In October 2020, the Trump-run U.S. Department of Education held an event trotting out a report alleging colleges had not disclosed billions of dollars from foreign sources, which they are obliged to do under federal law.
Officials painted a dire picture: Foreign influence had pervaded U.S. colleges and universities, potentially threatening academic integrity, national security and human rights.
As proof, a then-University of Washington student spoke, asserting the institution failed to intervene when the Chinese government detained her in late 2017 and pushed her into a "re-education" camp. She claimed, without giving evidence, that the university had not wanted to step in, lest it compromise a "multi-million deal" in the works with China. The university later denied the accusation.
The eye-popping presentation was not the Trump administration's first plunge into colleges' foreign entanglements.
By the time the Education Department published the report, it had begun investigating reporting practices of a dozen high-profile universities and went on to open several more probes over the next year. It also later threatened to yank colleges' federal funding should they not adequately comply with Section 117, the part of the Higher Education Act requiring institutions to report foreign gifts and contracts totaling $250,000 or more in a year.
Now over a year into President Joe Biden's term, the Education Department is no longer mirroring the Trump White House's aggressive rhetoric on these issues. Yet lawmakers' fears over foreign encroachment into higher ed — particularly from China — have not eased.
Strategy on foreign threats has not changed much between administrations, Susan Thompson, an FBI official, said last month during the annual meeting of the American Council on Education, higher education's top lobbying organization.
The Education Department has not publicly closed many of the investigations the Trump administration started. It has also not clarified or rescinded policies the previous administration enacted, including a complex checklist for reporting foreign money.
A lack of precise Education Department guidance leaves colleges in the lurch as they seek clarity about their legal requirements, higher education leaders have said. It's a challenge even as Congress debates legislation that would make Section 117 mandates stricter.
ACE has said it's willing to negotiate a regulation colleges could follow on Section 117. The department has not acted on this request.
Section 117, a history
Section 117 has been part of the Higher Education Act for decades, but one largely ignored by the department and, "regrettably," some colleges, Steven Bloom, ACE's assistant vice president of government relations, said in an interview.
The law firm Crowell & Moring attributed this lapse to the Education Department not initiating formal rulemaking on Section 117. The agency has never offered "significant interpretative guidance," it said.
Then during the Trump years came a "remarkably swift" bipartisan swing in policymakers' attitude toward China, Bloom said. Public criticism from Congress and the White House sharpened, and heightened scrutiny of China's links to higher ed followed.
These concerns were not entirely unfounded. American institutions have unwittingly facilitated Chinese government maleficence, such as when a Yale University scholar shared genetic data that enabled the country's scientists to surveil and oppress Uyghurs, a predominantly Muslim ethnic minority.
Colleges' legal requirement to report foreign financial ties to the federal government came to the forefront in February 2019, when lawmakers grilled then-Deputy Education Secretary Mick Zais during a Senate committee hearing.
Zais testified then that fewer than 3% of U.S. colleges reported receiving foreign gifts or contracts.
A Senate subcommittee investigation had also found nearly 70% of institutions that received $250,000 or more in funding from a Chinese entity — Hanban, an affiliate of the Chinese Ministry of Education — did not properly report those payments to the federal government.
"Foreign government spending on U.S. schools is effectively a black hole, as there is a lack of reporting detailing the various sources of foreign government funding," the subcommittee's report said.
Sen. Rob Portman, a Republican of Ohio, during the February 2019 hearing asked Zais if the department intended to revise its guidance on Section 117. Zais said it did not have a plan to do so.
"We would be delighted to work with you on any clarifications on the statute, but the statute is clear enough to know that you have to report," Portman said, according to a transcript of the hearing.
Bloom described it as a "catalyzing event" for the Education Department.
"There were a lot of difficult questions," Bloom said. "And the department didn't have great answers."
Colleges wants clarity
ACE wrote to the department several times in 2019 asking for clarity on Section 117. It wanted to know, for instance, when it sufficed to only disclose a gift's country of origin, and how to amend previously filed Section 117 reports.
ACE leaders said the department stonewalled them, not answering their questions and instead amping up efforts to crack down on reporting omissions.
"It was astonishing to us," Bloom said. "We had a pretty good working relationship on other issues with the DeVos Education Department, even when we disagreed. We have a good history with the department going back multiple administrations, it's just the nature of working with federal agencies. But this one was really surprising."
In November 2019, ACE argued the department was overextending past the bounds of the Higher Education Act with a proposal that asked for unnecessary details on colleges' foreign donations and contracts.
This reporting system was finalized and remains in place today. It asks for such information as the conditions attached to a gift, and the address of the individual or entity that provided it.
"It was astonishing to us. We had a pretty good working relationship on other issues with the DeVos Education Department, even when we disagreed."
