During the first Trump administration, the Department of Education (the "Department") focused intensely on universities' compliance with foreign source gift and contracting under Section 117 of the Higher Education Act (HEA).1 The Department undertook 19 investigations of major research institutions and interpreted Section 117 to significantly expand both reporting requirements and the diligence expected of universities. Although no new investigations were opened in the Biden administration, Congress and political advocacy organizations continued to collect information and issue reports criticizing universities' Section 117 compliance. In 2025, the White House issued an Executive Order and Fact Sheet on Section 117 but, perhaps more importantly, commenced three new Section 117 investigations and re-opened a closed Section 117 investigation. These new or revised investigative letters contain requests for information which are much more extensive than prior letters and delve into areas well beyond Section 117 such as export controls, non-disclosure of foreign support in federal grant proposals, malign foreign talent recruitment program restrictions and research security generally. This article analyzes how the content of these new letters suggest areas of heightened risk, what universities might be prioritized for investigations based on these letters and reports by Congress and advocacy organizations, and what universities can do to prepare for and lower such risk.
Federal Developments: the April 2025 Executive Order and New Section 117 Letters
Under Section 117, universities must biannually report to the Department any gift or contract with a foreign source exceeding $250,000 in the aggregate per calendar year. In April 2025, the White House issued an Executive Order2 (EO) and Fact Sheet on Section 117 directing the Secretary of Education to require additional reporting on details of foreign funding—including "true source," purpose, and ties to foreign governments—and directing greater interagency coordination (including with the Department of Justice) in audits and enforcement. The EO also directed agencies to ensure universities certify compliance with Section 117 and "any other applicable foreign funding disclosure requirements" and stated that such certifications would be "material" for False Claims Act purposes and receipt of federal research funds. In this regard, the EO sought to expand potential liability for non-compliance with Section 117, which by its terms only penalizes violations through a court order compelling compliance and, additionally, payment of enforcement and investigation costs in case of knowing or willful non-compliance.34 Although the meaning of "applicable foreign funding disclosure requirements" is not specified, it could include foreign support disclosures in federal grant proposals and/or malign foreign talent recruitment program certifications.
Since Spring 2025, four leading universities have received sweeping Section 117 notices of investigation and records requests (the "Section 117 Letters")—either new requests or re-opened requests from the prior Trump administration. Compared to past reviews, these letters request far broader information—including narrative descriptions of compliance controls; names and contact information for responsible officials; and supporting documentation. These letters further suggest that the Department, with other agencies, may use the Section 117 Letters as a means to gather information to pursue more serious allegations of non-disclosure of foreign support in federal research grant applications, violations of malign foreign talent recruitment program certifications required by funding agencies, and export control violations.
It is also important to note that these Section 117 Letters often are precipitated by information requests and public reports issued by Congress and/or advocacy organizations such as Americans for Public Trust (APT) and Campus Reform. These information requests and reports may indicate what institutions might be prioritized for investigation and what additional agency action might be forthcoming.
Taken together, the Section 117 Letters and Congressional and advocacy organization letters and reports underscore the expanded scope and risk of this renewed focus on research security generally and suggest potential defensive measures that universities can take now to reduce such risk. These defensive measures are particularly necessary due to the Executive Order's direction to agencies that universities receiving federal research funding certify to compliance with Section 117 and other foreign funding requirements and statement that such certification is material for False Claims Act liability and federal research funding purposes, thereby suggesting potential False Claims Act investigation and/or termination of federal research funding for non-compliance.
Key Risks Indicated by New Section 117 Letters and Potential Defensive Measures for Universities
The most recent Section 117 Letters suggest the following heightened risks and potential defensive measures for universities:
- International Research Collaborations. The Section 117 Letters ask detailed questions about institutional research collaborations with foreign research institutions, including identification of university personnel (as well as contact information), federal grants or contracts supporting the collaboration, principal investigators and other personnel involved with the federal grant or contract, foreign funding supporting such collaboration, purpose of the collaboration and underlying documentation. This request appears to function as a means to collect information on potentially more problematic misconduct than Section 117 compliance; namely, whether foreign support was properly disclosed in federal research grant proposals as other support, a foreign component or a financial conflict of interest and/or whether there was an overlap in substance or funding between the federal and foreign funding. Because the request is aimed at institutional, international research collaborations, it is prudent for universities to institute a more exacting review of such collaborations prioritizing by risks such as those with foreign countries of concern, involving federal support, exceeding a certain dollar amount, related to emerging technologies, or involving higher-risk universities or entities including ones on the China Defence Universities Tracker.5 Universities may wish to follow the lead of other universities5 which have established such elevated-risk reviews of formal research collaborations with foreign counterparts.
