The 2025 Interagency Agreement (IAA) between the US Department of Education and the US Department of Labor is more than a back-office grants shift. It is a warning that federal funding, accountability, and federal strategies are converging around workforce outcomes.
A federal grants transition rarely belongs on a president's cabinet agenda. This one does. Principal Grants Specialists, Becca van Lieshout, GPC and Rhyan Romaine, examine the impacts of this transition.
What Is Changing Under the ED-DOL Interagency Agreement?
The 2025 ED-Labor IAA is often discussed as an administrative change: new systems, new workflows, new federal points of contact. Those details matter. For new FY2026 awards, ED has told grantees that opportunities will continue to appear on Grants.gov, but grant management will transition to GrantSolutions and the Payment Management System, while existing grants remain in the G5 system.
But the bigger story is not the platforms. It is the policy signal. The federal government is building an integrated education-to-employment paradigm that places greater emphasis on employment outcomes and earnings to demonstrate measurable returns on public investments. For higher education leaders, the question is no longer whether workforce alignment and employment outcomes matter. The question is whether an institution can demonstrate its graduates satisfy the employment and earnings benchmarks established by federal policy: student by student and program by program.
Why Does the ED-DOL Agreement Matter for Higher Education?
On the surface, these appear to be administrative changes. In practice, they influence how federal grant programs are interpreted, scored, awarded, implemented, and evaluated. This agreement also signals a broader shift toward a federal operating model that increasingly connects education funding, workforce development, and institutional accountability.
This matters because administrative environments shape expectations. As programs are administered within a more workforce-oriented system, employment and earnings outcomes become increasingly important measures within the federal accountability framework.
How Could Evolving Federal Accountability Expectations Affect Colleges and Universities?
The ED–DOL IAA signals more than an administrative change. It reflects a broader shift in how the federal government evaluates institutional performance and public investment in higher education. While colleges and universities continue to serve broad educational, civic, and research missions, federal policy is increasingly asking institutions to demonstrate workforce-related outcomes alongside traditional measures of success.
Key implications include:
- Federal expectations are evolving. Institutions may increasingly be asked to demonstrate workforce-related outcomes alongside traditional measures of student success.
- Academic planning faces new external pressures. Program decisions may be evaluated through both institutional priorities and changing federal accountability expectations.
- Institutional readiness depends on connected decision-making. Academic affairs, workforce education, finance, grants, and institutional research will need to work together to respond to a more integrated federal environment.
For institutional leaders, the challenge is not to redefine institutional mission. It is to understand how evolving federal expectations may influence funding, accountability, academic planning, and institutional strategy.
What Operational Changes Should Higher Education Leaders Evaluate Now?
Although the long-term policy direction is still evolving, the operational implications are beginning to emerge. Institutional leaders should evaluate readiness in four areas:
- System transitions: New grants will move into GrantSolutions while existing awards continue in G5, requiring institutions to manage parallel federal processes.
- Financial operations: Payment, reconciliation, and internal control processes may require updates as federal systems evolve.
- Data readiness: Institutions should assess whether they can produce credible information on workforce-related outcomes as reporting expectations continue to develop.
- Cross-functional coordination: Finance, grants, compliance, institutional research, and academic leadership will need aligned processes and shared understanding as responsibilities increasingly overlap.
Operational readiness is no longer simply about adapting to new systems. It is about ensuring institutional processes can respond effectively as federal expectations continue to evolve.
What actions should institutional leaders consider now?
The next question for institutional leaders is no longer whether another federal change is coming. It is whether the institution is organized to respond when it does. Institutions do not need to wait for every implementation detail before preparing. Early planning can reduce risk and strengthen organizational readiness.
Leadership teams should focus on:
- Assessing institutional readiness across systems, workflows, and data capabilities.
- Strengthening cross-functional governance by bringing together finance, grants, compliance, institutional research, workforce education, and academic leadership.
- Evaluating workforce-related data to understand what the institution can demonstrate today—and where additional information or partnerships may be needed.
- Monitoring federal guidance so institutional responses remain coordinated as implementation unfolds.
The objective is not to predict every policy change. It is to build the organizational capacity to respond as expectations become clearer.
What Federal Developments Should Institutions Watch Next?
Several developments will shape how this transition unfolds:
- Additional federal guidance on reporting requirements and administrative processes.
- Continued refinement of workforce-related performance expectations.
- Expansion of cross-agency collaboration across additional education and workforce programs.
- Greater alignment between federal workforce priorities and state funding and accountability initiatives.
Specific requirements are expected to evolve, but the need for coordinated leadership is already apparent. Institutions that strengthen collaboration across finance, grants, academic affairs, workforce education, and institutional research will be better equipped to navigate whatever comes next.
Ellucian Grants Services – Helping institutions find, secure, and manage grants to advance institutional and student success. For more information, email [email protected].
Learn more about the interagency agreement with our Executive Brief.
