NACUBO Update: Political Moves Affecting Higher Education

NACUBO’s 2026 survey of 620 business officers ranked the top five higher education business issues as managing rising costs, demonstrating higher education’s value, building a resilient workforce, planning amid uncertainty, and leading institutional transformation. At Virtual CampusConnect on October 20, 2026, Nelnet Campus Commerce (NCC) welcomed Liz Clark, vice president for policy and research at NACUBO, to walk through the federal landscape behind those issues. Here are five takeaways.

The current funding law runs through December 11, 2026. President Trump signed H.R. 6500, the Continuing Appropriations and Extensions Act, 2027, on September 2, 2026, funding federal agencies through that date. As of September 8, full-year funding for the Department of Education had not been enacted, and the Senate Appropriations Committee had not marked up its bill. NACUBO’s slides show the Senate at 53 Republicans and 47 Democrats and the House at 219 Republicans and 214 Democrats as of September 29, with 22 of the 35 Senate seats on the November 3 ballot held by Republicans. The new Congress is sworn in January 3, 2027.

Student aid is part of that decision. NACUBO compared final FY2026 funding with the President’s request and the House bill. The Senate had not released figures as of October 20.

The House bill also ends subsidized undergraduate Direct Loans for new borrowers starting July 1, 2027 to close the Pell Grant shortfall.

Graduate PLUS loans closed to new borrowers on July 1, 2026, and new borrowing caps now apply to Parent PLUS loans. Clark said a quick survey from NACUBO and partner associations found most institutions taking a wait-and-see approach. Some have added endowment or development dollars for students, some are developing loan programs, and some are creating new tuition payment plans.

Workforce Pell also began July 1, 2026. It extends Pell Grants to programs of eight to 15 weeks, and both the state’s governor and the Secretary of Education must approve each program. NACUBO’s slides list approved programs in Iowa, Indiana, Nebraska, Texas, North Carolina, and Florida.

On September 4, 2026, Treasury and the IRS published proposed regulations (REG-119986-25). They would make a private school ineligible for Section 501(c)(3) tax-exempt status if it adopts, maintains, or enforces any policy or practice that discriminates on the basis of race, color, or national or ethnic origin, for any purpose. That covers admissions, scholarship programs, loan programs, athletics, and other school programs. Governmental units are excluded. The rules would apply to taxable years beginning after May 31, 2027, and Treasury and the IRS estimate the proposal may affect 18,000 private schools. Comments are due November 3, 2026.

The proposal applies even when race-conscious treatment is otherwise lawful, that donor-restricted scholarships could be significantly affected, and that major legal questions remain. Clark described the consequences of losing exempt status as reaching endowment management, taxable income, donor deductibility, and tax-exempt bonds. Treasury and the IRS are expected to propose changes to the Section 4960 executive compensation excise tax, the Section 4968 net investment income excise tax, and Form 990 for private institutions.

NACUBO reminded us that just because something is proposed, it is not yet a requirement. Three examples of proposals currently in play:

• Uniform Guidance: OMB published a proposed rewrite on May 29, 2026. NACUBO warned it could make federal grants less predictable and increase campus compliance work across grants management, procurement, payroll, systems, and audits. Section 157 of H.R. 6500 bars OMB from issuing or finalizing it through December 11, and NACUBO’s slides note that agencies are starting to implement pieces of the proposal.
• Accreditation: a Department of Education committee reached consensus on new rules on May 21, 2026, and NACUBO submitted comments to the Department. The Department aims to finalize them by November 1, 2026, with an effective date of July 1, 2027.
• Call to Action: on August 3, 2026, Secretary Linda McMahon asked institutions to publish statements before the end of 2026. The seven areas are admissions and merit, free speech, intellectual pluralism, affordability and outcomes, academic rigor, foreign influence, and national interests. NACUBO’s slides describe it as a call to action, not a regulation.

On February 12, 2026, OFAC announced a $1,720,000 settlement with IMG Academy for 89 apparent violations of counternarcotics sanctions. OFAC said the school received and processed tuition payments from two sanctioned individuals between 2019 and 2025. Clark said that whether payments arrive through your office or a third-party processor, institutions need to know who is paying.

NACUBO published Advisory Guidance 26-03, OFAC Sanctions Compliance: Considerations for Colleges and Universities, in July 2026. It explains the legal framework behind OFAC sanctions, discusses risk-based compliance programs and third-party payment processors, and offers considerations for evaluating sanctions risk across institutional operations.

The international picture is mixed. In fall 2025, graduate international enrollment fell 5.9% and undergraduate international enrollment rose 3.2%, according to the National Student Clearinghouse Research Center

Fall 2025 total enrollment grew 1.0%, and community colleges grew 3.0%. Giving to U.S. colleges and universities rose 4% in fiscal year 2025, to $78.8 billion, according to CASE. The class of 2026 set a record 59.1% FAFSA completion rate through June 26, according to the National College Attainment Network. In NACUBO’s survey, 73.5% of respondents named dedicated faculty and staff as a strength for navigating challenges, followed by strong leadership and governance at 62.8% and a strong financial position at 59.9%.

Some dates to keep in mind as you continue to follow the political landscape:

• November 1, 2026: Department of Education goal for finalizing accreditation rules
• November 3, 2026: Election Day and comment deadline on the IRS tax-exempt proposal
• December 11, 2026: Funding law expires and Uniform Guidance hold ends
• May 31, 2027: IRS proposal would apply to taxable years beginning after this date
• July 1, 2027: Accreditation rules take effect if finalized by November 1, and the House bill would end subsidized undergraduate Direct Loans for new borrowers

Student aid levels, tax-exempt status, grant rules, and accreditation are all in play heading into 2027. Business officers who track each one will be better positioned to plan.