Federal Update - August 26

Federal Update - August 26

Federal Update Education Government

August 26, 2026

GOVERNMENT RELATIONS HIGHLIGHTS

Trade Dispute Escalates: Tariff War with Canada 

Congress in Recess: Funding Fight Awaits Lawmakers’ Return 

FSA Releases Roadmap: Draft Plan Prioritizes Service and Modernization 

September NACIQI Agenda: Additional Accreditors in Hotseat 

DEEPER DIVE: ED Publishes AIM Proposal to Reshape Accreditation 

US-CANADA TRADE TENSIONS CONTINUE

What You Need to Know 

After months of negotiations, the United States and Canada appeared close to reaching a new trade agreement last week. Talks broke down over the weekend after the Trump Administration walked away from the negotiations, arguing that Canada had not made sufficient concessions on several key issues. In response, President Trump announced a 50% tariff on nearly $20 billion in Canadian imports, including perfumes, cosmetics, shears, hair products, and manicure preparations. Canada responded with 50% retaliatory tariffs. The United States imports over $1 billion in beauty and wellness products from Canada. 


Why This Is Important 

As the United States' second-largest trading partner, a prolonged trade dispute with Canada could become costly for consumers and businesses alike. President Trump has also threatened additional tariffs on Canadian automobiles and auto parts beginning January 1, 2027 if the two countries fail to reach an agreement. While most cosmetology schools are unlikely to see immediate disruptions, higher costs for beauty products, supplies, equipment, and salon-related goods could eventually place additional pressure on school owners, students, and graduates entering the beauty and wellness workforce. 

HOUSE RETURNS NEXT WEEK

What You Need to Know

Congress remains in its annual August recess. The House is scheduled to return to Washington next week, but the Senate is not expected to reconvene until the week of September 14. Government funding will be the House's top priority as lawmakers work toward the September 30 fiscal year deadline. While both chambers have passed separate continuing resolutions, the House may take up the Senate-approved measure, which would extend federal funding through December 11. 


Why This Is Important 

Once funding is addressed, Congress is expected to leave Washington again for much of October so lawmakers can focus on campaigning for the midterm elections. When Congress returns for the lame-duck session in November and December, it will face a crowded agenda that includes completing FY2027 appropriations, passing the National Defense Authorization Act, and other must-pass legislation. With so many priorities deferred until the end of the year, the lame-duck session is shaping up to be one of the busiest legislative periods of the Congress in years. 

FSA PUBLISHES FIVE-YEAR STRATEGIC PLAN

What You Need to Know 

On August 24, ED published a draft five-year strategic plan, outlining Federal Student Aid’s (FSA) goals for that period. ED will prioritize several core functions, including improving the FAFSA experience, increasing student loan repayment, modernizing FSA’s technology infrastructure, and recruiting and retaining capable FSA staff. The public may submit comments to the plan via email to FSAstrategicplan@ed.gov through September 23.   


Why This Is Important 

FSA is the frontline ED division for interfacing with schools as they work to administer federal financial aid in compliance with ED regulations. In recent years, many, including among AACS membership, have noted areas for FSA improvement. To the extent your institution has specific suggestions for improving FSA’s processes, efficiency, infrastructure, or staffing, we encourage you to consider submitting comments.   

UPCOMING NACIQI MEETING

What You Need to Know 

On August 21, ED announced a meeting of the National Advisory Committee on Institutional Quality and Integrity (NACIQI). The meeting will be held September 23 and 24. The public may attend virtually by registering here. NACIQI is the body that applies ED’s regulatory standards for accrediting agencies and makes recommendations regarding which accrediting agencies have ED “recognition.” A school must be accredited by an ED-recognized accreditor to participate in the federal financial aid programs. NACIQI will consider the recognition renewal applications for the following accreditors at the September meeting: 


  • American Bar Association 
  • Accrediting Bureau of Health Education Schools 
  • Accreditation Commission for Acupuncture and Herbal Medicine 
  • American Psychological Association 
  • Southern Association of Colleges and Schools, Commission on Colleges 
  • Transnational Association of Christian Colleges and Schools, Accreditation Commission 

 

NACIQI will also consider the compliance report of the Commission on Accreditation in Physical Therapy Education. 


