Federal Update - July 16

July 16, 2025

GOVERNMENT RELATIONS HIGHLIGHTS

Congress Weighs Rescissions: Senate GOP struggles to approve Trump spending cuts 

ED Begins Work on OBBBA: Rulemakings expected for major HEA changes 

New 90/10 Guidance: ED interpretation tweaks calculation 

Reminder of FVT/GE Deadlines: ED reminds schools of upcoming due dates 

Policy Reversal on Undocumented Students: New interpretation limits access to HEA programs 

CONGRESS TO CONSIDER RECISSION PACKAGE

What You Need to Know 

This week, Congress is considering a Trump Administration proposal to rescind $9.4 billion in previously-approved funding. The package would formalize cuts made by DOGE earlier this year to USAID, PBS, and NPR. While the House has passed the measure, it faces resistance in the Senate from moderates concerned about the scope of the reductions. The package must be approved by Friday, July 18 by both chambers, or it will be deemed rejected, and the funds will have to be spent. 

Why This Is Important  

Senate Democrats have warned that passage of the rescission package would jeopardize any chance of a bipartisan agreement on FY2026 appropriations. It remains unclear whether Senate Majority Leader Thune has the votes to advance the measure. President Trump has framed the vote as a test of loyalty to his priorities, adding political pressure to an already contentious debate.   

ED TAKES FIRST STEPS ON OBBBA IMPLEMENTATION

What You Need to Know  

President Trump signed the One Big Beautiful Bill Act (OBBBA) into law on July 4, setting in motion a sweeping overhaul of federal higher education policy. The law makes the most significant changes to HEA programs in nearly two decades. ED will need to conduct rulemakings to conform its regulations with the new law. The Department is now beginning the internal work needed to prepare for that process. 

Why This Is Important 

At a conference last week, Acting Under Secretary Bergeron confirmed that ED has started discussions around the negotiated rulemaking sessions needed to implement OBBA. He indicated that announcements on next steps will be made soon. Institutions should begin preparing for a busy regulatory cycle as the Department moves to operationalize the law’s provisions. 

ED REVISES 90/10 INTERPRETATION

What You Need to Know 

On July 7, ED published an Interpretive Rule in the Federal Register updating how revenues are classified for purposes of the 90/10 calculation. ED clarified that language in the preamble to the October 2022 Final Rule, which stated that revenues from non-Title IV programs delivered via distance education could not be counted, was interpretive. Because this preamble language did not go through the formal notice-and-comment process, ED determined it did not carry the force of law.   

Why This Is Important 

Institutions may now include revenues from ineligible programs delivered via distance education in their 90/10 calculations, provided those programs meet other regulatory requirements. ED’s announcement specifically addressed the enforceability of language found only in the preamble, not in the formal regulations, which can only be changed through rulemaking. While ED also indicated that revenues from ineligible programs at unapproved locations may be counted, 34 C.F.R. § 668.28(a)(3)(iii) still excludes most unapproved locations. Schools are advised to continue complying with existing regulatory provisions. The new interpretation is effective immediately, and ED has stated that institutions may revise prior fiscal year 90/10 calculations affected by the earlier interpretation. 

ED REINTERPRETS PUBLIC BENEFITS ELIGIBILITY FOR ILLEGAL ALIENS

What You Need to Know 

On July 11, ED published an Interpretive Rule revising its stance on eligibility for federal public benefits under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). While PRWORA generally restricts benefits to citizens and certain qualified non-citizens, it exempts basic public education for children. ED rescinded a 1997 Dear Colleague Letter that had allowed undocumented individuals, including adults, to receive certain educational benefits not classified as postsecondary. ED concluded that the earlier interpretation misread PRWORA and extended benefits beyond what the law permits.   

Why This Is Important 

In a July 10 press release, ED stated that the new interpretation ends prior guidance that allowed illegal aliens to access federal public benefits. ED stressed that the rule reinforces that programs authorized under the HEA, such as Pell Grants and federal student loans, remain off-limits to undocumented immigrants. ED also clarified that where HEA programs impose stricter citizenship requirements than PRWORA, institutions must continue to follow those program-specific rules. This change may affect institutional policies and access to certain ED-administered programs. 

For More Information

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