we look at these attacks on individual institutions that we've seen, these efforts to force negotiations, but we very clearly said essentially extortionary efforts to compel institutions to sign deals as incredibly harmful and disruptive and damaging, and they absolutely are.
Among a pretty vocal contingent of the administration supporters, these deals are insufficient. And I think you and I have talked about this, and Sarah and I have talked about this, Christopher Rufo posted a tweet in which he said the deals are too weak. That the administration, the president's being rolled by college and university presidents, and it's time to get serious.
We've seen extensive press coverage of a couple meetings at this point of White House officials, anti-Semitism task force officials, where they've tried to brainstorm different ways to go after institutions because they don't think that the campaign of individual going after individual institutions is working for them. The famous quote kind of being, we've made Harvard sympathetic to the public. And you look at the fact that in public opinion polls of late higher education is rebounding in the public's attention even among Republicans.
So I think you start to put all these things together, and from our perspective, this is just a grand escalation of this ongoing assault. And it absolutely is. But I think thinking from their perspective, they are also seeing a clock ticking, seeing diminishing results from their efforts, greater opposition growing certainly across the states, and thinking this is the chance to sort of accelerate these efforts, magnify them, go national with what has been a school-by-school approach.
Mushtaq Gunja: The thing about this compact that sort of strikes me is how so many of the provisions might apply to some of our most selective institutions, but really aren't very applicable to the vast majority of our institutions where the vast majority of our students are educated. So requiring the SAT is in this compact.
I mean, our open access institutions for the most part are not requiring any sort of standardized test, not just our fully open access institutions, but those institutions that are admitting 80, 90% of their applicants. Really, are we going to start requiring the SAT? For what purpose exactly?
This idea about the hard sciences, Jon, I showed you some data earlier this morning, but the unemployment rate for our physics majors is something like 7.5%. Our unemployment rate for our elementary educators is like 1.5%. We going to try to push everybody to the hard sciences. I mean, we don't have enough jobs in those fields right now.
I feel like there's just this underlying misunderstanding about what higher education is, who our students are, and where they're being educated that underlies all of this. And if this is truly going to be rolled out to all 3,927 institutions in the Carnegie Classifications, the economics of this just are very worrisome. They don't make any sense. Go ahead, Sarah.
Sarah Spreitzer: I was just going to say maybe it's not all the institutions. I mean, one of the things that's been difficult is the White House spoke to, I think the Wall Street Journal and the New York Times, when this was rolled out, then we went into a government shutdown or we were in a government shutdown. And so these documents are not even posted on the Department of Education website.
We were just saying that there is a response date, I think it's October 20th that's on there for institutions. It references a White House event at the end of November that would announce which institutions signed onto the compact. But there hasn't been a lot of kind of discussion with our institutions about this compact or how it would be implemented.
Again, like a grenade, this was just kind of tossed out there. And I don't think anybody, again, was surprised by what's in there because we've seen a lot of this in the negotiations on Title VI. But on the implementation side, I don't think anybody's had those conversations with the White House or with the Department of Education.
Mushtaq Gunja: On that point, Sarah, I mean, how have the nine responded that received this letter? What do we know so far from the public sphere?
Sarah Spreitzer: I mean, I'm sure their general counsels are reading it incredibly closely. I would think that they're likely talking to each other about the impact of it, but Jon may know more.
Jon Fansmith: Yeah. I mean, what we've heard from the institutions in most cases is that they are taking time to consider this and talk to the huge range of stakeholders who will be impacted by whatever choice they make. And I think certainly we all have a view as to what they should do, but the appropriate thing to do is think about what this means for your institution.
Now, I think there is a lot of legitimate fear for individual institutions in standing up to this administration. Let's be clear, just because this is being framed as a voluntary deal, we have seen time and again, in fact, Brown, one of the institutions that received the letter, just resolved the negotiation with the administration, how they approach people who don't go along with what they're going to do.
So I think, and Ted has talked about this often in the public, institutions will have to do what is right for them. But what is important is to ensure that the higher education community as a whole is there to support them when they make a decision, and that there is an understanding of what is at stake and a reinforcement for making choices that can seem very alone and very, very difficult.
