Congressional Republicans are increasingly focused on ensuring that U.S. colleges and universities are properly disclosing gifts and contracts from foreign sources under Section 117 of the Higher Education Act of 1965, 20 U.S.C. §1011f (“Section 117”). The Higher Education and Workforce Development Subcommittee of the House Committee on Education and the Workforce (the “Committee”) held a hearing on July 18, 2023 titled Exposing the Dangers of the Influence of Foreign Adversaries on College Campuses, which discussed the enforcement, and even potential expansion, of Section 117.
Witnesses testified before the Committee that not all reportable gifts and contracts were being disclosed, and advanced a range of possible solutions for strengthening enforcement of Section 117. Recommendations from the witnesses included moving investigations and enforcement from the Office of Federal Student Aid (FSA) to the Department of Education’s (ED) Office of General Counsel (OGC), and reducing the reporting threshold from requiring disclosure of each gift or contract that amounts to $250,000 or more (considered alone or in combination with all other gifts from or contracts with that foreign source within a calendar year) to only $5,000 per year.
Throughout the hearing, Republican Committee members criticized ED’s lack of new investigations into university relationships with foreign entities during the Biden administration and questioned the FSA’s effectiveness in properly enforcing Section 117.
History of Section 117 Enforcement
Section 117 of the Higher Education Act was enacted in 1986, but it was not until the Trump administration that ED began to aggressively monitor and investigate disclosures, opening 19 investigations between 2019 and 2021. ED also took an aggressive position in stating that noncompliance with Section 117 could make an institution ineligible for Title IV funding. It also provided additional guidance on ED’s interpretation of Section 117, which many institutions considered to expand the reporting requirements beyond the plain language of the statute.
As indicated in the hearing, lawmakers’ concerns that foreign funding may be distorting academic instruction, research and culture at U.S. educational institutions may signal renewed attention on Section 117 reporting.
Current Congressional Focus and Recommendations
The hearing highlighted tensions within Congress about the impact and influence of foreign funding not only with respect to curricula and campus culture, but also research security. Rep. Burgess Owens (R-UT) stated “we’re engaged with a battle against foreign bad actors whose goals are to undermine our American cultural freedom, turn our students against the free-market system and steal our intellectual properties.” Rep. Frederica Wilson (D-FL) took a different tone, stating that the Section 117 focus should be on providing guidance rather than enforcement, and cautioned against using Section 117 to “foster a hostile environment for future international research.”
Committee witness Paul Moore, Senior Counsel from the Defense of Freedom Institute, offered several recommendations regarding Section 117 including a congressional ban on the practice of anonymizing donors and a recommendation to “tie Section 117 compliance by America’s colleges and universities with the eligibility of those colleges and universities to participate in Title IV federal student loan, grant, and work-study programs.”
Rep. Burgess Owens asked Committee witness Craig Singleton, China Program Deputy Director and Senior Fellow from the Foundation for Defense of Democracies, for suggestions to address “loopholes” to the reporting requirements of Section 117, such as foreign regimes channeling funds to universities through third parties. Singleton emphasized increased transparency, and argued for drastically lowering the Section 117 reporting threshold to $5,000. He also said there should be a mandate that “U.S. universities make available details regarding all academic and research partnership agreements, both active and inactive, with entities located in countries of concern, such as China.”
Republican members of the Committee also expressed their desire to move enforcement of Section 117 from the FSA to the OGC at ED. Chairman Burgess Owens said the FSA was, “ill-suited for enforcement” because the department lacked the technical skill to conduct “substantial reviews” of disclosures. Rep. Virginia Foxx (R-NC) and Committee witness Paul Moore echoed this suggestion. Rep. Bobby Scott (D-VA) countered that the FSA was underfunded and the FSA would be more up to the task of enforcement if Congress increased its funding and oversight of the agency.
What’s Next on the Hill
Lawmakers have already conducted two previous hearings in April of 2023, making the hearing on July 18 the third in the pursuit to make regulatory changes to the Higher Education Act. The most recent hearing concluded the public hearing portion of the process, which will now be followed with finalizing “the issues to be addressed through rulemaking and solicit[ing] nominations for non-federal negotiators who can serve on the negotiated rulemaking committee(s), which will convene in fall 2023.” ED plans to issue new regulations at the end of the process. We will continue to monitor for any updates.
