New Executive Order Adds Scrutiny to Higher Education Institutions’ Foreign Funding Sources

As a part of the administration’s effort to add regulatory requirements and scrutiny to institutions of higher education, on April 23, 2025, President Trump issued an Executive Order (EO) on Transparency Regarding Foreign Influence at American Universities. The order:

• Calls for “robust enforcement” by the Department of Education (ED) and Department of Justice of Section 117 of the Higher Education Act (“Section 117”) to ensure higher education institutions disclose foreign gifts and contracts;
• Directs the Secretary of Education to take steps to require universities to disclose more detailed information about their foreign funding; and
• Directs the Secretary of Education to ensure that universities’ certifications of compliance with Section 117 are considered “material” for purposes of the False Claims Act (FCA) and for the receipt of federal grants.

The EO is the latest indication that we are seeing a resumption of the first Trump administration’s close scrutiny of universities’ foreign ties; and it elevates the potential consequences for covered institutions that fail to appropriately disclose their foreign sources of funding, including the risk of enforcement under the FCA. The EO comes on the heels of increasing scrutiny of universities’ foreign ties by Congress, adding another dimension of risk to this set of issues.

Section 117 at a Glance

Section 117, codified at 20 U.S.C. § 1011f, requires certain post-secondary institutions—public and private—to report gifts from, and contracts with, “foreign sources” valued at more than $250,000. Covered institutions are those that (i) offer a bachelor’s degree, advanced degree, or a transfer program of not less than two years that can be credited toward a bachelor’s degree and (ii) receive federal funding. Institutions owned or controlled by a foreign source must also report such ownership or control. 

A “foreign source” is: (i) a foreign government or any of its agencies; (ii) a foreign legal entity, such as a corporation; (iii) an individual who is not a U.S. citizen or U.S. national; or (iv) an agent acting on behalf of a foreign source. This definition is similar, but not identical, to the definition of “foreign principal” under the Foreign Agents Registration Act (FARA). Importantly, unlike FARA, Section 117 treats all non-U.S. nationals and citizens as “foreign sources,” even if those individuals are located in or domiciled in the United States.

Section 117 is only a disclosure regime; it does not prohibit funding from foreign sources. A substantially similar disclosure provision was first enacted in 1986, in the wake of concern over Georgetown University launching its Center for Contemporary Arab Studies with funding from several Middle Eastern governments and in the context of growing anxiety about foreign influence on U.S. research and education.

Institutions must disclose foreign funding received and submit certifications of compliance semiannually at the end of January and July through ED’s foreign gifts reporting system, which launched in June 2020. ED publishes the data on its website.

Historically, ED has led Section 117 enforcement through regulatory investigations. But the statute authorizes DOJ to seek a court order to compel the required disclosures in the event of noncompliance. For knowing or willful violations, DOJ may seek reimbursement of ED’s investigation and enforcement costs. In June 2020, ED expressly stated that institutions are subject to criminal penalties under 18 U.S.C. § 1001 for making false statements in their disclosures. ED also issued guidance indicating that violators could lose Title IV funding for student aid. Under the EO, universities could now also face civil liability under the FCA for certifying compliance with Section 117 despite knowingly submitting incomplete or inaccurate disclosures.

Enforcement Efforts  

Though Congress enacted Section 117 in 1998 (replacing a substantially similar disclosure requirement enacted in 1986), ED did not proactively enforce the law until 2019. During President Trump’s first term in office, ED initiated 19 Section 117 compliance reviews of public and private universities. Across these investigations, ED inquired about funding received from China, Russia, Qatar, Saudi Arabia, Egypt, Iran, and other sources. These investigations were carried on during the Biden administration. By January 2025, 12 of the 19 investigations had been resolved.

Universities have faced scrutiny for their foreign funding streams under other authorities as well. DOJ has brought criminal and civil cases in relation to failure to disclose foreign ties on federal grant applications. As part of the first Trump administration’s “China Initiative,” for example, a Harvard professor was convicted in December 2021 on false statement charges relating to his failure to disclose his association with—and income from—a Chinese government program to recruit scientific talent. Other investigations were unsuccessful and ended in dismissals or acquittals (and the China Initiative was discontinued under the Biden administration in favor of a broader campaign against hostile nation states).