So to that point, I think the other thing I'll say, which is worth noting, the administration wants written comments by October 20th on these terms. They also indicate they're not really open to renegotiating them in any real substance. But these nine are the test cases. Whatever they agree to, at least the way the administration's been talking about it, they will constitute the final version that will be offered to other schools.
It's not just that these nine have been targeted under tremendous pressure, but also that they are being essentially stood up to be the standard-bearers for all of higher education. It is a very, frankly, manipulative and difficult position to put those institutions into.
Sarah Spreitzer: Well, and also our institutions are not industry or businesses. You have a president and a provost, but you have to think about faculty, academic freedom, the needs of your students. They are all part of this community. But this incredible pressure, I think, is being applied to the administration. And I think that's a really difficult place to be in.
And Jon, you mentioned Ted speaking about this. Ted's been on a lot of the news media about this, and I would encourage folks just Google, Ted Mitchell. I mean, he was on ABC News last night. He was in that initial New York Times article. He's been talking about this a lot, and I think he has a lot of good messages and a lot of the same questions that we've just been talking about.
Mushtaq Gunja: Sarah, besides having Ted out there commenting on the compact and maybe some of the inherent contradictions within the document and the problems with it, what else is ACE doing and what might you suggest that we have our institutions do?
Sarah Spreitzer: I would start again with, Mushtaq, we've talked about this before, talking to members of Congress about the value of higher education and the impacts this would have on your specific institution and maybe using our new economic indicators tool to have that discussion. I mean, what is your economic impact going to be if you're going to have to limit enrollment either domestically because of tuition being frozen or your international student enrollment? What does your institution look like if you agree to this compact?
And understanding that these are going to have far-reaching impacts I think is a really important conversation to have. And I tell people all the time, it's important not to feel helpless. There are still policymakers here in DC and I think they're watching all of this very closely. And you may not have a policymaker that's specifically on the right committee or be involved in these types of issues, but they really need to understand that this is going to have a big impact on that institution that's in their backyard.
Mushtaq Gunja: What should we be watching for in relation to this compact over the next couple of weeks? Any tea leaves we should be reading? Or should we just all come back in two weeks and talk about it again in dotEDU?
Jon Fansmith: I mean, one thing I will say, and this is maybe hopeful on my part, but there was a pronounced change in the national dialogue around the administration's efforts when that five-page list of demands was sent to Harvard. For once, this sort of rhetorical arguments about higher ed had the administration's writing down in print for everyone to see, and there was an understanding of what exactly was being put on the table.
I am hopeful that this will serve as a similar moment, that the broader public will start to see what we're talking about is not ensuring quality or legal compliance or promoting standards of excellence, but essentially a federalization of higher education that you align with this administration's views or you suffer the consequences.
And that is something, even this administration rhetorically, is strongly opposed to this idea of a federalization of education. Their whole argument is, let's return education to the state. Let's put it in the hands of parents and educators. In this case, it's the exact opposite. They're essentially saying, "We're going to take choice out of the hands of students, or we're going to take it out of the hands of educators."
I hope the public is going to be more and more aware of this and that will help, because that's what's going to force them to back down. It's not our efforts, our concern. It is the efforts through legislators to understand the impact for themselves. Sarah's absolutely right, that's the direct path. But also the public being aware of what this actually means for them that's going to have, if anything, block this administration from pursuing it further.
Sarah Spreitzer: Well, I also think the easy answer of somebody in Congress would be like, "Well, you're not one of the nine institutions. How does this impact you?" And understanding that this is, I think somebody said, a canary in the coal mine, right? This is obviously a test to see how far they can take this. And so it is important to have those conversations to say, "Well, we're not one of the nine institutions. If we receive this, this is how this would impact our institution. And here's some of the negative impacts."
Mushtaq Gunja: And I sort of share a lot of your optimism, Sarah. I totally agree that our institution should be reaching out if they can. I think that the backlash on the Jimmy Kimmel stuff was a little bit instructive. I think the administration overreached, and I think the public, by and large, did not agree with the idea that the government should be dictating what is said on late night television. And we even saw some Republicans stand up and sort of agree with that.
