Education Department Moves to End Funding for Minority-Serving Institutions

The U.S. Department of Education plans to end discretionary grant programs for a slew of minority-serving institutions, officials announced Wednesday—after Congress had already appropriated hundreds of thousands of dollars to those programs. The move stunned MSI advocates, who argue the department doesn’t have the authority to nix them.

The Education Department asserted that these programs amount to “discrimination” and are “unconstitutional” because they require colleges to enroll a certain percentage of students from a particular racial or ethnic background to qualify. For example, HSIs must enroll at least a quarter Hispanic students, among other requirements, to earn the federal designation.

“Discrimination based upon race or ethnicity has no place in the United States,” U.S. Secretary of Education Linda McMahon said in the announcement. “To further our commitment to ending discrimination in all forms across federally supported programs, the Department will no longer award Minority-Serving Institution grants that discriminate by restricting eligibility to institutions that meet government-mandated racial quotas.”

Seven grant programs are on the chopping block, including funds for Hispanic-serving institutions, Alaska Native and Native Hawaiian–serving institutions, predominantly Black institutions, Asian American, Native American and Pacific Islander–serving institutions and Native American–serving nontribal institutions. Historically Black colleges and universities and tribal colleges are unaffected.

The department plans to “re-program,” or reallocate, the funding. Existing discretionary awards will be discontinued, and no new awards will be granted, according to the announcement. The department will disburse approximately $132 million in mandatory funds appropriated by Congress “that cannot be reprogrammed on a statutory basis.”

At the same time, the Education Department “looks forward to working with Congress to reenvision these programs to support institutions that serve underprepared or under-resourced students without relying on race quotas and will continue fighting to ensure that students are judged as individuals, not prejudged by their membership of a racial group,” McMahon said.

But what that re-envisioning process will look like, and what ED officials want to emerge from it, remain unclear. The Education Department did not respond to questions sent by Inside Higher Ed.

A ‘Devastating’ Blow

The move comes after the Department of Justice opted not to defend Hispanic-serving institutions from a recent lawsuit brought against the Education Department by the state of Tennessee and the advocacy group Students for Fair Admissions.

The lawsuit claimed that HSIs, as currently defined, are unconstitutional because of the 25 percent Hispanic enrollment threshold. U.S. Solicitor General D. John Sauer wrote to House Speaker Mike Johnson in July that the requirement “violates the Constitution,” so the DOJ wouldn’t put up a fight on behalf of the federal program.

Despite these developments, ED’s announcement shocked some higher ed advocates.

Emmanual Guillory, senior director of government relations at the American Council on Education, noted that President Donald Trump’s proposed budget for 2026 level funded the same programs the Education Department is now threatening to cut. So, “this takes me by surprise,” he said.

Institutions that are already underresourced are suddenly going to have to take a hard look at their budgets, he added, noting that the government-appropriated funds can go toward badly needed maintenance and improvements to classrooms, labs and other facilities. (HSIs and other types of MSIs must also have low per-student expenditures and serve at least half low-income students to qualify for federal funds.)

“This could really impact their bottom line,” Guillory said.

Gina Ann Garcia, a professor who studies HSIs in the School of Education at the University of California, Berkeley, learned of ED’s decision when she got a blitz of text messages from her colleagues. She was on her way to give a talk on an HSI campus and had to be the one to share the update with those who attended, she said.

She called the news “devastating”—especially during HSI Week and ahead of Hispanic Heritage Month, when campuses are busy celebrating their successes. She said HSI leaders remain committed to continuing their missions, but the blow to federal funds “stalls the work.”

With HSI grant funds, “people pilot new ideas,” Garcia said. “They pilot new tutoring programs. They train faculty to redesign their curriculum so that it’s adaptive to the students. Those sort of things have long-term impacts with a little bit of money … Without the funding, people can’t try new things.”

That applies not just to HSIs but to other minority-serving institutions, she added.

Meanwhile, the Education Department had already opened competitions for some of these now canceled grants, noted Deborah Santiago, CEO of Excelencia in Education, an organization dedicated to Latino student success.

“Institutions put time and effort into competing for these funds, and then they’ve made three- to five-year plans to invest in,” Santiago said. Now “they’re going to be left without any of that, with no recourse … and these institutions serve a high enrollment of needy students,” Hispanic and otherwise, who will pay the price. She emphasized that funds for HSIs don’t specifically go to Latino students and can improve the quality of those institutions for all students.

Santiago said it’s hard to know how to push back when she disagrees with the basic premise that acknowledging racial disparities and funneling resources toward institutions with a high proportion of underserved students constitutes discrimination.

The administration also “has made clear that they are happy to come after institutions that challenge the decisions that they’re making,” she said. “So, I think there are some institutions that are trying to figure out what the appropriate role is.”

Last month, the Hispanic Association of Colleges and Universities, represented by the civil rights organization LatinoJustice PRLDEF, filed a motion to intervene in the lawsuit targeting HSIs.

Francisca Fajana, director of racial justice strategy at LatinoJustice PRLDEF, said in a statement that the two organizations are going to “continue to fight alongside students and institutions to defend these essential programs and ensure that opportunity, equity and investment in higher education are not rolled back.”

Stepping Out of Bounds?

As institutions weigh their options, it’s up for debate whether the Education Department has the power to end MSI programs and redirect the money in the first place.

Amanda Fuchs Miller, former deputy assistant secretary for higher education programs under the Biden administration and now president of the higher ed consultancy Seventh Street Strategies, emphasized that these are “long-established programs” in the Higher Education Act, and Congress authorized their funding for fiscal year 2025.

As far as she’s concerned, ED’s plan “violates the statute and violates Congress’s power of purse to appropriate funds and that the department has to spend them the way Congress appropriates,” she said.

She said the department is supposed to notify Congress if they’re “reprogramming” funds in certain situations, like if not enough institutions apply for a grant program and there’s money left over, but the “executive branch can’t just declare these programs unconstitutional … That would be the role of the courts.”

Guillory said he expects to see legal challenges to the Education Department’s decision and “outrage” from members of Congress, MSIs and the organizations that represent them.

But the government’s fiscal situation complicates the matter, said Roxanne Garza, director of higher ed policy at the Education Trust. She said her understanding is that Education Department officials believe they have the authority to move Congress-appropriated funds around because the government is currently funded by a continuing resolution—a temporary spending bill.

That resolution lacks “specific language that indicates to the agency that you have to spend this specific money on this specific program,” she said, so the department can use that as an excuse to reallocate funds even though it’s clearly “circumventing congressional intent.”

She worries that what happens with MSIs could become a broader issue.

“It’s unclear what else they could suddenly decide to not fund, or to move funding from one program to the other,” Garza said. “It just continues to set up a dangerous and very unpredictable environment for our schools, our universities, the grantees that essentially depend on this funding.”

U.S. Senator Patty Murray, a Washington Democrat, also argued the administration is taking advantage of a precarious moment.

“Ripping away these resources at the tail end of the fiscal year is yet another example of how President Trump is putting politics ahead of students simply looking to get ahead, and is sowing chaos in our nation’s schools,” Murray said in a statement. “These are longstanding programs that Congress has authorized and provided funding for on an annual basis that the Trump administration—empowered by the year-long slush fund spending bill passed in March—is unilaterally deciding to eliminate funding at the end of the year.”

David Mendez, interim CEO of HACU, said in a statement that ultimately, it’s students who are going to suffer.

“Cutting this funding strips away critical investments in under-resourced and first-generation students and will destabilize colleges in 29 states,” Mendez said. “This is not just a budget cut; it is an attack on equity in higher education.”