Navigating Regulatory Risk in Higher Education
We are not even at the end of January, and the regulatory risk landscape is intense. In my earlier article predicting the Top Risks & Challenges Facing Academia in 2025.
I selected regulatory change as number one. In the coming months, we will see how new legislation, a new Secretary of Education, and various executive orders from the Trump Administration will transform Title IX, Diversity, Equity, and Inclusion, and potentially college accreditation and student aid.
TITLE IX–Back to 2020:
On January 9, 2025, the Biden administration's Title IX Final Rule was struck down. The U.S. District Court for the Eastern District of Kentucky declared the regulations unconstitutional for all schools nationwide.
In addition, an executive order was enacted on January 20, which directed federal agencies to use its definition of sex to enforce laws, including Title IX.
This is a bit of whiplash, as many schools just recently enacted compliance with the 2024 Biden Rule. This change in course will require institutions to pivot quickly. Navigating the requirements and timeline of the new legislation will increase the potential for non-compliance as well as financial and reputational risks as schools will need to adjust policies and procedures all while facing potentially more student protests.
Reimagining the Department of Education:
With a new Administration, the future of the Department of Education is in limbo. While I don't believe the department will be eliminated, significant changes will occur. One theme I see is that with less federal control and more state control, this change could create additional financial risks for struggling public institutions. Federal funding to higher education comprises 17-27% of institutional revenues, so reducing this amount can put higher education institutions in a more precarious financial position. Further, there is talk that the Trump Administration may impact some aspects of student aid and NIH research dollars.
Accreditation Disrupted:
Accreditation guidelines will also be at the forefront. Some Trump allies have proposed creating new politically aligned accrediting bodies and shifting accreditation authority to state governments, which would significantly depart from the current independent accreditation system. As such, Higher education accreditation groups are “emphasizing their nonpartisanship and willingness to work" with the Trump administration.
Diversity, Equity, and Inclusion:
Trump signed an executive order on January 21 that will require all executive agencies and federally funded educational institutions to terminate any race or gender-based diversity programs that could violate federal civil rights laws. The order requires that the Attorney General and Secretary of Education issue definitive guidance to all state and local educational agencies within 120 days of this order and identify potential civil compliance investigations among institutions of higher education with endowments over 1 billion dollars and, accordingly, develop action plans to "deter DEI programs or principles that constitute illegal discrimination or preferences." Institutional leadership will need to recalibrate policies and procedures all while facing potentially more student protests. Per Jonathan Turley, this order "will send a shock wave through higher education, and the resulting agency actions are likely to trigger a tsunami of lawsuits."
Bottom Line:
Only time will tell the long-term impacts of these regulatory changes on students and the higher education sector. Still, the pendulum has swung the other way, and executive leaders, boards, and fiduciaries must be proactive to stay ahead of regulatory risk and non-compliance. Below are some strategies leaders can adopt to reduce risk to their institutions.
Risk Mitigation Strategies:
Align board and leadership understanding of regulatory shifts.
Conduct proactive risk assessments to identify areas of the institution that can be affected by upcoming legislative changes and begin to "pre-comply" to mitigate legal and reputational risk.
Develop comprehensive training programs to help faculty, students, and staff understand the ramifications of new laws.
Create dashboards for tracking compliance requirements and deadlines.
Diversify research funding sources beyond federal grants.
Build relationships with regulators and accreditors.
Also, always include risk management in your discussions.
