Section 117 of the Higher Education Act requires colleges and universities to disclose foreign gifts and contracts valued at $250,000 or more from a single foreign source in a calendar year.1 The U.S. Department of Education (“ED”) has historically managed the reporting infrastructure and overseen compliance and enforcement through Federal Student Aid or, presently, through its Office of the General Counsel.2 On February 23, 2026, ED announced a new interagency partnership—structured as an Interagency Agreement under the Economy Act, 31 U.S.C. § 1535—with the U.S. Department of State (“State”). Under the agreement, State’s Bureau of Educational and Cultural Affairs will provide “vital support in administering Section 117’s biannual reporting and information collection provisions, public inspection requirements, enforcement activities, and implementing programs and other initiatives promoting lawful compliance.”3
This announcement signals an intensification of the Administration’s scrutiny of Section 117 reports and is likely a prelude to heightened enforcement activity targeting colleges and universities with respect to foreign influence in the academic environment. It also presages State’s possible use of this foreign funds information for its own national security purposes.
The new partnership between ED and State comes amid increased efforts by both Trump administrations to enforce Section 117 and address concerns about foreign influence in American higher education. During President Trump’s first term, ED opened investigations at 19 universities, which, per ED’s reports, led universities to report $6.5 billion in previously undisclosed foreign funds.4 In April 2025, President Trump signed Executive Order 14282, “Transparency Regarding Foreign Influence at American Universities,” directing the Secretary of Education to “take all appropriate actions to enforce” Section 117, including by working with the U.S. Attorney General and other executive departments.5 The Executive Order also provides that certification of Section 117 compliance shall be material for purposes of the False Claims Act and for “receipt of appropriate [f]ederal grant funds.”6 In President Trump’s second term, ED has thus far opened investigations at four additional universities.7
Congress has continued—and in some respects intensified—its focus on Section 117 compliance during the second Trump Administration. In early 2025, the U.S. House of Representatives passed H.R. 1048, the “Defending Education Transparency and Ending Rogue Regimes Engaging in Nefarious Transactions (‘DETERRENT’) Act,” which would, among other things, lower the Section 117 reporting threshold to $50,000 for any foreign source and eliminate the threshold entirely for any “foreign country of concern,” including the People’s Republic of China (“PRC”), Russia, North Korea, and Iran.8 These proposed amendments reflect a broader shift in how Section 117 is being conceptualized: it is not merely a disclosure requirement, but it is a national security transparency mechanism designed to provide greater federal visibility into foreign funding flows to U.S. institutions of higher education.
Consistent with that reframing, Congress’s oversight has increasingly focused on foreign influence risks associated with academic partnerships and funding arrangements. The House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (the “Select Committee on China”) has investigated foreign influence at universities. Chairman John Moolenaar endorsed the new ED-State partnership, describing it as “another example of how the Trump Administration is seriously challenging the threats from China and demanding more accountability from academic leaders who have allowed their campuses to be havens for China’s espionage efforts.”9
While ED’s announcement does not represent a change in policy or in the substantive requirements of Section 117, it is a notable development for institutions of higher education for several reasons.
- More broadly, the ED-State partnership is one of nine interagency agreements ED has executed as part of the administration’s ongoing effort to dismantle ED, following a March 20, 2025 Executive Order directing Secretary of Education McMahon to “take all necessary steps to facilitate the closure” of ED.10 Should ED ultimately be shuttered, this agreement may signal that oversight of Section 117 foreign gift reporting will land with State.
- In January 2026, ED launched a new Section 117 reporting portal at ForeignFundingHigherEd.gov, replacing the prior platform.11 The ED press release notes that this new portal has been designed to be fully compatible with both ED and State technological systems, facilitating the partnership’s implementation.12 Trade press has reported that Palantir, an artificial intelligence and data analysis company acting as a subcontractor of Monkton, was involved with the new platform before it was beta-tested with nine colleges and universities.13
- At present, ED publicly discloses only select portions of reported foreign gift information. Although ED could share non-public submissions with other agencies on a case-specific basis, this partnership establishes a formal mechanism through which State will have structured access to the complete underlying submissions reported by institutions. State will leverage its “national security and foreign national academic admissions expertise to review and assess the industry’s compliance with the law, share data with the public and federal stakeholders, and identify potential threats.”14 In practical terms, foreign gift disclosures that were previously reviewed primarily within ED may now also be subject to systematic review by national security professionals at State, potentially increasing scrutiny of whether institutions’ disclosures are complete and accurate and whether they raise foreign influence concerns.
- Together with EO 14282’s enforcement directives and the administration’s track record, the partnership signals that institutions should expect heightened scrutiny of Section 117 reports and should ensure their reporting is complete and accurate.
A comprehensive process for gathering relevant gift and contract information can be a challenge given the famously decentralized structures of many colleges and universities, but is needed for compliance with Section 117. In addition, there are some ambiguous or difficult-to-apply statutory provisions and subregulatory guidance that deserve special attention:
- Exercise reasonable due diligence to identify contracts and gifts from “foreign sources.” This includes determining whether the counterparty or donor is acting as an “agent” for a foreign source.15
- Evaluate affiliated entities for “intermediary” status. Gifts to or contracts with a separate entity that is “acting under the auspices of, or on behalf of” the college or university “and passes to an institution part or all of the benefit of the gift from or contract with a foreign source” may fall under Section 117 reporting requirements.16
- Estimate value of contracts at the time of execution. According to ED, an institution must disclose a contract when it “enters into a contract with a foreign source” and the value of such contract is $250,000 or more based on the anticipated “lifetime value” of the contract using a “reasonable valuation methodology.”17 This can pose challenges when contracts are of indeterminate value at the time of execution, e.g., technology licenses.
- Establish a process for judgment calls. Develop a reasonable process for making and documenting judgment calls regarding reportability.
We will continue to monitor these developments and their implications for institutions of higher education.
