Department of Education Discontinues Discretionary Grant Funding for Minority-Serving Institutions
What You Need to Know
Key takeaway #1
The Department of Education announced that it will discontinue discretionary funding for several Minority-Serving Institution grant programs, despite Congress having already appropriated these funds.
Key takeaway #2
The announcement raises the possibility of broader federal policy changes affecting MSIs in the future.
Key takeaway #3
MSIs may need to reassess budgets, potentially impacting facilities, student programming, and other institutional priorities.
Client Alert | 2 min read | 09.22.25
The Department of Education (DOE) announced on September 10, 2025, that it will end discretionary funding to several Minority-Serving Institution (MSI) grant programs that, it stated, “discriminate by conferring government benefits exclusively to institutions that meet racial or ethnic quotas.”[1] The agency stated that it would “us[e] its statutory authority to reprogram discretionary funds to programs that do not present such concerns.”[2] This announcement follows a July 2025 decision by the Department of Justice to no longer defend the constitutionality of a provision of the Higher Education Act of 1965 (HEA) that authorizes grant funding to Hispanic-Serving institutions, after determining that such programs “violate the equal-protection component of the Fifth Amendment’s Due Process Clause.”[3]
Under the HEA, MSI programs provide federal funding and support to colleges and universities that enroll a significant percentage of students from minority groups, aiming to strengthen academic resources, student support, and institutional capacity. The administration’s view that these programs are discriminatory and unconstitutional has resulted in seven MSI grant programs being targeted for cuts: (1) Strengthening Alaska Native and Native Hawaiian-Serving Institutions; (2) Strengthening Predominantly Black Institutions; (3) Strengthening Asian American- and Native American Pacific Islander-Serving Institutions; (4) Strengthening Native American-Serving Nontribal Institutions; (5) Minority Science and Engineering Improvement; (6) Developing Hispanic-Serving Institutions; and (7) Promoting Postbaccalaureate Opportunities for Hispanic Americans.[4]
In its announcement, the DOE stated that grant recipients would be notified the same day that existing discretionary awards and new awards would not be granted for the 2025 fiscal year despite the fact that the DOE had already opened competitions for some of these grants.[5] And, while the DOE stated that it “looks forward to working with Congress to reenvision these programs to support underprepared or under-resourced students without relying on race and ethnic quotas,” it did not explain what “reenvisioning” these programs would entail.[6]
Prior to the DOE’s announcement, Congress had already appropriated approximately $350 million in discretionary funds to support MSI programs for the 2025 fiscal year, all of which will be redistributed “to support other priorities.”[7] The DOE still plans to disburse about $132 million in mandatory funding under the MSI programs because it “cannot be reprogrammed on a statutory basis.”[8] DOE stated that it “continues to consider the underlying legal issues associated with the mandatory funding mechanism in these programs.”[9]
The DOE’s decision will have real and immediate effects on MSIs that depend on this grant funding. MSIs should prepare for continued uncertainty and remain attentive to potential policy shifts.
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