How the Federal Grants Landscape Is Changing After DEI Rollbacks in Higher Education

What the Shift Away From DEI Means For Higher Education

The rapid retrenchment of diversity, equity, and inclusion (DEI) in higher education has been truly remarkable in speed and scope. My colleagues and I at McAllister & Quinn have continued to work very hard with our partnering schools to craft proposals that can at once secure resources for their strategic priorities—especially those that focus on underserved communities—while also ensuring that their submissions comply with emerging federal guidelines. We’ve been fortunate to have the support of our strategic intelligence team to impose some order on the seeming chaos. There’s no need to review again the events of the last 18 months, since everyone in higher education understands that it all began in January 2025 with the series of executive orders (EO) from the White House.[1] We’re still learning about the full implications for higher education, including the effects on the federal grants landscape and how specific federal competitions are being reconfigured to reflect this new reality.

Still, some of the features of the funding landscape are becoming clearer, beginning with the administration’s funding priorities of workforce development, artificial intelligence (AI), and civil discourse. We are also learning more about other administration preferences, especially after the release in recent weeks of a series of grant opportunities from the Department of Education (DoEd)[2] and the Health Resources and Services Administration (HRSA). Given the events of late, we anticipated that grant projects would not be awarded that explicitly focus on issues of race, ethnicity, and gender, nor will support be extended to underserved populations that are defined by the same. But, the emerging picture is more complicated. Some, but not all, of the newly released grant competitions include priorities that privilege rurality and socioeconomic class instead of criteria associated with DEI. I review a few examples of these grants here to illustrate how the administration has incorporated some of these new funding priorities into the revised solicitations for longstanding grant competitions, while not eliminating DEI as a priority from all of them. My hope is that the review here might also hint at the shape of things to come for the federal grants landscape.[3]

The New Federal Grants Landscape

Title III and Title V Grant Changes

Let’s first consider the release of the Department of Education’s (through the Department of Labor) Title III Strengthening Institutions Program (SIP).[4] The FY2026 Notice of Funding Opportunity (NOFO) represents a significant departure from prior competitions. The statutory purpose of SIP, strengthening institutional capacity for colleges serving high numbers of low-income students, remains unchanged, but the funding categories and the competitive criteria have been dramatically revised. The most obvious and consequential change is the reprogramming of several funding streams under Title III and Title V that targeted Minority-Serving Institutions (MSIs) and Hispanic-Serving Institutions (HSIs). For the FY26 competition, funds appropriated for several of these programs were folded into a single SIP competition, effectively eliminating the Developing Hispanic-Serving Institutions program which is predicated on percentage of Hispanic enrollment, among others.[5] The resulting competition is substantially larger in terms of total funding ($350,000,000) and with approximately 600 expected awards.

Taken together, this shift transforms SIP from its long-standing structure as a general capacity-building program to better support underserved students, often defined by applicants in terms of race or ethnicity. Instead, the 2026 iteration of SIP is a broader program that provides federal funding to under-resourced colleges and explicitly privileges rural-serving institutions. To be clear, the statutory language of SIP has never privileged race or ethnicity, and the 2026 NOFO forecloses the option of defining the target student population with any factor other than economic status. Institutions who submitted strong proposals were undoubtedly mindful of these revised guidelines.

How HRSA Grants Are Shifting After DEI Restrictions

Another bolus of opportunities has come from the Health Resources and Services Administration (HRSA), which released a number of NOFOs in very quick succession during May and June. Like the Title programs from DoEd, the competitive criteria for HRSA grants in previous iterations focused on support for underrepresented populations. For instance, the 2025 version of HRSA’s Nurse Faculty Loan program (NFLP) encouraged applications to, “Enhance experiential and didactic curricula to help NFLP students address health disparities, social determinants of health (SDOH), health equity, and behavioral health integration for populations they serve upon graduation (emphasis added).” Institutions frequently defined these populations in terms of race or ethnicity and designed their programs accordingly. That language was deleted in the 2026 NOFO.[6]

HRSA’s Nursing Workforce Development Program (NWD) aims to increase nursing opportunities for students from disadvantaged backgrounds. Which disadvantages? The 2026 competition eliminates language from the previous iteration that stated disadvantaged students included “racial and ethnic minorities underrepresented among registered nurses.” In its place is language that outlines new funding preferences as reflected in the title change for the program, from “Workforce Diversity Program” to “Workforce Development Program.” One of the key changes in focus is to privilege schools that will “substantially benefit rural populations.”[7] However, the program goals for the NWD also establish preferences for medically underserved areas that include many urban environments, so submissions are likely to include urban and rural applicants with strong cases for federal support.

