Colleges Face a Federal DEI Ultimatum

This week, Inside Higher Ed described the higher education sector's reaction as invoking words like "'potentially existential'" in response to the Trump administration's latest effort to reshape how colleges operate.¹ The source of that alarm: a new certification requirement from the General Services Administration that could put federal funding at risk for institutions with diversity programs.

What the GSA Is Requiring

In early 2026, the GSA proposed a new compliance certification for the System for Award Management (SAM.gov), the federal database that all organizations must register with to receive federal contracts and grants.

Under the proposal, every organization — including colleges and universities — would be required to certify during SAM.gov registration that they do not engage in programs the administration categorizes as "discriminatory." An executive order then directed federal contracting agencies to insert a specific six-paragraph compliance clause into contracts by April 25, 2026.²

Programs that could fall under the certification's scope include:

• Race-based scholarships or academic programs
• "Cultural competence" training requirements
• "Overcoming obstacles" narratives or framing
• Diversity statements in hiring or admissions
• Training programs that the administration says "create a hostile environment"

The False Claims Act Risk

The stakes for colleges are not limited to losing a contract. The Association of American Universities warned that institutions could face False Claims Act exposure if they certify in good faith that they are compliant — and are later found, under subsequent administration interpretation, to have violated the DEI certification.

That creates a legal catch. A university might genuinely believe its programs are legal, sign the certification, and then face federal litigation years later if the government's definition of prohibited DEI shifts.

If your college receives federal research grants, student financial aid funding, or federal contracts, this certification would apply to it. Any institution that declines to certify would risk losing access to all federal funding — including Pell Grants and federal student loans for its students.

How Higher Education Is Responding

On behalf of approximately two dozen higher education associations, the American Council on Education sent a formal letter to the GSA urging the agency to rescind the proposal. The groups describe the certification language as "vague, undefined, overbroad, burdensome, and legally contested."

Their core argument: colleges are already legally required to certify that they follow federal anti-discrimination law. The new proposal doesn't just ask for compliance with existing law — it demands compliance with executive orders and guidance, which are executive branch interpretations that go beyond what Congress has enacted and remain subject to legal challenge.

Higher education groups arguing against this proposal are not defending illegal discrimination. They are arguing that the language is so vague that ordinary programs — mentoring programs for first-generation students, language access services, need-based outreach — could be swept in without clear legal definition. Watch for court challenges to this rule in coming weeks.

What This Means for Students

If your college depends on federal research contracts, the financial exposure could be significant. Major research universities receive hundreds of millions of dollars annually in federal grants. The threat of losing that funding — or facing False Claims Act liability — is not abstract.

For students enrolled in programs that receive federal support, the implications depend heavily on how courts ultimately interpret the certification language. Race-based scholarship programs would be the most directly affected. Programs framed around first-generation student success or needs-based outreach may be restructured to comply, even if they are ultimately permitted.

Students applying to colleges this cycle should monitor how institutions respond to this certification requirement. Colleges that publicly refuse to certify may lose federal contract funding. Colleges that certify may restructure or rename programs. Either path has consequences.

For context on how federal policy is reshaping university finances, read our earlier coverage on federal research funding cuts at universities and Education Department programs moving to other agencies.

What to Watch Next

The April 25 deadline for agencies to insert the clause into contracts is a procedural step — it is not the end of the legal fight. Multiple higher education groups have already signaled they may challenge the requirement in court. State attorneys general from states with strong university systems are likely to weigh in as well.

For students and families, the near-term action is to watch your institution's communications. If your school announces changes to scholarships, academic support programs, or hiring practices, these may be responses to federal compliance pressure. Understanding how financial aid actually works and what merit scholarships are available — separately from institutionally administered diversity programs — will help you plan around any program changes.

For those considering how federal policy affects where to apply, our college planning checklist and how to build a college list can help you think through which institutions and aid sources are most stable.

Footnotes

1. Inside Higher Ed. (2026, April 1). 'Potentially Existential': Higher Ed Denounces Proposed Federal Funding Strings. https://www.insidehighered.com/news/diversity/2026/04/01/higher-ed-denounces-gsas-proposed-federal-funding-strings ↩

2. Higher Ed Dive. (2026). GSA plan would ban DEI for all federal funding recipients — including colleges. https://www.highereddive.com/news/gsa-plan-would-ban-dei-for-all-federal-funding-recipients-including-schoo/814353/ ↩