Education Department Escalates Crackdown on Universities Hiding Foreign Funding

Federal probe raises urgent questions about national security, taxpayer dollars, and why U.S. campuses are turning to foreign adversaries for financial support

Natalie C. Frank, Ph.D September 6, 2025

Ken Lund/flickr [CC BY-SA 2.0]

WASHINGTON, D.C. - The Education Department is preparing to widen its investigation into American universities accused of concealing financial ties to foreign adversaries, according to a senior official familiar with the probe. The move signals a growing federal effort to address concerns that U.S. research and taxpayer-backed institutions are vulnerable to overseas influence.

The Trump administration has already scrutinized Harvard, the University of California at Berkeley, the University of Michigan, and the University of Pennsylvania for allegedly violating Section 117 of the Higher Education Act, which requires disclosure of foreign gifts and contracts over $250,000. With only about 40% of schools fully complying, federal officials warn that dozens, possibly even hundreds, more institutions could soon face questions about their reporting practices.

The official said, “All top recipients of federal research dollars should be on notice.”

Why Now and Why so Many?

One immediate question is why the scope of foreign funding on U.S. campuses seems to be coming to light now. Is the volume of undisclosed money truly growing, or is it simply that the federal government has sharpened its focus? The timing suggests a combination of both. In recent years, Chinese state-linked organizations have stepped up investment in academic partnerships as part of a broader global influence campaign. At the same time, Washington has begun devoting more resources to uncovering the true extent of these financial ties.

Estimates vary, but higher education analysts believe that as many as 100 to 150 major research universities may have accepted funds from countries considered U.S. adversaries, including China, Russia, Iran, and in some cases Middle Eastern governments. Not all of these institutions necessarily broke disclosure laws, but the sheer scale highlights the potential for sensitive research to be exploited.

Why Would Universities Take the Money?

Universities argue that global collaboration is essential for research advancement. Yet the reliance on foreign funding may also reveal a deeper problem: chronic underfunding at home. Federal research budgets have grown only incrementally, leaving universities competing fiercely for grants. Foreign donors can offer a tempting lifeline, particularly in fields like engineering, computer science, and medicine, where equipment and staffing costs are high.

Some education finance experts suggest that declining state support for public universities has also opened the door. When taxpayer dollars don’t keep pace with institutional needs, schools may look overseas, even to adversaries, for revenue streams. Whether this is a matter of financial necessity or opportunism remains a point of debate.

A National Security Threat

The stakes go beyond financial transparency. Federal officials warn that foreign students and researchers connected to adversarial governments may be pressured to share sensitive discoveries with their home countries. One recent case involved a Chinese student at a Michigan university who was later found to be linked to a military-affiliated institution in China. The student allegedly pressed an American aerospace professor to share information with potential military satellite applications.

The official added that foreign governments use donations not just to gain access to laboratories but also to shape campus environments. “Universities that are funded by foreign adversaries often allow that to influence their decision-making,” the official said, pointing to cases where Middle Eastern funding coincided with reluctance to condemn antisemitic incidents on campus.

Government Coordination

According to the Education Department, Section 117 disclosures allow agencies such as the Department of Defense, National Institutes of Health, and NASA to cross-check grant applications with reported foreign funding. The problem, officials say, is that universities’ disclosures are often incomplete or inaccurate, making it difficult to track how far foreign involvement reaches.

Students from China, Russia, Iran, and North Korea are seen as particularly high-risk. “Students from foreign adversaries, such as China, Russia, Iran, and North Korea, pose a very clear national security threat,” the senior official told The Daily Signal.

That concern mirrors remarks from Secretary of State Marco Rubio, who said in May that he planned to “aggressively revoke visas for Chinese students, including those with connections to the Chinese Communist Party or studying in critical fields.”

President Trump recently appeared to suggest that 600,000 Chinese students could enter U.S. universities, though the White House clarified this referred to two years’ worth of visas, not an expansion of current policy. “It’s simply a continuation of existing policy,” a White House official explained.

The Message to Universities

By stepping up enforcement, the Education Department is signaling that taxpayer dollars come with accountability. As the senior official put it, “By enforcing the Higher Education Act, the Trump administration has reminded universities of their accountability to their biggest donor, the American taxpayer.”

For institutions that have grown reliant on international funding, the message is clear: disclosure is not optional. With federal dollars on the line and national security risks at stake, universities may soon face a reckoning about who pays for their research, and at what cost.