Assistant vice president of government relations, American Council on Education
Not complying with the department's policy could lead to it pulling colleges' federal funding, the agency said, a legal interpretation higher ed groups rejected.
Congress has also begun to step in on foreign gift reporting.
A broad legislative campaign to bolster security and competitiveness with other countries would impose new reporting mandates.
Proposed House and Senate legislation would direct faculty to disclose when they receive money or gifts from foreign sources. The House's version of the bill doesn't trigger a reporting requirement unless a foreign entity is giving an individual faculty or staff member $50,000 or more, while the Senate's includes no limit at all.
"This means faculty and staff would have to report when a visiting foreign scholar buys lunch on campus for them or gives them a small gift, such as a coffee mug with the logo of the foreign visitor's home university," ACE wrote to Congressional leaders in September.
Both bills would also alter Section 117, lowering the threshold for which colleges would need to report foreign donations and contracts.
The Senate's would bring it down from $250,000 to $50,000, while the House's provisions are multilayered. Colleges would need to report a single gift or contract worth $100,000 or more, as well as if a foreign source gave a college donations or contracts that collectively amounted to $250,000 over a three-year period.
ACE wrote to Congress last month opposing these measures, citing exponential new pressures on the Education Department, which already "is unable to effectively manage the existing Section 117 requirement."
Terry Hartle, ACE's senior vice president of government relations and public affairs, said in an interview that Congress would be broadening the haystack containing a needle. Section 117 reporting has never unearthed any problematic gifts or contracts, Hartle said.
An Education Department spokesperson did not answer a detailed list of questions about whether Education Secretary Miguel Cardona supports beefing up reporting requirements and how the agency is currently reviewing colleges' Section 117 submissions.
The spokesperson said in an email the department "is aware of legislative proposals and is monitoring developments as Congress considers possible changes to Section 117."
"If legislation is enacted into law, the department will review the language of the statute, as amended, and assess any new statutory requirements, including those related to issuing regulations," the spokesperson said.
The spokesperson also declined to comment on the status of investigations the Trump administration initiated into more than a dozen institutions from 2019 to 2021.
Higher ed experts say these big-name schools, such as Harvard and Yale universities, were selected deliberately. Their prominence was meant to draw eyes to the administration's efforts to pressure institutions on Section 117.
Typically, such investigations are conducted "in a quiet way," Bloom said. Announcing them publicly was "a bit astonishing," he said.
Of the 19 investigations listed on the Education Department's website, only four have been publicly closed. Higher Ed Dive contacted the remaining 15 institutions for comment on the investigations.
Four of the universities provided statements by publication time. None of the institutions have communicated with the Education Department about the investigations since providing the information it requested.
Statements from Case Western Reserve University, in Ohio, Florida State University and Stanford University said they continue to comply with federal guidelines.
In the case of Florida State, the institution asked for clarification whether its interpretation of Section 117 was incorrect, spokesperson Dennis Schnittker said in an email. It received no response.
Cornell University cooperated fully with the department's investigation that started in July 2019, spokesperson Rebecca Valli said in an email. It had reported roughly $150 million in foreign gifts and contracts since 2012 under Section 117, but later identified about $150 million more the law may have required, Valli said.
The university amended its Section 117 report in 2019 and substantially changed how it would oversee international operations, Valli said. Changes include hiring a new chief compliance officer and implementing processes designed to capture data from multiple systems containing foreign gifts and contract information.
"While the status of the investigation remains open, Cornell has not received further communications from the department following Cornell's production of documents," Valli said.
Meanwhile, lawmakers, especially among the GOP, continue to leverage colleges' foreign gift reporting mandates as talking points.
Rep. Mike Gallagher, a Republican of Wisconsin, wrote to Cardona in November questioning why the Biden administration appeared not to have opened additional Section 117 investigations.
He also alleged that during Biden's time in office, colleges had only posted $4.3 million in foreign funding — while from July 2020 to the end of January 2021, the department recorded $1.6 billion in foreign money that colleges reported.
The department "may have relaxed its enforcement standards and, in the process, thrown the Chinese Communist Party an important lifeline at Beijing's request," wrote Gallagher, who also gave an interview to Fox News on the subject.
The issue has trickled down to the state level as well. Last year, Florida passed a law requiring public and private colleges to report to the state gifts from foreign entities worth $50,000 or more.
Florida Gov. Ron DeSantis, a Republican who spearheaded the legislation, is regarded as a potential presidential candidate in 2024. ACE officials have said foreign gift reporting will likely feature in the election cycle.
"Concerns about espionage and concerns about intellectual property are bipartisan and bicameral," Hartle said during ACE's annual meeting last month.