Education Department Proposes Sweeping Changes to Grant Rules, Easing Terminations and Limiting Appeals

The U.S. Department of Education argues that federal agencies must retain the flexibility to cancel multi-year grants when national priorities shift, while universities and state education departments warn that a new proposal to terminate funding "for convenience" will politicize billions of dollars in research and programming. The tension centers on a sweeping overhaul of the Education Department General Administrative Regulations (EDGAR), published in the Federal Register on August 24, 2026. The proposed framework would grant the Secretary of Education unprecedented discretion to reduce, suspend, or end discretionary awards before their scheduled completion date, even if the recipient has complied with all financial and administrative requirements.[1][3][4]

The regulatory push follows the Trump administration's efforts over the past 18 months to terminate more than $2 billion in competitive grants that it deemed misaligned with its policy agenda. Those previous attempts frequently stalled in federal court. Last fall, a federal judge in Seattle invalidated several termination notices, ruling that the department had failed to provide individualized explanations for ending each grant or to inform recipients that the funding priorities had changed.[1]

"The proposal would make it easier to take the actions that they have already taken," said Julia Martin, the director of policy and government affairs at the Bruman Group, a law firm advising state education departments on federal funding. By codifying the ability to cancel awards "for convenience," the department aims to bypass the legal requirement to prove noncompliance. The department's notice states the change will "ensure that the department retain ongoing programmatic discretion after an award is made, consistent with law, to terminate a discretionary award for convenience."[1]

Beyond terminations, the 2026 proposal fundamentally alters how the department evaluates and monitors the billions it distributes annually. The new rules would eliminate the requirement to publish grant competition notices, annual priorities, and maximum award amounts in the Federal Register, shifting that information exclusively to Grants.gov. The framework also restricts the administrative avenues grantees can use to appeal a sudden loss of funding, limiting their ability to challenge the department's rationale.[1][2][5]

The regulations introduce strict new ideological and operational conditions for funding recipients. Grantees would be required to ensure that all hiring, admissions, promotion, and compensation decisions tied to the federal money are based on "merit and high standards," explicitly prohibiting considerations of race, color, religion, sex, or national origin. The rules also mandate that state and local grantees comply with presidential executive orders when using federal funds, a provision the department described as correcting an oversight in the 2024 EDGAR amendments.[3][5]

Higher education advocates warn the changes will destabilize long-term planning. The Association of Governing Boards of Universities and Colleges (AGB) issued a policy alert noting that the provisions could make multi-year federal awards vastly less predictable. By allowing the department to deobligate unspent balances and halt continuation funding, the rules expose grant-funded personnel, research projects, and institutional financial commitments to sudden shifts in executive branch priorities after an award has been finalized.[5]

The National Association of Pupil Services Administrators (NAPSA) highlighted that the rules also grant the department authority to issue partial awards, distribute funding in delayed installments, and review previous grantee activity before releasing authorized funds. These mechanisms provide the federal government with multiple leverage points to pressure institutions into compliance with administration policies outside the formal grant criteria.[6]

The Education Department's initiative mirrors a broader, government-wide overhaul of grant administration proposed by the Office of Management and Budget (OMB) in May 2026. That overarching proposal, which seeks to convert the Uniform Guidance in 2 CFR Part 200 into a binding "Uniform Grants Regulation," generated nearly 500,000 public comments. The Education Department's separate EDGAR filing demonstrates that individual agencies are advancing the administration's grant-control architecture independently, rather than waiting for the government-wide rules to take effect. The public comment period for the education rules, which spans 30 days, closes on September 23, 2026, with finalization expected by the end of the year.[3][5]