As higher education institutions begin a new academic year this fall, campus leaders are navigating a fast-changing federal policy landscape that's redefining the rules on research and funding. Over half of higher education research expenditures—nearly $60 billion according to the 2023 Higher Education Research and Development Survey—is supported by the federal government. That's more than financial aid—it's funding that transforms institutions and supports economic and workforce development at local and regional levels. The changing federal landscape underscores the critical need for institutions to safeguard their missions, defend institutional resources, and advocate for stabilizing policy solutions.
Impacts of Executive Orders and Federal Actions
According to the COGR (formerly the Council on Governmental Research), more than 60 executive orders with potential impacts on higher education have been signed since January 20, 2025. These orders are radically disrupting federal grants and funding research. Sweeping policy changes launched by federal agencies like proposed caps on indirect cost recovery and politicized funding criteria have triggered legal battles and created uncertainty.
- Eligibility Concerns: Programs designed to support diversity and underserved populations are being cut or canceled outright, erasing progress on bringing student outcomes to parity
- Grant Delays: Funding announcements and awards are stalled while grantmaking agencies rush to adapt their processes for compliance
- Crippling Cost Caps: A proposed 15% ceiling on indirect costs (Facilities & Administrative rates) threatens institutional cost recovery for essential research infrastructure and administration—jeopardizing grant viability
- Heightened Scrutiny: New grant conditions enforce stricter anti-discrimination, citizen verification, and foreign disclosure requirements, increasing compliance burdens and risk
- Legal Pushback: Multiple lawsuits challenge these executive orders and agency policies, but uncertainty persists during protracted litigation
- Grant Terminations: A recent executive order adds a termination for convenience clause to all discretionary grants, allowing for the cancellation of grants that do not align with the administration’s priorities. According to Insider Higher Ed, more than $3 billion in research funding has been cancelled, including key programs like the Institute of Museum and Library Sciences grants and shifts in federal agency priorities aligning with the current administration's agenda.
Within months, these federal actions have reshaped the grant landscape, causing eligibility confusion, operational delays, financial shortfalls, and legal turmoil.
Fiscal Year (FY) 2026 Federal Budget Proposal
The President's FY 2026 budget request proposes $163 billion in federal spending cuts, hitting non-defense discretionary funding especially hard. Major agencies supporting higher education and research—including the Department of Education, National Science Foundation, and Health and Human Services—face steep reductions, while defense spending rises 13%. The proposal would eliminate hallmark programs like Strengthening Institutions, TRIO, GEAR UP, and CCAMPIS, drastically reducing support for access and student success. NSF's budget would be slashed by 56%, threatening STEM scholarships and technical education. The budget's underlying theme is to shift responsibility to states through federalism and block grants, leaving higher education with fewer federal resources and greater uncertainty.
Understanding the Federal Budget Process
The President's budget is a policy statement—not the final word. Actual funding levels are set by Congress through the appropriations process, which is still underway despite the passage of HR 1, "The One Big Beautiful Bill." Both chambers are expected to finalize FY 2026 funding by September, ahead of the start of the new Federal fiscal year on October 1. Because Congress controls the purse strings, the enacted budget may look very different from the President's proposal.
Next Steps for U.S. Institutions
Given these developments, we encourage institutions to take the following actions.
- Know Your Terms and Conditions – Understand the terms of your executed awards, agency guidance, and federal regulations. These remain enforceable while your award is active.
- Be Proactive – Anticipate possible changes to project activities, language, or objectives in accordance with the executive orders. Do not act on those changes until you receive guidance from your funding agency.
- Audit Internally – Inventory all grant-funded projects, activities, outcomes, and initiatives that relate to DEI, gender ideology, undocumented residents, or renewable energy
- Respond to Terminations – If a grant is modified, paused, or terminated, route notices to your sponsored research office. The University of Pittsburgh published guidance in April that can be used as a model. It is also important to pay close attention to the instructions provided by the funding agency.
- Keep Planning – Grant planning is akin to strategic planning and should continue in support of meeting institutional outcomes. Initiatives and partnerships can be repurposed if priorities or funding change.
- Develop Contingency Plans – Scale down project designs, repackage ideas for new proposals, and expand grant prospecting efforts
- Engage Policymakers – Highlight success stories and community impact. Track legislation and stay involved—policy shapes funding.
- Consult Legal Counsel – Experienced legal advisors can help navigate compliance, respond to executive orders, and evaluate your options when grants are at risk
Ellucian Grants Services
The mission of Ellucian Grants Services (EGS) is to help institutions find, secure, and manage grants to advance student and institutional success. Contact us at [email protected] or learn more on our Website.