We've got a very similar thing that's happening here, right? This is not just make sure that you comply with anti-discrimination laws in a particular way. This is really getting down to you need to have a particular student body composition. You need to have your, what is taught in the classroom, the political diversity on campus needs to look a certain way.
By the way, you can't take into account diverse political ideology when you're admitting students, but they need to definitely be politically, ideologically diverse, whatever that means. I mean, I start to share your hope here, that the public may not like this, and hopefully we're starting to see the tide turn. Friends, can I move us to the shutdown?
Jon Fansmith: Sure.
Sarah Spreitzer: Sure. I mean, it doesn't feel like a shutdown with everything going on. But yes, let's talk about the shutdown.
Mushtaq Gunja: Okay, fair. Sarah, since you got the mic, where are we? So we're into a second week of a government shutdown, where are we and how is it impacting our institutions? Why should we care?
Sarah Spreitzer: Yeah. Well, I mean, we got to October 1st, which is the start of the federal fiscal year. Congress had not passed or conferenced any of the 12 appropriations bills, so federal funding ran out for the agencies and on the discretionary side, think Department of Education, NIH, NSF. So all of those agencies are supposed to be shuttered right now with non-essential workers being sent home.
The department put out this compact. Obviously those were essential employees working, and the White House is still working, but Congress and the White House seemed to be very far apart in whatever's going to happen. And I think that the Democrats have said that they are not willing to take a clean CR unless it addresses some of the ACA cuts that are coming.
I don't know where we go from here. I mean, I know Jon and I will usually bet how long would the shutdown be. I don't get the sense that anyone is talking right now. They're both trying to bring pressure to bear and blaming the other party, but they're nowhere near kind of sitting down and actually working on a deal.
Mushtaq Gunja: And I should just note, whenever we talk about shutdowns or anything especially, especially, it's probably very important for me to timestamp where we are in this process. So it's October 7th at 1:30 Eastern, because who knows? I mean, Sarah, I hear nobody's talking.
Sarah Spreitzer: Yeah, but we could reopen. I don't know, maybe we'll reopen by the end of the week. The other thing, Mushtaq, is this is being decided by a very small handful of people. This isn't like every member of Congress. They're bringing pressure to bear on leadership. But if President Trump were to call a meeting with Senator Schumer and Congressman Jeffries, again, I don't know, maybe they would be able to hammer out a deal. It just doesn't seem likely at this point because I think emotions are running very high on both sides.
Mushtaq Gunja: Well, Jon, I want to get to the impacts on campus, especially grant funding and what in the world happens when, theoretically, 95% of the Department of Education should be furloughed. But just on the shutdown and the politics of it, is Sarah right? Is nobody talking? How do we get out of this?
So the sticking point appears to be some healthcare subsidies that were eliminated in the One Big Beautiful Bill. The Democrats want some version of those subsidies to come back. The Republicans are saying, "Sure, maybe we can talk about it, but we can't talk about any of it until the government reopens. So we're not going to talk about it." Where do we go from here, Jon? I mean, how does this thing end?
Jon Fansmith: Sarah's right. At this point, there are no meaningful conversations happening. There are individual small groupings of senators and house members who are talking. We had this sort of farce yesterday where the president announced he was talking to Democrats, and Chuck Schumer said, "He's not talking to me. I have no idea who he's talking to." And then the president came back and said, "Look, we're not going to talk about any of these things until the shutdown is resolved." And so in a space of about six hours, we went through a very clear affirmation that there are no conversations happening.
I think there's, and we'll talk in a second about the impact for our institutions, but how does this end? It's really hard to say right now. I'll just say that the political dynamics around shutdowns, and we've had a bunch of them, although not since 2018 was the last one. It usually has to go both sides right now think they're winning. Both sides think they have the right messaging. Both sides think this will bear political consequences for the opposing party in the midterms next year.
They usually resolve shutdowns when constituents start to feel pain. And when constituents start to feel pain and start complaining to their members, you tend to see whichever party the majority of Americans blame comes to the table and makes concessions. Right now, we're very early. We're week into this. At least in public polling so far, people are tending to blame Republicans. But again, if that goes on two or three weeks, maybe the messaging flips, why won't Democrats concede and just do a clean CR to restore funding?
