Navigating Rapid Federal Funding Shifts in Higher Education
The landscape of federal higher education funding is undergoing significant change, and these shifts create increasing uncertainties for many institutions of higher education. Recent actions from the current administration signal a broader effort to reduce the size and capacity of Department of Education (ED) while realigning its activities to advance key policy priorities. For colleges and universities, this requires careful attention, as policy and funding changes are coming quickly and reshaping how institutions access federal funding, serve students, and remain compliant with federal requirements.
Federal Funding Ends for a Range of Discretionary Grant Programs
On Wednesday, September 10, 2025, the Department of Education published a press release titled “U.S. Department of Education Ends Funding to Racially Discriminatory Discretionary Grant Programs at Minority-Serving Institutions,” ending several grant programs that have long provided critical resources to institutions that serve significant minority populations.
These programs are often core to their institutions’ mission to broaden higher education opportunities, allowing for expanded student success initiatives, academic programming, and institutional capacity-building. They typically serve all students at an institution – not simply those of a particular demographic or profile. This recent action by the Department of Education represents a fundamental funding shift with potentially long-term implications, depending on whether future litigation or ongoing court cases change the course.
Reallocating Certain Discretionary Grant Program Funding
The Department of Education has ended funding for a range of discretionary grant programs; impacting both 2025 new awards and non-competing continuations (continued funding for the subsequent budget year for existing grantees). The Department plans to reallocate funding from the following programs to other agency initiatives:
- Strengthening Alaska Native and Native Hawaiian-Serving Institutions (Title III Part A)
- Strengthening Predominantly Black Institutions (Title III Part A)
- Strengthening Asian American- and Native American Pacific Islander-Serving Institutions (Title III Part A)
- Strengthening Native American-Serving Nontribal Institutions (Title III Part A)
- Minority Science and Engineering Improvement (Title III Part E)
- Developing Hispanic-Serving Institutions (Title V Part A)
- Promoting Postbaccalaureate Opportunities for Hispanic Americans (Title V Part B)
Funding from these seven programs will be reallocated to invest in charter schools, American history and civics programs, Historically Black Colleges and Universities (HBCUs), and Tribally Controlled Colleges and Universities (TCCUs). Click here to read the full press release “U.S. Department of Education Makes Historic Grant Investments in Programs That Bolster Educational Outcomes.”
Although some discretionary MSI grant programs are being eliminated, not all federal support is disappearing. Approximately $132 million in mandatory funds appropriated by Congress will still be disbursed in fiscal year 2025. Unlike discretionary funding, these dollars cannot be reprogrammed and are statutorily required to support several Title III, Part F programs, including:
- Strengthening Alaska Native- and Native Hawaiian-Serving Institutions
- Strengthening Predominantly Black Institutions
- Strengthening Asian American- and Native American Pacific Islander-Serving Institutions
- Strengthening Native American-Serving Nontribal Institutions
- Developing HSI Science, Technology, Engineering, or Mathematics and Articulation Programs
These funds cannot be reprogrammed by the Department. Even if discretionary programs are eliminated, mandatory Title III-F STEM/Articulation funding is built into federal law, providing some stability.
Are you an Impacted Minority Serving Institution?
Institutions still have options to mitigate impact and advocate for support. Consider:
- Engaging your program officer to determine eligibility for a no-cost extension to maximize remaining funds.
- Communicating with your congressional delegation. Consider sending a formal letter urging them to weigh in with the Department of Education on behalf of your institution.
- Strengthening association memberships. Legal action taken by associations only protects member institutions. Ensure you are aligned with organizations such as:
- Diversifying funding streams. Explore federal, state, and private foundation opportunities to offset lost discretionary support.
McAllister & Quinn’s Strategic Intelligence
Institutions are faced with several challenges including budget gaps, program disruptions, compliance and legal risk. As policies continue to quickly evolve, institutions must remain nimble and well-informed.
McAllister & Quinn is committed to helping colleges and universities cut through the uncertainty by delivering timely, actionable intelligence. We provide strategic intelligence that helps institutions respond proactively rather than reactively. Click here to subscribe to our monthly newsletter designed specifically for small and mid-sized college and university leadership to understand what’s happening in Washington, DC and how it impacts your institution.
Micaela Quinn
Micaela Quinn is a Director of Grants and Federal Affairs in the Higher Education Practice at McAllister & Quinn. She specializes in helping small to mid-sized colleges and universities navigate the evolving federal funding landscape. Micaela partners with institutions to identify strategic grant opportunities—both federal and foundation-based—and supports them from early concept development through to full proposal submission. Her work emphasizes aligning funding strategies with institutional priorities, particularly during periods of policy and funding change.
