On June 22, 2020, the Department of Education (DoEd) announced a new electronic reporting functionality and policies governing how institutions of higher education must submit their required foreign gift and contract reports under Section 117 of the Higher Education Act. The announcement reminds schools that:
"Institutions that are owned or controlled by a foreign source must file two disclosure reports per year - one no later than January 31 and the other no later than July 31. All other institutions that receive a gift from or enter into a contract with a foreign source, the value of which is $250,000 or more, considered alone or in combination with all other gifts from or contracts with that foreign source within a calendar year, must file a disclosure report no later than January 31 or July 31, whichever is sooner." ...
"As of June 22, 2020, institutions must report Section 117 information using the new reporting system, available at https://partners.ed.gov/ForeignGifts. Institutions should no longer report foreign gifts or contracts on the E-App in question 71. If your institution submitted an E-App prior to June 22, 2020, those gifts or contracts already reported do not need to be re-submitted using the new system."
Compliance with this reporting requirement is typically managed through the offices of general counsel, accounting and finance, and offices that report data directly to the Department of Education. Under the statute, if it is determined that there was a "knowing or willful failure to comply" with these reporting requirements, the institution must pay "the full costs to the United States of obtaining compliance, including all associated costs of investigation and compliance." This would likely also include the costs of any litigation.
The June 22, 2020 notice also includes links to two appendices. Appendix A describes what information must be reported, and Appendix B contains "excerpts of certain responses to public comments the Department provided during the course of developing this information collection."
In addition, the Spring 2020 Regulatory Agenda lists a proposed rule that the Department of Education is working on, with a June 2020 target date. Agency: ED/OPE. RIN 1840-AD50. Title: Documentation of Foreign Source Gifts and Contracts. Abstract: "The Department proposes a regulation requiring submission of true copies of original agreements memorializing statutorily defined gifts, contracts, and/or restricted and conditional gifts or contracts from or with defined foreign sources by institutions, the value of which gifts or contracts is $250,000 or more (considered alone or in combination with other gifts from or contracts with that foreign source to the institution within a calendar year). The proposed regulation would make the submission of these true copies part of institutions’ semiannual disclosure reports filed with the Secretary of Education, pursuant to the requirements of Section 117 of the Higher Education Act of 1965 (HEA), as amended. This proposed regulation is necessitated by the ongoing failure of many institutions to comply with the statutory mandate that institutions accurately and fully report covered gifts and contracts from foreign sources in a timely manner. Departmental and other investigations have uncovered persistent underreporting by institutions of statutorily defined gifts, contracts, and/or restricted and conditional gifts or contracts from or with statutorily defined foreign sources."
Background on the Foreign Gifts and Contracts Reporting Requirement
"Section 117 of the Higher Education Act of 1965 (HEA), as amended, requires certain institutions that participate in the Title IV student assistance programs to submit to the Secretary disclosure reports containing information about gifts received from any foreign source, contracts with a foreign entity, and any ownership interests in or control over the institution by a foreign entity.
Specifically, all Title IV domestic institutions that offer a bachelor's degree or higher, or that offer a transfer program of not less than two years that is acceptable for credit toward a bachelor's degree, are required to report contracts with or gifts from the same foreign source that, alone or combined, have a value of $250,000 or more for a calendar year; and/or if the institution is owned or controlled by a foreign source. Additional information about this requirement is available on pages 2-180 to 2-182 of the Consumer Information and School Reporting chapter of the Federal Student Aid Handbook.
The report below provides a complete listing of all foreign gifts and/or contracts reported by Title IV institutions for the previous six years. This data is self-reported by institutions. Negative amounts indicate an adjustment to a previously received amount. There may be additional instances of foreign gift reporting that are tied to pending applications currently undergoing review. Data from pending applications are not included in this report until the application review has been completed.
A statutory requirement to disclose foreign-sourced gifts and contracts has existed for more than three decades, although the Department of Education has never published regulations to further define a school's obligations. In a February 1995 communication DoEd stated, "Although the statute permits the Secretary to issue regulations concerning this reporting requirement, the Secretary has determined that regulations are unnecessary." Before its June 22, 2020 notice, DoEd had likewise offered only scant guidance to schools on the government's interpretation of the scope of the requirement:
- In February 1995, DoEd issued GEN-95-12, in which DoEd "intended to inform institutions about the statute and provide affected institutions with an address to which the reports should be forwarded." Aside from specifying a mailing address and fax number, this publication basically either paraphrased or repeated the text of the statute itself.
- On October 14, 2004, DoEd issued a "Dear Colleague" letter, GEN-04-11, which provided some instructions and answers to a few frequently asked questions. In its June 22, 2020, DoEd rescided the 2014 guidance, stating, "That guidance became outdated now that there is a new method for institutions to submit Section 117 reports, and given the Department updated the specific questions institutions must answer via the new reporting system."
DoEd had been reviewing school compliance with foreign gift and contract disclosure reporting, and sent letters to some institutions of higher education, either reminding them of reporting obligations under 20 USC 1011f, or notifying them of "investigations related to the universities' reports of defined gifts and contracts, including restricted and conditional gifts or contracts, from or with a statutorily defined foreign source."
- A concise article in The National Law Journal reviews the background of why the administration is now so interested in this old law. According to the article, it stems in part from concern about Confucius institutes which then led to an assessment of whether schools were reporting Confucius Institute money to DoEd as a "foreign gift or contract." Most weren't, however, according to the February 2019 bipartisan report of the U.S. Senate Permanent Subcommittee on Investigations cited in the National Law Journal article.
- On September 4, 2019 DoEd published notice of a proposed new form that would be used by schools to report gifts and contracts under 20 USC 1011f. Comments were due on or before November 5, 2019. Visit regulations.gov to read the notice, supplemental documentation describing the form, and comments DoEd received. On December 17, 2019 and February 10, 2020, DoEd published additional information collection request notices. NAFSA signed on to a comment letter (March 11, 2020) developed by the American Council on Education (ACE). Appendix B of DoEd's June 22, 2020 notice contains "excerpts of certain responses to public comments the Department provided during the course of developing this information collection."
- On June 22, 2020, DoEd announced its new electronic reporting functionality and policy statement.