Understanding Proposed Changes to Federal Grantmaking Requirements

Three recent Trump administration proposals would change how federal grants to colleges and universities are awarded and managed. In May, the Office of Management and Budget (OMB) proposed a substantial rewrite of the Uniform Guidance. Since then, the National Science Foundation (NSF) and the U.S. Department of Education (ED) have proposed changes to their grant policies that draw on elements of the OMB proposal.^Footnote1

Background: The Uniform Guidance

The Uniform Guidance sets forth administrative requirements, cost principles, and audit requirements for grants and cooperative agreements across federal agencies. For colleges and universities, it shapes the management of sponsored research and other awards, including which costs may be charged and when awards may be suspended or ended. As it exists today, the Uniform Guidance is formally designated as "guidance" rather than "regulation," and its provisions become binding on recipients when each agency adopts it in its regulations and award terms.

The May 29 Notice of Proposed Rulemaking (NPRM) from OMB would rename the Uniform Guidance the "Uniform Grants Regulation" and codify it as a binding OMB regulation.^Footnote2 NSF and ED were among the dozens of agencies that co-issued the NPRM, meaning each agency's own regulations would be amended to adopt the Uniform Grants Regulation if the regulation is finalized. After this one-time joint rulemaking, future OMB amendments would apply government-wide on a single date without each agency issuing its own rule.

OMB Proposed Changes to the "Uniform Grants Regulation"

The proposed OMB rule would require senior political appointees to review discretionary awards before issuance for consistency with applicable law, agency priorities, and the national interest. While the NPRM permits peer review methods to continue, the proposal states that agency officials should not "routinely defer" to peer-review recommendations and that any peer-review methods should remain advisory.^Footnote3 The NPRM additionally states that, all else being equal, preference should go to applicants with lower indirect cost rates, although OMB did not propose changes to how those rates are negotiated.

The proposal would also expand termination authority. Since 2020, the Uniform Guidance has permitted termination of an award that no longer effectuates program goals or agency priorities. The proposal would add the national interest to that standard, assess these factors as of the time of termination, and allow agencies to suspend awards for up to ninety days.^Footnote4 Agencies would need to offer opportunities to object and appeal only for terminations based on noncompliance.

Other provisions would limit allowable costs: publication costs would be unallowable unless required by statute or approved in advance, conference attendance would require express agency approval, and subscriptions and professional memberships would be restricted.^Footnote5 The proposal would also eliminate fixed-amount awards, restrict funded collaborations with designated foreign countries and entities, and codify administration policies on diversity, equity, and inclusion.

On July 8, EDUCAUSE and more than fifty other associations signed comments led by the American Council on Education (ACE) urging OMB to withdraw the proposal.^Footnote6 The associations argued that political review would undermine merit-based award decisions, that termination without appeal rights would destabilize long-term research and education investments, that the cost restrictions would conflict with federal public access requirements, and that parts of the proposal exceed the statutory authority of the OMB.

In early September, Congress passed and the President signed legislation funding the government through December 11, 2026. The law includes a provision that prevents issuance or finalization of the proposed OMB rule, "or a substantially similar rule," before that date.^Footnote7 The restriction will expire on December 11 unless Congress extends it. It does not specifically mention the draft NSF guidance or the proposed ED revisions to the Education Department General Administrative Regulations (EDGAR).

NSF Draft Guidance on Financial Assistance

In June, NSF released for public comment draft Guidance on Financial Assistance (GFA), which would replace the existing policy guide for preparing NSF proposals and managing awards. Although the GFA is an agency policy document rather than a regulation, its requirements apply to every NSF grant and cooperative agreement. Notably, the draft states that one of its purposes is to align NSF policy with the proposed OMB revisions, although OMB has not yet finalized its rule.^Footnote8

The draft would align NSF termination provisions with the OMB proposal, make journal publication fees (such as article-processing charges) unallowable in line with the OMB proposal, and drop references to fixed-price awards. Although NSF describes the merit review guidance in the draft as essentially unchanged, NSF awards would be subject to the review requirements proposed by OMB if the NPRM is finalized.