Then came the anomaly. HRSA released the Scholarship for Disadvantaged Students (SDS) on June 26, a program that has previously encouraged schools to identify underserved populations, often based on race or ethnicity. The previous iteration of this program included language in the overview section that defined “disadvantaged” as, “including students who are members of racial and ethnic minority groups.” Pretty straightforward. While almost anyone would have predicted the omission of this language, there was a significant surprise later in the NOFO where the HRSA details the funding priorities. The third priority (of four) explains that proposals will receive up to two additional points if at least 5% of the institution’s full-time students are underrepresented minority students. In the same section, the NOFO clarifies that scholarships will not be awarded solely on the basis of race or ethnicity, but that these students will also face financial hardship from the costs of attendance.

How Colleges Should Prepare

What does all of this say about the trajectory of federal grants and issues of diversity?  Federal grants will continue to focus on populations that are “disadvantaged” or “underserved,” but applicants will have less discretion in defining that population, and agencies will stipulate more strictly the indicators or measures to be employed by applicants. For instance, HRSA grants that focus on medically underserved areas or populations (MUA/P) must use the data tools provided by the agency, while other competitions are likely to use some measure of family income or resources invested per student/patient. In the context of a grant competition, many but not all of these indicators identify the target population by using proxies for class rather than race, ethnicity, or gender. As I’ve noted elsewhere, the emerging emphasis on class is a very interesting turn in America’s long history of denying class distinctions.^[8]

In practical terms, it will be interesting to see what populations will be served when grant recipients implement the work that they have proposed. For historical reasons, the United States has reinforcing social cleavages based on race/ethnicity and economic status. Thus, grant programs (or any initiative, for that matter) that provide resources for disadvantaged or underserved populations might also include a significant percentage of non-white recipients, simply because the median income for Hispanic and Black populations is less than the median income for white citizens.

For the foreseeable future, we will be watching closely as agency officials forecast the overall direction of programs and as they release new opportunities. McAllister & Quinn’s team of analysts provides real-time intelligence that informs our work with partnering schools, and we provide a bi-weekly digest of that information to institutional leaders. This information has already proved to be invaluable for partnering schools who have “stayed in the game,” and as a result have continued to receive federal funding. Clearly, the federal government will continue to invest in institutions who are supporting underserved student populations and those who know how to navigate this complicated landscape.

Sources

[1] In a previous thought piece, I reviewed the series of executive orders (EOs) related to higher education and DEI from that time, triggering immediate legal challenges. Many of those cases are still ongoing even as the long-delayed appropriations process for FY26 detailed further restrictions for DEI work on campuses receiving federal funding.

[2] These opportunities are administered by the Department of Education staff who have been detailed to the Department of Labor.

[3] Readers will note that I did not include analysis of grant programs from the National Science Foundation and the National Institutes of Health in this piece. Later this summer I’ll be sharing a focused review of how policy changes are rippling through those agencies.

[4] The Department of Education’s Title III Strengthening Institutions Program (SIP) is hardly a new program, originating in the broader legislation of the Higher Education Act of 1965. The program’s intent was to provide additional support for schools that served low-income students.  In 1980, Title III was restructured to establish SIP to help build capacity for under-resourced and minority-serving institutions.

[5] For a comprehensive review of the revised parameters of the Title III competition in 2026, please see the detailed summary drafted by my colleague Lena Heier.

[6] The analysis of this competition by Branden Dutchess, Research Analyst at McAllister & Quinn, has been extremely helpful.

[7] This passage benefits from the analysis of my colleague, Tess McArdle.  In addition to the revisions to these two competitions, there are a series of more focused programs under the Federal Office of Rural Health Policy.

[8] Class has never been an important aspect of identity in the United States.  Even at the time of our founding, de Tocqueville identified the United States’ defining characteristic as the “equality of conditions” that prevailed in revolutionary America.  John Steinbeck captured this American ethos in his famous quote, “the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”