There are things that the American public are very sympathetic to service members, especially those deployed overseas not receiving paychecks. Those are the sort of things that when people hear those stories, they tend to want to start moving to a resolution. So, we will see. I mean, I think both Sarah and I agree, we're not talking anytime in the next few days. We're talking a matter of weeks before this is resolved.
Mushtaq Gunja: Yeah.
Sarah Spreitzer: Yeah. And I would just, to Jon's point, about when people will start feeling pain, I mean, it is the longer it goes on. I mean, Sean Duffy today, the Secretary of Transportation said, "TSA is kind of stretched to their limits." And people may not know that workers that are considered essential like TSA, like service members, like others, they're not being paid. And so they're about to miss the first paycheck. Once you miss two paychecks, how are you going to pay rent, how are you going to pay a mortgage, how are you going to pay your bills starts amping up that pressure.
I think also people start noticing if the national parks are closed. And so if that goes on for a very long time, that starts impacting people. And then today there was a memo released from the White House that said they don't believe that they would have to pay workers after the government shutdown is lifted. And again, that's going to start impacting people that are counting on that paycheck to pay their rent or pay their mortgage once the government shutdown ends. And so you can see everyone is really trying to amp up the pressure.
Mushtaq Gunja: Sure. Okay. So what does this mean for our institutions? So Department of Education is essentially shut down. What about FSA? What about TRIO? What about the grants that come out of the Department of Education, the money that flows to and through? What happens when the government shut down?
Jon Fansmith: This is one of the reasons why the length of the shutdown starts to matter a lot. Because in the short term, for colleges and universities, there's not a lot of immediate impact. You mentioned the Federal Student Aid office, FSA, at the Department of Education. Of the 95% of Department of Ed employees who are furloughed during the shutdown, a large percentage of that remaining 5% work for FSA, and they will continue to do things like process financial aid applications, disperse financial aid, manage the loan portfolio both in terms of issuing loans and managing repayment of loans.
A lot of grants that have already been awarded, institutions can continue to draw those down. Probably the two biggest areas in the education space you'll see the impacts of a shutdown immediately are new grant competitions won't go forward. So if you're expecting to compete for something, apply for something, that will be put on hold until the shutdown is resolved.
The other area, which is kind of a mixed bag in some ways, the Office of Civil Rights Investigations, and there are a couple hundred at this point that have been initiated by this administration, plus a number that are holding over from previous administrations. Those will be frozen in place. And while certainly given how this administration has used that process, and a lot of ways we would very strongly disagree with.
If you are under investigation, the inability to talk to the Department of Education to get guidance, to understand how you comply, to give your counsel advice and guidance on what they need to do, those are things that have real repercussions for how you manage the risk and the possible harm of being subject to this kind of an investigation. So there are things in the short-term that are meaningful.
Long-term, and we've never gone more than five weeks, you start to get into more substantive cancellations of programs and other things. It's harder to sort of predict when you go that much longer, because at a certain point, the federal government will take emergency actions because the funding situation becomes more complicated. But again, if you are going into multiple months, and I've seen people talking about that, that starts to be a real problem with a lot of the issues of funding that comes out to institutions being put on hold indefinitely.
Sarah Spreitzer: Yeah. And I was going to say, also, on the grant side, Jon, the last time we had a long shutdown, the 35-day shutdown, we were hearing concerns about the grant review process slowing down at all the research agencies. The peer review panels couldn't meet, they couldn't put out the grant announcements for applications. And so people were really worried about that slowdown.
Given the uncertainty, the rifts, the chaos of the grant terminations, I think this is totally different. We're not going to feel that same pain, I think, on our institutions given the fact that we've had so much uncertainty for the last nine months. And so what does it matter if your peer review panel isn't meeting for another five weeks? Who knows if your grant's even going forward? So I just think it's a little different this time.