- Section 117 Written Controls. In the Section 117 Letters, the Department also asks for a "written narrative description of the university's written procedures and administrative systems in place to address and achieve compliance with Sec. 117's foreign funding disclosure requirements." This section of the letters also requests names of university individuals responsible for Section 117 compliance (along with contact information). Although universities may not wish to describe their specific Section 117 compliance controls in a publicly available Section 117 policy, universities should prepare to be able to explain these details including the units responsible for tracking foreign gifts and contracts, how that information is tracked and consolidated for reporting purposes, what units or individuals are responsible for reporting, and how diligence should be conducted as part of the process. Universities should also ensure that there is specific, articulated and well-circulated guidance on complicated Section 117 issues such as the expected level of diligence in determining whether a domestic source is in fact a subsidiary or affiliate of a foreign source or how to report when the university has informal information to suggest that the source of funds was a foreign source rather than domestic source. Universities may wish to use their audit function to determine whether their Section 117 compliance controls are sufficient and capable of being described and whether responsible individuals understand and are following such controls.
- Export Control Policies and System. In the Section 117 Letters, the Department also asks – not just for a copy of the university's export control policies – but a full narrative description of such policies and administrative systems, responsible university individuals (along with contact information), procedures and training, and any findings of export control violations. As with federal grant proposal non-disclosure of foreign support described above, this request appears to be a means to obtain information on lack of export control policies and procedures, or a lack implementation thereof, and resulting failures to handle export control compliance and potential violations appropriately. Universities should consider auditing their export control function to determine appropriate staffing and adequacy and implementation of policies and systems that encompass the life cycle of export control activities.
- Documentation Review—Foreign Gifts, Grants, Contracts. The Department further asks – not just for a list of foreign source gifts and contracts — but underlying documentation and responsible individuals (including contact information). Congress and the advocacy organizations have used the underlying documentation to allege non-compliant Section 117 reporting, and it is likely that the Department would attempt to do the same and uncover further information from the responsible individuals. Universities should consider auditing high value foreign gifts and contracts, focusing on underlying agreements and other information available to university personnel, to confirm accuracy of reporting on issues that have been important to the Department, Congress and the advocacy organizations. Such areas might include whether diligence was properly performed to "look through" intermediaries or domestic subsidiaries when reporting country of attribution, whether the counterparty is non-governmental and whether the foreign gift or contract is in fact restricted or conditional. It is also noteworthy that a focus of advocacy organizations has been on foreign source gifts or contracts attributed to "tax haven" countries such as Bermuda, Guernsey, British Virgin Islands, Bahamas, Cayman Islands and Jersey. The advocacy organizations have alleged that despite that attribution, publicly available information would have shown that the gift or contract should have been attributed to a country of concern. Thus, universities might wish to audit whether an abnormal number or dollar value of gifts and contracts have been attributed to "tax haven" countries and, if so, conduct further auditing as to those gifts and contracts.
- International Student, Faculty, Scholar and Research Personnel Agreements/Funding. The Section 117 Letters also ask for admissions agreements for foreign students, faculty, scholar and researchers as well as Declarations of Finances for International Students when the home government's financial support is indicated. Although it is arguable whether tuition and other support constitutes a "contract" under Section 117, the Department has made it clear since 2019 that they consider such support to be reportable as a contract under Section 117. The Department and others clearly expect universities, as part of Section 117 compliance, to collect from these admissions and declarations all of the support information from foreign governments or entities that sponsor students such as the China Scholarship Council, in order to determine aggregate amounts of support for purposes of Section 117 reporting. Thus, universities should consider whether their systems need to be revised to ensure collection and accurate reporting of this information. Moreover, the Department asks in the Section 117 Letters for agreements detailing the participation of these individuals in university research collaborations, which could be a way to gather information about inaccurate malign foreign government talents recruitment programs certifications, inaccurate other support federal grant proposal disclosures, or research security concerns generally. Thus, part of the review of tuition and other support could encompass whether these agreements make reference to "red flags" such as identification of individuals or entities who are restricted parties or foreign talent recruitment program participants, or research involving classified or restricted research.
