Federal Update - September 9

September 9, 2026

GOVERNMENT RELATIONS HIGHLIGHTS

Accountability Rule: Early Implementation Deadline Nears  

Congress Kicks the Can: Funding Deadline Moved to December  

Road to November: Republicans Gather for Midterm Convention  

Auditors Put on Notice: ED Highlights Incentive Compensation Risks  

Reporting Enforcement Risk: Institutions Asked to Address Data Gaps 

REMINDER: ACCOUNTABILITY RULE DECISION DUE OCTOBER 1

What You Need to Know 

All AACS member institutions must decide by October 1, 2026 whether to early implement the Department’s Accountability in Higher Education and Access Through Demand-Driven Workforce Pell: STATS and Earnings Accountability Final Rule. Schools notify the Department of their choice through their reporting submission. Specifically, schools will report under either (1) the Accountability Final Rule requirements to early implement or (2) the FVT/GE Rule requirements to decline early implementation. See Electronic Announcement GENERAL-26-49 for reporting details.  

Why This Is Important 

For many schools, early implementation may be the most attractive option to avoid the more burdensome FVT/GE Rule reporting requirements and to leave open the possibility of additional early implementation benefits that may apply, pending further Department clarification. Be sure to check with legal counsel and financial aid professionals before making a final determination. 

GOVERNMENT FUNDING CRISIS AVERTED

What You Need to Know 

President Trump signed legislation last week extending federal government funding through December 11, avoiding a government shutdown ahead of the midterm elections. The measure passed the House by a bipartisan vote of 370-48 after previously clearing the Senate. The continuing resolution (CR) keeps federal agencies operating under current funding levels while giving Congress additional time to negotiate FY2027 spending bills. 

Why This Is Important 

The CR provides short-term certainty for schools and students by maintaining federal operations through early December, including programs administered by ED. However, Congress still must complete work on the annual appropriations bills that fund federal agencies for FY 2027. With lawmakers expected to spend much of October focused on the upcoming congressional elections, many major funding and policy decisions will likely be pushed into the year-end lame-duck session. Congress will face a crowded agenda that includes government funding, the National Defense Authorization Act, and other must-pass legislation. 

TRUMP AND REPUBLICANS KICK OFF MIDTERM CAMPAIGN PUSH

What You Need to Know 

President Trump and Republican candidates are gathering in Dallas this week for a midterm election convention, the first event of its kind in recent political history. President Trump is expected to use the gathering to highlight his policy agenda and frame the November elections as a referendum on his Administration. The President is seeking to unify his party around a national message at a time when public polling remains challenging for Republicans and concerns about inflation, foreign policy, and other issues continue to shape voter sentiment. 

Why This Is Important 

The House, currently in recess for Labor Day week, is expected to return briefly next week before spending much of September and October on the campaign trail. The Senate is expected to remain in session somewhat longer. The outcome of the election will determine control of Congress for the final two years of President Trump's term and could significantly affect his ability to advance legislative priorities. 

UPDATED INCENTIVE COMPENSATION GUIDANCE

What You Need to Know 

On July 21, ED’s Office of the Inspector General (OIG) issued a letter addressed to certified public accountants regarding the ban on incentive compensation. The OIG states that the letter is intended to highlight for auditors certain incentive compensation-related considerations raised by a February 2026 settlement agreement between the Department and Study Across the Pond, LLC and its principal.  

Why This Is Important 

The letter indicates that auditors should assess a school’s compliance with the ban on incentive compensation regarding arrangements between the school and a third party that “appear compliant in form but violate the incentive compensation ban in substance.” The letter also advises that auditors should consider whether information regarding how a third party is compensated under a bundled services agreement is complete and whether third-party recruiting arrangements are accurately represented. ED instructs auditors to “evaluate the information obtained with a questioning mindset[,]” indicating this may be an area of increased enforcement attention for this administration. 

REPORTING CATCH-UP DEADLINE

What You Need to Know 

AACS encourages member institutions to confirm that their historic FVT/GE reporting submissions are complete and accurate. Please refer to the ED’s spreadsheet (updated August 28), which shows the FVT/GE data files that are missing from institutions’ previous submissions, if any. Institutions with missing or incomplete data have until January 15, 2027 to submit or complete their historic data reporting.  

Why This Is Important 

The Department reported that at least 1,900 institutions have not reported or have underreported the FVT/GE reporting data from the 2024 and 2025 cycles, which were due September 30, 2025 and October 1, 2025, respectively. The Department stated that it intends to review the submissions for completeness and may take adverse action against institutions that fail to timely comply. 

For More Information

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