Jon Fansmith: I mean, I don't disagree with that point, but I think there are still grants going out and that process. Especially your ability to work with grant officers and others, you think about the processing of visas for international students and scholars, the delays in shutdowns, I absolutely agree with you, Sarah. But I do think if you start going into five weeks, six weeks, seven weeks, where there's a real impact on the speed and pace that the government operates, that just means a much bigger impact that you could weather in the short-term, but becomes really pronounced as you start pushing out over for the longer term.
Sarah Spreitzer: Yeah. To me though, that's going to be more of an impact though on individuals rather than, say on our institutions. Because like I said, our institutions have gotten just numb to the chaos and uncertainty. You mentioned international students. I mean, we're going to get our international enrollment numbers in a couple weeks and we're expecting them to be way down. So if they're not processing visas, you have fewer students coming anyways.
Mushtaq Gunja: Slight detour. What is the latest with H-1Bs and the $100,000? I mean, has that continued to move forward? Is this all just part of a negotiating ploy? Where are we there?
Sarah Spreitzer: Yeah. So Mushtaq, I can't remember if we talked about that on the last podcast. That was another Friday night executive order, I don't know, maybe three weeks ago, where it was announced that we were going to have a new $100,000 fee put on H-1B, which are work visas, and our institutions hire faculty and staff on H-1Bs.
It was announced with the Secretary of Commerce, with President Trump, not the Secretary of Homeland Security or the Secretary of State. I think given that it was likely led by commerce, there were a lot of questions about the way that the EO was written, who the $100,000 fee would actually apply to. And since it was announced, we've seen a letter from the Chamber of Commerce asking it to be withdrawn.
We just saw the first lawsuit brought by I think a group of impacted industries, including AAUP. It's a lawsuit that's being led by Democracy Forward. But it hasn't been implemented at all. So even if your institution is hiring in H-1B and you're willing to pay that $100,000 fee, I don't think there's any place to actually pay it on the DHS website.
I think right now, our H-1B hiring is paused. Unfortunately, I think it's causing a lot of stress for our institutions, especially when they're looking to hire early career tenure track faculty that may not qualify for say, an O visa. And so yeah, we're trying to figure out what's going on, but the fact that it hasn't been implemented yet makes me think that they're negotiating with industry or certain groups about the fee.
Mushtaq Gunja: You're negotiating with India, Jon. What do you think?
Jon Fansmith: I mean, I think it's hard to discount the idea that this administration would be doing that. We saw that earlier with Chinese students and the idea of capping the number of Chinese students that was then resolved in direct trade negotiations with China. Especially given the number of Indian nationals who are on H-1B Visas, certainly that could be an element.
I also think the idea, and Sarah talked a little bit about this, of the broad latitude given to the Secretary of Homeland Security to exempt individuals, companies, or industries in the executive order from the $100,000 annual fee really points to the idea that this administration will start negotiating deals around, if you are this tech company, you can lower your fees to 5,000 if you do something. But if you are this tech company, you can't. And so it would certainly be consistent with how this administration has approached both domestic and foreign trade issues.
Sarah Spreitzer: And to bring this back to the shutdown, in a normal shutdown, everything would be stalled. Efforts to implement this policy would be stalled. But because things are being decided by a very small handful of folks, not really involving career staff, I don't know. Maybe there is a small group working on the implementation at DHS even though we're in a shutdown. So I don't think that that's going to delay the enforcement or the ultimate implementation of this 100K or whether it's being used with negotiations. That may be ongoing too.
Mushtaq Gunja: There hasn't been implemented yet, right? I mean, as far as we can tell?
Sarah Spreitzer: I mean, there's no button on the Homeland Security website of where you would pay this. I mean, unless you want to just send a check for $100,000 to the Secretary of DHS and hope it gets processed, I'm not really sure what to tell you.
Mushtaq Gunja: There are many jokes I could make about how one might be able to direct those $100,000 straight into the President's bank account or something like that.
Sarah Spreitzer: Well, I think the money actually goes to commerce, which is also very different from... H-1B fees go back to pay for the personnel to process H-1Bs. There are certain functions at the Department of Homeland Security that are paid for by the fees either used for your visas or for the review of your visas. So I'm not sure how this is going to work.
