This bill inserts Section 117A into the Higher Education Act to prohibit eligible institutions of higher education from entering into contracts with designated foreign countries of concern or foreign entities of concern. It builds a waiver process that can allow narrowly tailored agreements for one-year periods, requires institutions to name a compliance officer, and authorizes investigation, civil enforcement by the Attorney General, and fines sized as percentages of federal funds received under the HEA.
The measure matters because it ties institutional contract choices directly to HEA program participation and federal grants, creating a compliance regime that intersects campus research, vendor relationships, international partnerships, and student programs. For institutions, the bill converts national-security designations into near-automatic grounds for contract termination, financial penalties, and potential temporary loss of access to federal student-aid programs.
At a Glance
What It Does
The bill prohibits most agreements between covered colleges and any foreign country or entity the statute identifies as a ‘concern.’ It permits the Secretary of Education to issue one-year waivers after multi-agency consultation and requires renewal requests at least 120 days before waiver expiration. Institutions must terminate contracts no later than 60 days after a foreign source is newly designated as a concern.
Who It Affects
The rule applies to institutions of higher education that participate in HEA programs (excluding certain exempted institutions). It also affects foreign vendors, affiliated research partners, agents handling translations and contract negotiations, and federal agencies asked to consult on waiver decisions.
Why It Matters
The bill converts national-security lists and determinations into operational constraints on campus contracting, making institutions’ third-party relationships a compliance risk tied to federal funding. It also centralizes enforcement with the Department of Education and the Justice Department and imposes fines measured against HEA funding, creating material financial exposure for violators.
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What This Bill Actually Does
Section 117A creates a broad prohibition: covered institutions may not enter into contracts with a foreign country of concern or a foreign entity of concern. The statute defines 'contract' to include purchases, leases, affiliations, exchanges of institutional name or resources, and similar arrangements, while carving out ordinary arms‑length vendor purchases and limited student‑cost payments under specific conditions.
The prohibition is forward‑looking but also addresses existing agreements by creating a pathway for legacy contracts to be reviewed.
To avoid a per se bar on all interactions, the bill establishes a waiver regime: an institution seeking to enter into a covered contract must submit the full, unredacted contract and a certified statement by a designated compliance officer showing the agreement benefits the institution’s mission and promotes U.S. security, stability, or economic vitality. The Secretary of Education decides whether to issue a one‑year waiver only after consulting a long list of national‑security agencies, and must notify relevant congressional committees at least two weeks before issuing a waiver.The statute builds in timing rules and triggers: first‑time waiver requests must be submitted at least 120 days before a contract is executed; renewal requests for multi‑year deals must also be filed 120 days before expiration; an institution must terminate any contract within 60 days if the foreign partner becomes newly designated as a concern during the contract term.
For contracts that predate the statute, institutions must file waiver requests within 30 days; the Secretary then issues a waiver covering up to one year or until the contract terminates.Compliance and enforcement are centralized. Every institution that submits a waiver must designate and maintain a compliance officer responsible for certifying compliance.
The Department of Education’s General Counsel will investigate suspected violations and ask the Attorney General to seek civil relief to compel compliance. The Secretary can impose fines calculated as a percentage of HEA funds received (5–10 percent for a first knowing violation, at least 20 percent for repeat violations), require payment of federal enforcement costs, and, after repeated noncompliance, bar institutions from receiving waivers or participating in HEA programs for set periods.
The Five Things You Need to Know
The bill requires institutions to submit the complete, unredacted proposed contract and, if the original is not in English, a translation by a translator who is not an affiliated entity or agent of the foreign source.
A first waiver may be issued only for a one‑year period; institutions must file renewal requests at least 120 days before the waiver expires to keep multi‑year contracts in force.
If a foreign source is designated as a country or entity of concern during an existing contract, the institution must terminate that contract within 60 days of notice from the Secretary.
The Department of Education may impose fines equal to 5–10% of the institution’s HEA funds for a first knowing violation and not less than 20% for subsequent violations, plus the government’s enforcement costs.
An institution that violates Section 117A for three consecutive institutional fiscal years becomes ineligible for HEA programs for at least two institutional fiscal years and must demonstrate two years of compliance to regain eligibility.
Section-by-Section Breakdown
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Blanket prohibition on contracts with designated foreign sources
Establishes the core rule: institutions covered by the HEA may not enter into contracts with any foreign country of concern or foreign entity of concern. The provision adopts a broad working definition of 'contract' that captures affiliations, use of institutional branding or resources, and many non‑standard commercial arrangements, while excluding routine arms‑length purchases and limited student cost payments under specified conditions. Practically, this creates a legal bar that reaches beyond simple vendor relationships into partnerships, research collaborations, and articulation or exchange agreements.
