State and Education Depts. Partner on Foreign Gift Reporting

JD Supra Trade Law

Published February 23rd, 2026

Detected March 3rd, 2026

Summary

The U.S. Department of Education and the U.S. Department of State have formed a partnership to jointly oversee Section 117 foreign gift and contract reporting requirements for higher education institutions. This collaboration aims to streamline oversight and enhance transparency regarding foreign influence in academia.

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What changed

The U.S. Department of Education announced on February 23, 2026, a new interagency partnership with the U.S. Department of State to share oversight responsibilities for Section 117 of the Higher Education Act. This section mandates that institutions of higher education disclose foreign gifts and contracts valued at $250,000 or more annually. The partnership is intended to improve efficiency, reduce administrative burdens, and enhance transparency regarding potential foreign influence in higher education institutions.

Educational institutions must continue to comply with the existing biannual reporting deadlines of January 31 and July 31. Noncompliance can lead to enforcement actions by the Department of Justice, including civil suits and potential loss of Title IV federal student aid program eligibility. The State Department's involvement may lead to a more literal interpretation of the public records requirement for Section 117 disclosures, potentially increasing transparency and scrutiny of reported information.

What to do next

Review updated interagency partnership details regarding Section 117 foreign gift and contract reporting.
Ensure accuracy and timeliness of all foreign gift and contract disclosures exceeding $250,000.
Consult legal counsel regarding potential implications of the State Department's role in disclosure transparency.

Penalties

Enforcement by the U.S. Department of Justice, including civil actions compelling compliance and recouping enforcement costs; potential loss of eligibility for federal financial student aid programs under Title IV.

Source document (simplified)

March 2, 2026

State Department Partners With Education Department on Section 117 Foreign Gift and Contract Reporting

Alex Brackett, John Moran, Maricris Prendingue, J. Patrick Rowan, John Sullivan, Farnaz Thompson, Sarah Wake McGuireWoods LLP + Follow Contact LinkedIn Facebook X Send Embed On Feb. 23, 2026, the U.S. Department of Education (the Department) announced a new interagency partnership with the U.S. Department of State (State Department) to share responsibilities for oversight of Section 117 of the Higher Education Act, which requires institutions of higher education to disclose foreign gifts and contracts valued at $250,000 or more to the federal government. According to the Department, this partnership is intended to “ensure efficient delivery of funded programs and activities” and deliver on the administration’s promise to “return education to the states.” By partnering with agencies that are better positioned to deliver results for students and taxpayers, the Department’s goal is for these new partnerships to “streamline federal education activities on legally required programs, reduce administrative burdens, and refocus programs and activities to better serve students and grantees.”

Background on Section 117 Reporting

Section 117 requires institutions of higher education to disclose foreign-source gifts and contracts valued at $250,000 or more annually to the Department. The disclosure requirements are intended to protect national security and academic integrity by providing transparency regarding potential foreign influence in higher education. Institutions must file biannual Section 117 reports by Jan. 31 or July 31, whichever is sooner, following receipt of the gift or entry into the contract. Noncompliant institutions risk enforcement by the U.S. Department of Justice, including civil actions compelling compliance and recouping the full costs of enforcement. The Department asserts through its Nov. 13, 2020, notice of interpretation that noncompliant institutions also may lose the ability to participate in federal financial student aid programs under Title IV of the Higher Education Act of 1965, as amended.

Section 117 further specifies: “All disclosure reports . . . shall be public records open to inspection and copying.” The Department previously did not release reports in response to requests under the federal Freedom of Information Act if institutions claimed that such records include trade secrets and commercial or financial information that could harm the institution’s interests if released. The State Department, however, may not be as deferential to institutions and may interpret the “public records” language of Section 117 more literally for greater transparency.

The Trump administration has made Section 117 enforcement a significant priority. In April 2025, President Trump signed the executive order titled “Transparency Regarding Foreign Influence at American Universities,” making it a top priority “to end the secrecy surrounding foreign funds in American educational institutions and safeguard America’s students and research from foreign exploitation.” Since Jan. 20, 2025, the Department has initiated four new investigations under Section 117 — into two Ivy League schools and two public flagship universities — amid reports of inaccurate and untimely foreign source gift and contract disclosures.

The New State Department Partnership

According to the Department, the State Department will support the Department in managing the Section 117 foreign funding reporting portal and “use its national security and foreign national academic admissions expertise to review and assess the industry’s compliance with the law, share data with the public and federal stakeholders, and identify potential threats.” The partnership “will ensure the data gathered from the portal can be easily used by national security experts, allowing potential threats to be addressed decisively and proactively by an agency that is best equipped to protect America’s most vital interests across all domains.”

The State Department will also help manage the new Section 117 Foreign Gift and Contract Public Transparency Dashboard, the public reporting portal that the Department launched earlier this year and recently upgraded to include new data visualization capabilities. The portal allows the public, Congress, and the media to inspect and analyze key features of disclosed foreign funding, including gifts and contracts received from parties designated as entities of concern by the State Department, among other federal agencies.

Broader Context

This interagency agreement is part of the Trump administration’s broader effort to restructure the Department under its “Returning Education to the States” initiative. The Department announced the Section 117 partnership alongside a separate interagency agreement with the Department of Health and Human Services (HHS), under which HHS will take a growing role in administering school safety and family engagement programs, including Project SERV, School Safety National Activities, Ready to Learn Programming, Full-Service Community Schools, Promise Neighborhoods, and Statewide Family Engagement Centers.

These agreements follow seven agency partnerships signed in 2025, including a workforce development partnership with the Department of Labor, which has created an integrated federal education and workforce system and reduced the need for states to consult multiple federal agencies to effectively manage their programs. McGuireWoods’ previous client alert on this matter can be accessed here.

Key Takeaways for Institutions of Higher Education

Institutions of higher education should be aware that:

The State Department will now play a significant role in Section 117 compliance, bringing national security expertise to review and assess institutional compliance with foreign gift and contract reporting requirements.
The Department’s Office of the General Counsel will continue to maintain all statutory responsibilities and oversight of the program.
Institutions should continue to submit required disclosures through the new reporting portal at www.foreignfundinghighered.gov.
With heightened enforcement and the involvement of the State Department, institutions should review their internal processes for tracking and reporting foreign gifts and contracts to ensure timely and accurate compliance.
Institutions also may wish to adopt a formal policy and procedure concerning Section 117 reporting to demonstrate good faith in identifying, collecting and reporting all relevant foreign gifts and contracts.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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