Mushtaq Gunja: Well, sure, but it used to cost $800, and now it's costing $100,000. I mean, there's no way that they're doing 120 times the amount of work, but we'll leave that aside just for a quick second.
Sarah Spreitzer: Sounds good.
Mushtaq Gunja: Last question on the shutdown. Our institutions are responsible for all sorts of reporting, especially on iPads. It's just always on my mind. What should our institutions do in a world in which the government shutdown, they maybe can't answer some of the routine questions?
Jon Fansmith: The short answer is your legal obligations don't end because of the government is in shutdown, and existing deadlines don't get pushed back by a shutdown. So it's an incredibly difficult situation, again, for institutions because we've already seen with this administration, they've gutted staffing at the Department of Ed. They've eliminated a large number of the regional OCR and FSA offices that provide a lot of direct technical support and assistance institutions and the folks at the department who would give guidance and clarity and resolve questions.
Again, this is all apolitical. These institutions just trying to meet what the administration wants them to do during a shutdown that's not available. So you're, in many ways, sort of sailing blindly unless you have absolute clarity about what you need to do. And given the complexities certainly around things like iPads reporting and others, with all of the changes that are coming into place, the additional changes this administration is proposing around iPads, which are enormous, we talked about before, it will inevitably lead to problems for institutions.
Mushtaq Gunja: Importantly, your legal obligations don't stop just because we're in shutdown, and please don't incur more risks. There's always corrections that can be done on the back end, especially on iPads. Can we talk about negotiated rulemaking?
Sarah Spreitzer: Yeah, which is going on even though we're in shutdown. So what's up with that?
Mushtaq Gunja: Yeah, Sarah, can they do that?
Sarah Spreitzer: I don't know. I'm looking to you as the lawyer who used to work at the Department of Education, Mushtaq, can they do that?
Mushtaq Gunja: Yeah. And I'll tell you, for one of the shutdowns at the Department of Ed, for one of the shutdowns at the White House, I got furloughed both times. I didn't get to work. I mean, I guess maybe I didn't have to work, but I didn't get to work. So I don't really understand what's going on and how they're making the determinations about what's essential and what's non-essential. Let's just put that to aside for a second because it seems like it is happening. Jon, what happened in this first sort of round of negotiated rulemaking? First of all, remind us what's on the table for us to be talking about here?
Sarah Spreitzer: Well, what is negotiated rulemaking too, Jon?
Jon Fansmith: Yeah, we can talk about that too. And Mushtaq, it seemed like you're a little bitter you weren't designated as essential. Again, I don't don't know.
Mushtaq Gunja: I was doing good work. I thought I was important. Turns out I wasn't at all.
Jon Fansmith: I mean, working without pay is not a great reward either. Look, you are absolutely essential to ACE, so we would never furlough you. Negotiated rulemaking, really quickly, is the process by which essentially the executive agencies, administrative agencies implement laws. And in this case, we're talking about the big reconciliation bill, the One Big Beautiful Bill, which has a ton of impacts on higher education. We've talked about them throughout the course of the year.
But the Department of Education has two different rulemaking committees to implement the provisions of the One Big Beautiful Bill Act. The first one, as you guys were talking about, met last week. We went to a shutdown at midnight on Tuesday. The committee was supposed to meet Monday through Friday. There was some thought that with the shutdown, they'd stopped meeting the department. Even announced at the beginning, we'll go online two weeks later. And then it turned out they said, "No, we can continue to meet in person."
So they did. They met Monday through Friday. This is the RISE, Reimagining and Improving Student Education Committee, and this committee is focusing basically on the graduate loan provisions and a couple things. Repayment plans is a big piece of that, but the one that I think we're watching most closely is the new loan limits on graduate students. And in particular, because the reconciliation bill created two categories of graduate students, graduates and professional graduate students, and how you delineate between those two, what actual programs qualify as a graduate program versus a professional program.
The department has come out very aggressively with a very limited number of programs, 10 specific programs that they say should qualify for professional. Big difference there is graduate programs, you have a $20,000 annual borrowing limit, $100,000 aggregate borrowing limit. Professional program's $50,000, $200,000. If you think especially about health professions, those loan limits are going to be really impactful. So if the department classifies you as professional, a lot more of your students will be able to meet their full cost of attendance through federal lending. If not, they're going to have to go into the private market.