Narrow, time‑limited waiver process with interagency review
Authorizes only one‑year waivers that apply strictly to the proposed contract terms submitted with the request. Institutions must file initial waiver requests not later than 120 days before entering into the contract. The Secretary may issue waivers only after consulting a long list of national‑security and science agencies (FBI, DNI, CIA, State, Defense, DOJ, Commerce, DHS, Energy, NSF, NIH) and must notify key congressional committees at least two weeks before issuing a waiver. Renewal requests follow the same 120‑day advance timing for continuation beyond the initial year. The requirement for interagency consultation embeds national‑security review into ordinary institutional contracting decisions.
Triggers for termination and transitional treatment for existing contracts
If a foreign source becomes newly designated as a concern during the term of a contract, the institution must terminate the contract within 60 days of notice. For contracts already in place on enactment, institutions must submit waiver requests within 30 days; the Secretary then issues a short transitional waiver covering up to one year or the remainder of the contract, whichever is sooner, and those deals may be renewed under the standard waiver renewal process. These timing rules create an immediate administrative burden on institutions with active foreign partnerships.
Compliance officer duties, investigation, and civil enforcement
Institutions submitting waiver requests must designate a compliance officer—either an employee or authorized agent—who personally certifies compliance statements. The Department of Education’s General Counsel investigates suspected violations and, if it finds knowing or willful noncompliance, asks the Attorney General to bring civil actions to compel compliance. This structure places primary investigatory responsibility on the Department and remedial authority with the federal courts and DOJ.
Financial penalties and limits on future waivers
Sets a graduated financial penalty scheme: first knowing or willful violations trigger fines of 5–10% of HEA funds for the most recent fiscal year; subsequent violations trigger fines of not less than 20% of that funding. The statute also requires repayment of government enforcement costs. An institution fined for a first violation that then knowingly fails to comply in two additional calendar years becomes ineligible for waivers, increasing the risk that a noncompliant institution will face longer‑term programmatic exclusion.
Definitions and program participation consequences
Defines 'foreign country of concern' by cross‑reference to existing statutory lists and empowers the Secretary, with consultation, to add countries; defines 'foreign entity of concern' by cross‑reference to R&D statutes and other federal lists. The bill also amends the HEA program participation agreement to make compliance with Section 117A a condition of participation, and it adds a three‑strike rule that can render an institution ineligible for HEA programs for at least two institutional fiscal years after specified repeated violations.
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Explore Education in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Federal national‑security agencies — gain a formalized role in vetting and approving higher‑education contracts and a statutory mechanism to block high‑risk relationships.
- Students concerned about foreign influence — benefit indirectly when institutions terminate or avoid partnerships the government deems risky, potentially reducing exposure to sensitive programs or foreign funding tied to adverse actors.
- Domestic vendors and research partners — may face reduced competition for contracts and collaborations if institutions shift away from designated foreign sources toward U.S. or allied suppliers.
Who Bears the Cost
- Institutions of higher education — must staff or fund compliance officers, legal reviews, translations by non‑affiliated translators, monitor designation lists, and may lose significant portions of HEA funding through fines or ineligibility.
- Researchers and academic units — face disrupted joint projects, delayed collaborations, and potential loss of foreign‑sourced equipment, data, or student exchanges that fall under broad 'contract' definitions.
- Department of Education and federal agencies — will absorb investigatory, consultation, and administrative workloads without dedicated offsets; interagency consultation requirements could slow waiver decisions and require staff time.
Key Issues
The Core Tension
The bill balances two legitimate aims—protecting U.S. national security from risky foreign partnerships and preserving academic collaboration—but does so by turning wide contractual categories and executive‑branch designations into hard funding and legal consequences; the central dilemma is whether national‑security protection should be achieved by blunt, funding‑linked prohibitions that increase administrative burden and risk unintended disruption to legitimate academic activity.
The bill sweeps broadly by defining 'contract' to capture affiliations, use of an institution’s name or resources, and non‑standard transactions, which risks ensnaring common academic arrangements like memoranda of understanding, dual‑degree agreements, and certain research collaborations. That broad language forces institutions to make judgment calls about whether an arrangement requires a waiver, increasing legal uncertainty and transactional friction.
The translation requirement (non‑affiliated translator for non‑English contracts) aims to prevent covert foreign influence but raises costs and delays for routine agreements with legitimate partners.
Operationally, the interagency consultation requirement centralizes national‑security inputs but offers no public timeline beyond the 60‑day pre‑execution notification clause; in practice, consultations with ten federal entities create timing and coordination risks. Enforcement mechanics raise due‑process and proportionality questions: 'knowing or willful' violations trigger steep fines calculated as a share of an institution’s federal HEA funds, which could cripple smaller colleges.
Finally, the statute leaves open how the Secretary will interpret ambiguous terms (e.g., 'benefit of the institution’s mission,' 'restricted or conditional contract'), which will determine whether routine international engagement is chilled or merely redirected.
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