Impact of the Trump Administration’s Executive Orders and Actions for Academic Institutions & Federal Funded Research Community | Hinckley Allen

The Trump Administration’s first two months have been marked by a flurry of actions impacting federal grant recipients, federal contractors, and academic and scientific researchers. These unprecedented measures, including executive orders (“EO”), cuts in funding, government investigations, and research grant terminations, have highlighted the need for institutions to carefully evaluate their programs, policies, and grants and respond accordingly as the situation rapidly evolves.

Here, we summarize the most significant actions taken, the impact, and the proactive steps that institutions and grant recipients should consider during this uncertain time.

Two Separate DEI-Related Executive Orders

During his first week in office, President Trump issued two separate DEI-directed executive orders that directly impact institutions that receive Title IV funding or government grants/contracts.

The first EO, entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” rescinds multiple longstanding directives relating to DEI initiatives. Our companion piece comprehensively reviews this EO, including its broad implications for employers.

One significant aspect of this EO is that it creates significant exposure for institutions for False Claims Act investigations and enforcement. It directs agency heads to implement a certification requirement for grant recipients to affirm that they do not operate any DEI program in violation of federal anti-discrimination laws. Grant recipients also must acknowledge that compliance with these laws is material to the government’s payment decisions.

This EO also identifies higher education institutions as institutions “of concern” and further directs the attorney general and funding agencies to identify investigations that they will take up into these institutions’ policies and practices. This will include investigations into admission policies, as this EO prohibits the use of education-based affirmative action plans that are noncompliant with Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023).

President Trump’s second EO, “Ending Radical and Wasteful Government DEI Programs and Preferencing,” also takes aim at institutions of higher learning by prohibiting the federal government from considering “under any circumstances … DEI … factors, goals, policies, or requirements” in, among other things, federal spending. The Office of Management and Budget (OMB) director is ordered to “coordinate the termination of all” DEI grants and performance, with federal agencies similarly instructed to end equity-related grants and grant requirements by March 21, 2025. To accomplish this, federal agencies are required to provide the OMB director with lists of all federal grantees who have received funding “to provide or advance” DEI since January 20, 2021, along with recommended actions “to align” those grants with “the policy of equal dignity and respect.”

These DEI-related EOs have already been the subject of numerous federal court challenges. Recently, in Nat’l Ass’n of Diversity Officers in Higher Educ. v. Trump, the Fourth Circuit, on March 14, 2025, reversed the district court’s nationwide injunction that blocked several aspects of these executive orders. The Fourth Circuit’s decision permits the government to move forward with enforcement of several key provisions of the DEI executive orders, including (1) the “Termination Provision” that directs agencies to terminate “equity-related” grants and contracts, and (2) the requirement that federal contractors and grantees certify that they do “not operate programs promoting DEI that violate any applicable Federal anti-discrimination laws” and that certify that “compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions.”

A more in-depth analysis of this recent decision is provided in our companion piece.

Agencies’ Review and Termination of Grants

Since the issuance of the EOs, there has been a wave of actions by federal agencies to comply with and implement the requirements in the EOs. For example, staff at the National Institute of Health (NIH) and the National Science Foundation (NSF) have been instructed to review all new and active grants for any DEI-related activities, including the review of tens of thousands of research grants for words that could indicate violations of the EOs, including “women,” “bias,” “transgender,” and “ethnicity.” According to Science.org, NIH currently funds approximately 1,600 active research and training projects mentioning “gender” in their abstract; 412 use the terms “transgender,” “gender minority,” or “nonbinary.” NIH staff members have also been instructed to review and identify all existing grants related to climate change and any grants that provide funding to academic institutions in China.

Beginning earlier this month, NIH started terminating active research grants that are purportedly inconsistent with these new priorities, including the restrictions on DEI-related research. To support these terminations, NIH is, at times, relying on an OMB regulation (2 C.F.R. § 200.340) that became effective October 1, 2024. The OMB Guidance provides that a federal award may be terminated by a federal agency “according to the terms and conditions of the Federal award, including, to the extent authorized by law, if an award no longer effectuates the program goals or agency priorities.” Further, it provides federal agencies with the discretion to apply it retroactively to June 21, 2024.