Mushtaq Gunja: This is round one. This week was round one of the rulemaking, what comes next?
Jon Fansmith: So there will be another five-week, or sorry, five-day session next month, I believe. And then there will be a second committee, the Accountability in Higher Education and Access through Demand-driven Workforce Pell Committee, which is going to meet in December and January. And they're going to talk about the accountability measures, the workforce Pell implementation, a number of other provisions from the bill. They haven't announced the negotiators for that process yet. We will see how that works out.
The one thing I do want to focus on while we have the time though, is timing. And timing seems like a super boring thing. I get it. But little background, generally... Or not generally. Very specifically, the Federal financial aid year starts on July 1st of every year. There is a law that requires the Department of Education to finalize regulations that impact financial aid by November 1st of the preceding year. And that makes sense because it allows institutions, and vendors, and servicers, and everyone else, including the Department of Education, to change their systems and implement whatever those changes mean in a way that they can assist students and inform them.
This administration, by the very definition, has said they're going to keep doing the rulemaking process into January. Meaning, that even the most optimistic timeframe has final rules, schools and everyone else understanding what the law actually means and how to implement it. Probably not in place until late March, April at the earliest. That's past the point where most institutions would've packaged aid.
So you could have graduate students whose ability to borrow is dramatically affected by which program is eligible. There's all sorts of systems work the institutions do with external vendors. There's a huge number of dominoes that fall once those changes are put into place. It's hard enough to do that from the November 1st to July 1st. It's going to be nearly impossible to do it if you're talking April 15th to July 1st.
And so we continue to ask the administration, we continue to ask Congress to think about extending those deadlines, pushing out a year, doing something. Because what they're doing, and we just came off two years of FAFSA chaos, is building another FAFSA mess basically. And not FAFSA this time, but what does this loan implementation look like? And we don't think they want that, we know that students and institutions don't want that.
Sarah Spreitzer: But Jon, wasn't this included in OBBB that they had to put these changes in place by July 1st? I mean, the department's following what Congress put into the law.
Jon Fansmith: So, yes, the OB3 stipulated the effective date of the changes are July 1st. That doesn't negate the requirement on the Department of Ed to finalize regulations by November 1st of the preceding year. Somebody noted in the comments, if the department doesn't meet that November 1st deadline, the law actually requires them to delay implementation by year to give institutions the time. Just because Congress screwed the Department of Ed with their timeframe not passing this until early July, doesn't actually excuse the Department of Education from not meeting their statutory obligations.
Sarah Spreitzer: But probably also why they're trying to meet during the shutdown, given that incredibly tight timeframe.
Mushtaq Gunja: Timelines aside... And the timeline, by the way, I mean all this is frightening. Yes, it seems like if they try to rush implementation, we could well be headed toward another financial aid disaster. Negotiated rulemaking has a set of negotiators that go and negotiate. Is there a way for our institutions to be helpful in this process until we get to the comment period, or what should our institutions be doing now?
Jon Fansmith: So there'll be... Sorry. You're asking before we get to the public comment part?
Mushtaq Gunja: Yeah, before we get to public comments, is there anything or do we just wait and hope?
Jon Fansmith: No. I mean, I will point to the health community in particular who's been, I think, really active and effective in terms of some of these discussions we're having about how do you classify a program at what level and what will the impact be on students. And then particularly health professions, but lots of other professions. What are the downstream impacts for our economy, for communities, especially rural or underserved communities, and why there is a need for doing this and getting that into the space.
Negotiators are representatives of institute. They come from institutions, in most cases, are consumer advocacy groups. They're representing a segment of the community stakeholder group. The more information that is put out there that clarifies the implications of choices are being made at the table, the more they inform those negotiators.
Again, a lot of this is a process that gives a lot of leverage to the Department of Education. If there's not unanimous consent among the negotiators, the department is entitled to write the rules the way they want to. So in some ways, they encourage dissent among the rule makers, but there should be very clear implications of the choices they're making. And everybody in higher ed can speak to some of these things and what they might mean.
