Federal grants are not simply a source of extra money. For colleges and universities, they support research, workforce development, student success initiatives, community partnerships, program and technology modernization, and they drive institutional innovation. They also come with wide ranging terms and conditions that ensure effective and efficient use of federal dollars, require regular reporting, and establish expectations around documentation to support expenditures.
The Office of Management and Budget's proposed revisions to the Uniform Guidance (2 CFR Part 200) could significantly alter how federal agencies award, monitor, and manage grants. While the proposed changes have not been finalized or approved, it signals a broader federal shift toward increased oversight, expanded recipient accountability, and greater emphasis on documented institutional performance. Principal Grants Specialist Becca van Lieshout, GPC, and Senior Grants Specialist Shauna Nischik, PMP, examine potential impacts of the proposed changes slated for implementation during the next new federal fiscal year on October 1, 2026, with final timing dependent on congressional action.
What Are the Proposed 2026 Uniform Guidance Changes?
At its core, oversight is shifting from policy compliance to performance and proof.
Under the proposed updates to the Uniform Guidance, institutions will be evaluated not just on whether compliant policies and internal controls exist, but on whether these systems consistently produce reliable, verifiable results across the full grant lifecycle—from application through audit to increase transparency and ensure compliance with the current administration’s policy agenda.
Some of the most significant proposed changes include:
- Expanded applicant risk reviews conducted by federal agencies
- Final awards approved by senior political appointees
- Increased scrutiny of financial and cybersecurity controls
- Enhanced subaward reporting requirements
- Additional documentation requirements for payment requests
- Greater federal discretion to terminate awards
- Tighter restrictions on certain categories of costs
- Increased emphasis on policy alignment and institutional accountability
- A preference to issue discretionary awards to institutions with lower indirect cost rates
- Restricting eligibility among different types of non-profit organizations, for example, a 501(c)(3) or a 501(c)(4)
- The subcategorization of research into basic, applied, or experimental development
This means institutional policies and priorities, project and expenditure documentation, internal controls, and day-to-day operations are no longer separate elements—they are evaluated together as an interconnected operating environment that determines eligibility for funding, final award decisions, and award terms and conditions.
Why Proposed Federal Grant Reforms Matter for Higher Education
Taken individually, these changes may appear operational. Taken together, they represent something much larger: A shift from grants compliance as individual, specialized administrative functions to grants compliance as an enterprise-wide governance responsibility. This signals a move toward integrated, evidence-based oversight, where agencies expect alignment between what institutions say, what they do, and what they can demonstrate through documentation.
How Institutions Can Assess Federal Grant Readiness Now
Whether the proposed rule is finalized as written or not, many of these priorities are already appearing in federal funding conversations, agency guidance, and program oversight practices. As oversight becomes more integrated, many institutions are re-evaluating whether fragmented processes and legacy approaches can support future compliance expectations. Institutions that begin assessing organizational readiness now will be better positioned to respond to future federal expectations as these proposals become finalized.
Strategic Questions for Leadership
- How well are compliance, finance, and program operations aligned?
- Can institutional practices withstand greater scrutiny?
- Are internal controls producing evidence of effectiveness or merely documentation of intent?
What Should Institutions Watch Next?
As the regulatory process continues, institutions should pay attention to:
- Final rule language and agency interpretation
- Changes in monitoring and enforcement practices
- Increasing alignment between proposal-stage commitments and audit-stage validation
Even as details evolve, the direction is clear. Oversight is becoming more integrated and focused on demonstrating that projects are implemented as proposed and achieve the projected results.
How Ellucian Grants Services Supports Institutional Readiness
Institutions navigating this change need connected systems and processes that bring together finance, compliance, and program operations — giving leaders trusted visibility and helping them respond with confidence. Strengthening grant operations within that framework ultimately helps institutions sustain the research, workforce readiness, and student success initiatives those funds make possible. Ellucian Grants Services helps institutions:
- Improve alignment across the grant lifecycle
- Strengthen grants-related processes and documentation
- Increase visibility into institutional performance and risk
The goal is not simply to respond to evolving federal requirements, but to strengthen institutional readiness and build operational confidence needed for long-term success through stronger governance, connected operations, and documented accountability.
Ellucian Grant Services – Helping institutions find, secure, and manage grants to advance institutional and student success. For more information, email [email protected].
Learn more about the proposed changes with our Executive Brief.