Additionally, as has been widely reported, the federal government has begun canceling and suspending federal grants and contracts with several different universities. On March 7, 2025, the Department of Justice, Department of Health and Human Services (HHS), Department of Education, and U.S. General Services Administration announced the immediate cancellation of approximately $400 million in federal grants and contracts with Columbia University due to an alleged failure to comply with federal anti-discrimination laws. According to NIH, this included more than 400 research grants totaling approximately $250 million. In addition, on March 19, 2025, the federal government suspended $175 million in federal grants to the University of Pennsylvania for an alleged failure to comply with the government’s interpretation of Title IX.

Government Investigations

Federal agencies have begun initiating investigations into numerous institutions of higher education. On March 7, 2025, the HHS Office of Civil Rights announced investigations into four medical schools and hospitals pursuant to the DEI-related EOs and under Title VI of the Civil Rights Act of 1964. According to HHS, these investigations are in response to reports it had received alleging that these institutions’ medical education, training, and scholarship programs are discriminatory.

On March 14, 2025, the Department of Education’s Office of Civil Rights announced that it had opened investigations into 45 different universities based on reports that these universities used “racial preferences and stereotypes in education programs and activities” by partnering with The PhD Project, a nonprofit that assists students from underrepresented groups earn degrees. Six additional higher education institutions are also now under investigation for awarding “impermissible race-based scholarships.”

Fixed Cap on the Indirect Cost Rate

The new administration is also attempting to impose significant new restrictions on funding. On February 7, 2025, NIH announced in NOT-OD-25-068 (Supplemental Guidance to the 2024 NIH Grants Policy Statement: Indirect Cost Rates) that it would limit the indirect funding rate for all grant recipients to 15 percent. This limit applies to all new grants issued on or after February 10, 2025, and to all existing grants “for go forward expenses from February 10, 2025 forward.”

This represents a profound change that will impact institutions that use such funds to cover the overhead costs associated with completing research. Historically, institutions have negotiated the indirect cost rate directly with NIH, and the indirect cost rate has represented a large portion of the funding received.

For the time being, this fixed cap is temporarily on hold. On February 10, 2025, twenty-two state attorneys general filed a lawsuit and sought injunctive relief in Commonwealth of Massachusetts v. NIH, D. Mass., No. 1:25-cv-10338. That same day, the U.S. District Court for the District of Massachusetts issued a temporary restraining order that stopped the implementation of NIH’s policy, and the Court subsequently issued a nationwide preliminary injunction that enjoined NIH from taking any steps to implement or enforce its Supplemental Guidance. Although this preliminary injunction currently remains in place, this issue will no doubt be subject to further litigation.

Next Steps for Academic Institutions and the Federally-Funded Research Community

Every academic institution and federally funded recipient should:

1. Conduct a privileged audit of all programs, affiliations, practices, initiatives, policies, and procedures that in any way relate to DEI.
2. Carefully review and analyze, with the assistance of counsel, all existing grants and federally funded contracts that could potentially be impacted.
3. Assess current reliance on federal funding and potentially explore alternative funding and cost-saving mechanisms, such as resource sharing, industry partnerships, and state-level funding.
4. Carefully review and analyze with counsel all new federal contracts and grant applications, paying particular attention to any new certification language that creates False Claims Act exposure.
5. Take appropriate steps if a termination or suspension notice is received, including:
6. Scrutinizing the grant agreement/contract, applicable agency guidance, and applicable regulations to determine if the agency exceeded its authority.
7. Document questions and objections to the agency in writing.
8. Track and document all costs associated with termination, including any adverse impacts caused by the agency’s position.
9. Carefully consider whether certain ethical obligations continue even after termination.
10. Consult with experienced legal counsel. This is a quickly evolving area, and it requires counsel with the requisite experience to stay abreast and provide guidance on the legal, regulatory, enforcement, and policy landscape. It is also critical to ensure that appropriate legal privileges apply to any review and analysis performed.

We will continue monitoring developments and will provide updates as this evolving legal landscape clarifies.