- Malign Foreign Government Talents Recruitment Program. As with export control, the Department asks for the written policies as well as a full narrative description of such policies and administrative systems, responsible university individuals (along with contact information) and any findings of violations of federal restrictions on Malign Foreign Government Talents Recruitment Program participation. Again, this request appears to be aimed at obtaining information regarding malign foreign government talents recruitment program restrictions rather than Section 117 information. Rather than relying on a policy that simply restates these restrictions and the requirement that covered persons on relevant federal research grants certify their non-participation, universities should consider auditing the adequacy of their policies and systems, including whether relevant institutional employees understand the requirements, how questions or reports of non-compliance are handled, whether initial certifications and annual certifications are in fact submitted, and whether additional reporting of talents program participation such as through university internal outside activity disclosures should be required.
- Witness Interviews. It is noteworthy that the Section 117 Letters ask for lists of responsible individuals, including contact information, involved in Section 117 compliance, export control, foreign gifts, grants and contracts and malign foreign government talents recruitment program restrictions. The possibility that the government will reach out to interview these individuals heightens the need for universities to ensure that these institutional employees understand the policies and processes in their respective areas and are provided the adequate guidance and training.
- Expelled Students. One of the Section 117 Letters asks for information regarding foreign students who were expelled or whose university credentials were canceled including the source of their funding (federal or foreign). Universities may consider re-examining the facts behind past expulsions or credential cancelation if they relate to research security to ensure that investigations were performed properly and any remediation (such as modification of admissions procedures or reporting to funding agencies) is appropriate.
- Public Records Requests. The Section 117 Letters for the public universities appear to have originated from public records requests issued by advocacy organizations. Such universities should pay careful attention to the contents of these requests. To the extent the requests suggest non-compliance, universities should ensure that such issues are investigated and remediated (including the filing of additional or modified Section 117 reports as necessary).
Heightened Risk Factors—Know if Your University is a Likely Target
The Section 117 Letters and reports from Congress and advocacy organizations suggest universities are particularly at risk if they:
- Have previously been subject to a Section 117 review, and Congress and/or advocacy organizations allege non-compliance with past remedial agreements;
- Are listed by advocacy organizations as high-dollar recipients of foreign funds or as potentially underreporting (especially with countries/entities of concern);
- Have faculty, students, researchers or scholars recently subject to research security related enforcement action by federal agencies;
- Only began Section 117 reporting after renewed Department focus in 2019, or submitted large volumes of amended reports as guidance developed; and/or
- Have significant numbers of reported anonymous foreign donors.
Conclusion and Practical Next Steps for Universities
Universities should take a risk-based approach to which of the above defensive measures they wish to undertake in anticipation of potential Section 117 Letters. There are likely other enforcement priorities at this time and universities' compliance and auditing functions may be understaffed and underfunded. Universities should weigh the extent of their defensive measures with the factors indicating they may be a potential target listed above and the cost and burden of such measures. Universities may also wish to focus their audit and compliance units on the one to two highest-risk areas (e.g., institutional international research collaborations) with other areas to be audited or reviewed in subsequent years. However, given that the prior Trump administration issued 19 Section 117 Letters and the increased renewed focus in this area based on the Executive Order and expanded scope of the new letters, it would be prudent for universities to promptly assess their risk and consider what defensive measures to undertake.
- lower the annual reporting threshold to $50,000, or zero for foreign countries or entities of concern,
- prohibit universities from entering into contracts with foreign countries or entities of concern, absent granting of a waiver,
- require institutional policies and procedures regarding Section 117 compliance including provision of a publicly available and searchable database of disclosures,
- reporting of investments related to foreign countries or entities of concern,
- significantly increase penalties including up to $100,000 or the value of the gift or contract, whichever is greater, or for more serious violations up to 5 to 20% of all federal funds received in the most recent fiscal year or loss of eligibility to receive federal financial student aid. The Act would also authorize the Dept of Ed to share Section 117 reports from institutions with law enforcement and funding agencies including DOJ and the FBI.
Footnotes
1. Section 117 of the Higher Education Act of 1965 (HEA, P.L. 89-329, as amended) establishes foreign gift and contract reporting requirements for certain domestic public and private institutions that (1) offer a bachelor's degree or higher (or offer a transfer program of at least two years), (2) are accredited by a nationally recognized accrediting agency, and (3) receive federal financial assistance.
3. However, the Department of Education has indicated that, though it has not done so in the past, it has the authority to penalize institutions participating in Title IV with termination from Title IV participation which would result in loss of eligibility to participate in federal financial aid programs.
4. Additionally, the proposed DETERRENT Act would:
6. https://globalsupport.mit.edu/managing-project-risk/elevated-risk-project-review-process/
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