Mushtaq Gunja: We have just a couple of minutes left. Sarah, I wanted to ask you on one end that we... And I hope you're prepared to talk about. We didn't talk about it very much yesterday.
Sarah Spreitzer: Great. I can't wait, Mushtaq. Please.
Mushtaq Gunja: Sarah, this dear colleague letter that was sent out, I think September 29th, September 30th, on lobbying.
Sarah Spreitzer: Oh, yeah.
Mushtaq Gunja: What is it? What does it mean for our institutions?
Sarah Spreitzer: Yeah. So it was sent, I think, Jon, by the Under Secretary Nicholas Kent, and basically a reminder to institutions that are doing registered lobbying activity that you can't use federal funds for lobbying activity. When I've worked for individual institutions of higher education, the funding for me in my office always came from a specific pot of funding that was very clean, that they knew didn't have any federal funding in it. So it's not any kind of change to the lobbying requirements. I think it was just a reminder, but I don't know. Jon, would you anything to that?
Jon Fansmith: I think it's reasonable to ask why in this moment the Department of Education chose to send a letter to all institutions reminding them of what the legal compliance environment around lobbying is. And the letter was particularly focused on paying dues to membership organizations or associations that do lobbying work.
You don't have to dig too hard to understand that there are some advocacy groups. And I'll just reference what somebody already said in the comments, Council for Opportunity and Education represents the TRIO grants. There is a lot of talk in that letter that sort of shades to how different organizations lobby and what are the legal requirements.
I think candidly, as candid as you can be in a public forum with a thousand or so people on it, I think the timing was intentional, that there is some effort to try to chill institutions' willingness to support associations that are advocating on their behalf. Certainly to maybe put a little fear into schools about whether they may be at risk as a result of supporting these organizations that are really actively representing their interests.
COE, for instance, has filed suit against the administration around the disbursement of TRIO grants. It wouldn't shock me to think that this was, in some ways, a response to those efforts.
Mushtaq Gunja: Well, I will say to your colleague, letters don't have the force of law, and this is just reminding folks of their obligations. So some ways, there's not a new there though. Of course, it's always interesting to be able to see, to try to connect the dots and try to understand where the administration's priorities are.
Okay. Friends, last minute or so, do you have any words of advice, words of hope, sunshine to leave our great attendees with, Sarah and then Jon?
Sarah Spreitzer: I mean, I thought we were going to use this time to discuss the new Taylor Swift album.
Mushtaq Gunja: Do you have a favorite track?
Sarah Spreitzer: Yeah, I like Fate of Ophelia, although I'm hearing a lot of mixed things about the album. I haven't talked to Jon about it yet.
Mushtaq Gunja: Jon?
Jon Fansmith: I mean, mixed feelings, honestly. I listened to it in full last night.
Sarah Spreitzer: Wow. Really? That's how you spent your Monday night?
Jon Fansmith: Listen, I have a wife and two teenage daughters.
Sarah Spreitzer: Oh, so it wasn't just you listening to it alone. I better listen to this in case it comes up on the podcast.
Jon Fansmith: I knew you would ask about it, Sarah. I mean, one step away from Taylor Swift for a second. But seriously, if you haven't been watching polling, Gallup and Pew both have polls out in the last month or so that show that the public's opinion of higher ed is improving. And that's really, honestly, the first time in about 10 years, you can say that. And it's as pronounced among Republicans as it is among others.
We've talked a little bit about this, but I do think if you have hope in this moment, it's a tough moment, it's that we are making the case for what we do, and the public is noticing and responding. And so I think that's keep doing what you're doing, all of you watching. It's important it is being noticed. And I do think the tide is turning slower than we like, but it's happening.
Sarah Spreitzer: That was much better than my comment.
Mushtaq Gunja: I thought both of them were equally awesome. And thanks all, and we will see you here again in a couple of weeks for the, wait, can they do that, additional question.
Sarah Spreitzer: Yep, [inaudible 01:00:00]. Yep. Thanks, guys.
Mushtaq Gunja: Thanks all.