Dive Brief:

• More than two dozen higher education groups are arguing that federal law does not allow the U.S. Department of Education to revoke federal financial aid for colleges that fail to adequately report their financial ties to foreign entities, as the agency recently threatened. 

• The American Council on Education wrote to the department Monday on behalf of the organizations, reiterating that officials have been unresponsive to their requests to clarify reporting requirements. 

• The Trump administration has been stepping up its scrutiny of colleges' relationships with other countries, particularly China, and the department has accused institutions of drastically underreporting foreign dealings. 

Dive Insight:

Section 117 of the Higher Education Act requires colleges report to the Education Department all gifts and contracts with foreign countries and organizations totaling $250,000 or more in a year.

The department, however, alleges that institutions have for years presented a deeply incomplete picture of their financial connections outside the U.S., and subsequently opened investigations into a dozen prominent schools. 

The agency also recently instituted a comprehensive checklist for information colleges would need to share with it. Colleges that don't fully report their foreign ties could lose access to Title IV money, the department said last month.

In ACE's latest letter to the department, its president Ted Mitchell wrote that the groups do not believe the HEA permits federal officials to follow through with this threat. It's also unnecessary, Mitchell wrote, because the law directs the Education Department to refer offending institutions to the U.S. Department of Justice. Although a college found in violation of Section 117's requirements would need to reimburse the government for the cost of becoming compliant, Congress didn't intend for the department to pull their Title IV funding, Mitchell argued.

Included in the letter is a memo from law firm Hogan Lovells, which was prepared at ACE's request and backs its assertions.

The letter also states the way the department made its threat violated the Administrative Procedure Act, which governs how federal agencies must release regulations. Mitchell urged the department to participate in a formal rulemaking process to develop reporting mandates.

An Education Department spokesperson did not respond to Higher Ed Dive's request for comment by publication time.