Agencies Move to Implement OMB’s Proposed Grants Takeover

The Education Department published a familiar-looking proposed rule Monday.

If finalized, it would let the education secretary terminate ED grants—meant to help students access college, workforce training programs and more—simply “for convenience,” and allow her to prioritize grant applicants who promise to charge the government lower, or zero, overhead cost rates. States and subgrantees that receive grants would have to comply with the president’s numerous executive orders, which aren’t supposed to carry the force of law.

The National Science Foundation ended a public comment period Monday on its own familiar proposal, which includes lines such as “Reminder: NSF may act immediately to suspend or terminate [grants] if needed to protect government interests.”

Critics of these proposals note that they echo the controversial rule that the White House Office of Management and Budget proposed earlier this year. That rule, which would give political appointees sweeping control over grant making across the government, hasn’t been finalized or implemented yet.

The government says it received nearly 500,000 comments on that proposed rule, placing a burden on OMB to respond to them all—even if those arguing that the actual number is lower are correct. Lawyers for advocacy groups have already threatened to sue if OMB finalizes the rule, and the Senate has passed a bipartisan continuing resolution that would both fund the government through mid-December and block the OMB rule until then.

Yet ED and NSF are proposing their own, agency-specific rules that would implement the OMB’s vision for their own distinct federal entities, even if the OMB rule fails to take effect. NSF’s proposal directly says one of its aims is “aligning with the proposed revisions to the Office of Management and Budget’s (OMB) Uniform Guidance.” Other federal departments may follow suit. The moves underline the Trump administration’s indefatigability—or stubbornness—in seeking to assert political control over billions of dollars in federal grants.

Amanda Fuchs Miller, president of Seventh Street Strategies and a former deputy assistant secretary for higher ed programs during the Biden administration, said courts rejected the Trump administration’s efforts to cancel grants at will last year, and then others pushed back on the OMB’s efforts to enshrine that power in its proposed rule. She said she now thinks the administration is trying to assert similar power through these individual agency proposals in the hope they will fly under the radar or take effect more quickly because they don’t draw hundreds of thousands of comments.

“This is like a runaround—if the Congress blocks the OMB rule or delays it, they will still be able to do a lot of the same things,” Miller said of the ED proposal. She added that it will make the rules more ideological and add “huge unpredictability” for colleges, who could see their grants canceled at any point.

The NSF proposal had received more than 3,000 comments as of publication time Monday, and while that number was bound to grow by the midnight deadline, it’s a far cry from the purportedly nearly half a million comments on the OMB proposal.

American Council on Education President Ted Mitchell submitted a comment Monday on behalf of ACE and 24 other higher ed groups expressing “deep concerns” about the NSF proposal, saying it “would incorporate many of the problematic provisions included in the Office of Management and Budget’s (OMB) proposed rule, which would make historic and harmful changes.”

“We urge NSF not to finalize the GFA [Guidance on Financial Assistance] as drafted and to remove provisions that rely upon or implement elements of OMB’s proposed rule before that rule has been finalized,” Mitchell wrote.

Sarah Spreitzer, ACE’s vice president and chief of staff for government relations, told Inside Higher Ed that OMB hasn’t even responded to the comments on its proposal yet. But she said doing things out of order isn’t new for the administration.

“They’ve been taking these actions for the past year and a half,” Spreitzer said, adding that the administration’s moves have “caused a lot of chaos, and I think this is retroactively going back to provide the structure for those decisions and to allow for those decisions to continue.”

Association of Public and Land-grant Universities President Waded Cruzado submitted a comment Sunday on the NSF rule calling for parts of it to take effect only after the OMB uniform guidance is finalized—though APLU opposes that proposal, too. Cruzado noted that APLU previously submitted comments on the OMB proposal “and identified several provisions that warrant significant revision before finalization, including changes to merit review, discretionary termination and suspension authority, and allowable costs.”

“If the final Uniform Guidance differs from the proposed [NSF] rule in any of these areas, institutions will have built compliance infrastructure around a standard that federal regulation does not ultimately require,” Cruzado wrote.

Spokespeople for ED and OMB didn’t provide comments or interviews for this article. NSF spokesperson Mike England wrote in an email, “Since the January 2024 publication of the NSF Proposal and Award Policies and Procedures Guide, there have been important policy updates which NSF has had to communicate to the research community through supplemental notices.” The agency “is committed to continuing to reduce the administrative burden on the research community by streamlining requirements into the revised guide, making necessary updates stemming from NSF-specific legislation, and providing the community with an opportunity to comment,” he said, adding that any final changes “from the ongoing OMB review process will be incorporated to the NSF guide, where applicable.”

Regarding the ED proposal, Miller said awarding applicants extra points in grant competitions if they charge less—or nothing—in indirect costs is another “sort of a runaround to get around how to cap it without capping it.”

The administration has repeatedly tried to cap indirect cost rates—the amount of a grant that goes to overhead, such as administrative salaries and lab and utilities costs—only to be stopped by judges and Congress.

In its proposed rule, ED said this move would provide “greater flexibility to ensure that Federal funds are directed toward the activities and outcomes most central to a program’s purpose.” It estimated that, in each year over the next decade, “750 new grant recipients would apply to programs where the Secretary gives competitive preference for applicants who charge lower indirect costs,” resulting in “an annual transfer of $45,000,000 from indirect costs to direct costs.”

The comment period on the ED proposal ends Sept. 23, and the department plans to finalize the rule “in late 2026.”