EDUCAUSE joined an August 24 ACE letter urging NSF not to finalize the GFA as drafted and to remove provisions that rely on the OMB proposal until that rulemaking is complete.^Footnote9 NSF said it will provide one additional thirty-day comment period before finalizing the GFA, with a goal of implementing it in the first half of fiscal year 2027.^Footnote10

ED Proposed EDGAR Revisions

The August 24 ED proposal would revise EDGAR through formal rulemaking, and several provisions are similar in approach to those in the OMB NPRM. The proposal states that ED could terminate a discretionary grant "for convenience of the Secretary."^Footnote11 The secretary could also give a competitive preference to applicants that agree to charge less than their negotiated indirect cost rate, or no indirect costs, for the life of the grant.

Other provisions rely on authorities unique to ED, although some reflect themes in the OMB proposal. The secretary would have more discretion over continuation funding for multiyear grants, and reductions or denials of continuation funding would not be treated as "withholdings" that trigger hearing procedures under the General Education Provisions Act. ED would also revise its grant selection criteria; require that hiring, admissions, promotion, and compensation under a grant be based on "merit and high standards;" and require recipients of state-administered grants to comply with executive orders.

On September 23, EDUCAUSE joined ACE-led comments urging ED to withdraw the proposal, arguing that it would incorporate elements of the OMB rule despite Congress's decision to pause it.^Footnote12 ED intends to finalize the regulations in late 2026.

What's Next

Whether Congress extends the prohibition on finalizing the OMB rule beyond December 11, when the current funding law expires, is an open question. It is also unclear whether ED will finalize its EDGAR revisions. EDUCAUSE will continue to monitor these developments and keep members apprised.

Notes

1. Office of Management and Budget et al., "Regulation for Federal Financial Assistance," Federal Register 91, no. 103 (May 29, 2026): 32198–32305; National Science Foundation, "Agency Information Collection Activities: Comment Request; National Science Foundation Proposal/Award Information-NSF Guidance on Financial Assistance," Federal Register 91, no. 120 (June 24, 2026): 38030–38031; U.S. Department of Education, "Education Department General Administrative Regulations," Federal Register 91, no. 162 (August 24, 2026): 54666–54683. Jump back to footnote 1 in the text.↩
2. Office of Management and Budget et al., "Regulation for Federal Financial Assistance." Jump back to footnote 2 in the text.↩
3. Ibid., 32249. Jump back to footnote 3 in the text.↩
4. Ibid., 32250–32251. Jump back to footnote 4 in the text.↩
5. Ibid., 32262–32263, 32231, 32253. Jump back to footnote 5 in the text.↩
6. American Council on Education et al. letter to Russell T. Vought, Director, Office of Management and Budget, "RE: Proposed Rule on Regulation for Federal Financial Assistance, Docket No. OMB-2026-0034," July 8, 2026. Jump back to footnote 6 in the text.↩
7. "Continuing Appropriations and Extensions Act, 2027," Pub. L. No. 119-103, div. A, sec. 157 (September 2, 2026). Jump back to footnote 7 in the text.↩
8. National Science Foundation, "NSF Guidance on Financial Assistance" (draft for public comment), Docket No. NSF-2026-OTR-0001, June 2026, Summary of Changes, 6–8. Jump back to footnote 8 in the text.↩
9. American Council on Education et al. letter to Suzanne H. Plimpton, Reports Clearance Officer, National Science Foundation, "RE: Agency Information Collection Activities; Comment Request; National Science Foundation Proposal/Award Information-NSF Guidance on Financial Assistance," docket no. NSF-2026-OTR-0001, August 24, 2026. Jump back to footnote 9 in the text.↩
10. National Science Foundation, "Revisions to the NSF Guidance on Financial Assistance," presentation, July 2026. Jump back to footnote 10 in the text.↩
11. Termination for convenience is a concept drawn from federal procurement law. Under the Federal Acquisition Regulation, the government may end a contract when doing so is in the government's interest, without a finding that the contractor was at fault. See 48 CFR 49.502 and 52.249-2. ED cites these provisions in explaining its proposed termination authority. See U.S. Department of Education, "Education Department General Administrative Regulations," Federal Register 91, no. 162 (August 24, 2026): 54669. Jump back to footnote 11 in the text.↩
12. American Council on Education et al. letter to Zachary Rogers, U.S. Department of Education, "RE: Proposed Rule on Education Department General Administrative Regulations (EDGAR), Docket No. ED-2026-OPEPD-2542," September 23, 2026. Jump back to footnote 12 in the text.↩

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Kathryn Farrell is a Partner at Ulman Public Policy.