In October 2023, three years after ED launched a Section 117 investigation into Stanford, the university reached a civil FCA settlement with DOJ to resolve allegations that it failed to disclose foreign funding in federal research grant applications. In December 2024, DOJ reached a similar civil FCA settlement with the University of Delaware over its alleged failure to disclose a professor’s support from a Chinese government institution in requests for federal research funding. Although these cases stemmed from authorities other than Section 117, they illustrate that universities’ obligations to disclose foreign funding have real teeth.

The EO is consistent with the administration’s broader approach to addressing foreign malign influence. The administration has taken a variety of steps in its first 100 days concerning foreign influence and appears to be consistently interested in preserving regulatory discretion to go after types of influence, or sources of influence, it deems problematic. While the areas of focus may have shifted, this administration remains focused on combating foreign influence.

Congressional Involvement

The executive branch is not alone in scrutinizing universities’ foreign funding sources. Congress has used its oversight and legislative authorities to examine some foreign funding of universities and consider more robust disclosure obligations.

Congressional Investigations

In July 2023, the chairs of the House Select Committee on China and the House Committee on Education and Workforce launched an investigation into universities alleged failures to disclose funding from China. That investigation culminated in a September 2024 report identifying how multiple universities had allegedly contributed to substantial gains by the Chinese government into nuclear weapons technology, artificial intelligence, semiconductors, and robotics. Concerns about foreign funding continue to arise in other congressional oversight efforts concerning universities. For example, in March 2025, the Select Committee issued a round of letters to several universities focusing on, among other issues, foreign funding of Science, Technology, Engineering, and Mathematics (STEM) programs. 

In February 2025, the House Committee on Oversight and Government Reform sent a letter to the Acting Secretary of Education requesting information on ED’s Section 117 enforcement efforts and urging action to combat foreign malign influence.

DETERRENT Act

Legislative proposals to increase scrutiny on universities’ foreign funding appear to have bi-partisan traction. At the end of March 2025, the House passed the Defending Education Transparency and Ending Rogue Regimes Engaging in Nefarious Transactions (DETERRENT) Act. The Act passed primarily with Republican support but was cosponsored by two Democrats and garnered 31 Democratic votes of approval.

The DETERRENT Act would lower Section 117’s reporting threshold from $250,000 to $50,000 in most cases. For gifts from “countries of concern” and entities from these countries—currently China, Russia, North Korea, and Iran—the Act would mandate reporting of any gift and require institutions to obtain a waiver from ED to enter into contracts with entities from such countries. The Act would also expand the definition of foreign sources to include international organizations and close the gap between Section 117 and FARA’s definition of agent of a foreign principal by adopting FARA’s definition as part of the definition of foreign source.

Renewed Enforcement Efforts: Increased Risk and Consequences to Universities

The EO has already led to increased scrutiny of universities’ foreign funding, including audits and investigations by ED. In the last several weeks, ED opened or re-opened three Section 117 investigations. Moreover, the EO directs the Secretary of Education to take steps to require universities to disclose more details about foreign funding and provide the public with more access to information about the funding. While details remain scant—namely what further information must be provided and how it must be disclosed—once implemented, these requirements will provide ED with additional levers against covered institutions. The recent investigations shed light on what kinds of documents ED may ask for. In one investigation, ED requested documents going back to 2017 in the following categories: (1) tax records; (2) Section 117 compliance; (3) international student, faculty, and research personnel agreements; (4) international research collaboration; (5) foreign government talent recruitment programs; and (6) foreign gifts, grants, and contracts.

The EO portends a greater role for DOJ in monitoring universities’ foreign ties. Specifically, the EO’s directive to treat certifications of compliance as “material” suggests DOJ will explore and expand upon using the FCA to enforce Section 117 compliance. A university that knowingly makes incomplete or inaccurate disclosures but nonetheless certifies its compliance with Section 117 could be held liable for making a “material” false claim to ED, under the theory that ED would not have provided federal funding to the university had ED known the university received the undisclosed foreign funding. DOJ has articulated a similar legal theory in prior civil FCA settlements with universities related to disclosing foreign funding, but making Section 117 certifications “material” representations by default could increase DOJ’s leverage in such matters. These moves, in combination with more investigations from ED, put even greater pressure on universities to review disclosures closely for accuracy and completeness.

As a first step, universities should carefully review their foreign funding compliance procedures. But complying with these enhanced regulatory burdens is only part of the issue. Universities—including those that face or expect regulatory scrutiny on other grounds—should ensure they are considering the entire landscape of risks as they seek to navigate this thorny set of issues.