Why This Is Important 

ED staff have prepared a report that urges NACIQI to withdraw recognition from the American Bar Association, which NACIQI will consider at the September meeting, potentially placing the ABA in the same position as NACCAS. Though NACCAS is not on the agenda for the upcoming meeting, as AACS has previously reported, on July 22, NACIQI voted 9–3 to recommend that ED withdraw recognition from NACCAS. This recommendation is an important step and does indicate risk, but it is not a final decision. The matter is now with ED’s Senior Department Official, who has until October 20 to decide whether to accept, reject, or modify NACIQI’s recommendation. There may also be additional steps after that decision, including an appeal and a possible legal challenge. This means the final outcome for NACCAS may not be known for some time. If NACCAS ultimately loses federal recognition, NACCAS-accredited schools would have up to 18 months to obtain accreditation from another recognized accreditor. 

DEEPER DIVE: ED PUBLISHES AIM PROPOSED RULE

On August 20, ED published the Accreditation, Innovation, and Modernization (AIM) notice of proposed rulemaking (NPRM) in the Federal Register. Public comments may be submitted via regulations.gov under Docket ID ED-2025-OPE-1042 through September 21. ED states that the NPRM is intended to implement Executive Order 14279, which instructs ED to hold ED-recognized accreditors accountable for “unlawful” DEI-related activities and to “realign accreditation with high-quality, valuable education for students.”  

 

Because the AIM negotiated rulemaking committee reached consensus, the NPRM mirrors the AIM committee draft language almost exactly. According to ED statements during the AIM negotiated rulemaking, ED plans to publish the AIM final rule by November 1, 2026 in advance of a July 1, 2027 implementation date.  

  

The NPRM proposes to require accreditors to modify their existing standards to include, among other things, review of institutional compliance with the following proposed requirements: 

  

  • Achievement of “student success with respect to student achievement” based on an assessment of (a) state licensing or certification examination results, where applicable; (b) program retention, completion, or graduation rates; (c) post-completion or graduation outcomes, including employment and continued education; (d) scores on standardized assessments for admission to higher-level degree programs, where applicable; and (e) “educational and economic returns” relative to the total cost of program attendance. These returns would be assessed using (1) the earnings data collected under the Accountability Final Rule, (2) enhanced unemployment insurance wage records, or (3) other reliable earnings data available to the accreditor. 
  • Maintaining “appropriately qualified faculty” who are subjected to regular performance evaluations.  
  • Conducting a cost-benefit analysis regarding institutions’ use of facilities, equipment, supplies, and student support services.  
  • Maintaining an institutional policy for undergraduate programs that would allow credit to transfer for “coursework that has been successfully completed at another institution that is accredited by an agency recognized by the Secretary and is comparable in content and learning outcomes to the institution’s own course offerings, unless the institution provides a written basis for denial[.]” The NPRM specifies that such policies would not allow institutions to “deny the transfer of credit based on the institution at which the student completed the coursework or the agency that accredits that institution, so long as the agency is recognized by the Secretary.” An institution would be required to provide a student the opportunity to appeal a decision to deny transfer credit within 15 days.  
  • Adhering to academic freedom protections for faculty regardless of “viewpoint” and “ideology,” including institutional policies to protect the expression of faculty’s academic perspectives, provided such perspectives are within the scope of the course subject matter the faculty member is teaching.  
  • Maintaining an institutional policy that “appropriately prioritize[s] intellectual diversity and the free exchange of ideas amongst faculty[.]” 

  

Additionally, the NPRM would simplify the process for institutions seeking to change accreditors or add a new institutional accreditor. AACS encourages any institution that has concerns with or suggestions for the proposed language to submit comments to the NPRM. AACS will continue to keep members informed as the rulemaking progresses. 

For More Information


If you have any questions about this Update, please email info@myaacs.org.

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