SHEO official warns of federal funding uncertainty, DOE staff cuts and growing Pell shortfall

Tom Harnish, vice president for government relations at the State Higher Education Executive Officers Association (SHEO), gave a federal policy update to the Board of Regents that covered appropriations, mandatory budget processes, and recent actions at the U.S. Department of Education.

The update matters because federal appropriations, student aid policy and Department of Education capacity affect campus budgets, student assistance programs and compliance enforcement.

Harnish said Congress appears poised to approve a full‑year continuing resolution for FY2025 that will hold discretionary funding at current levels until Oct. 1, 2025. He also described the FY25 budget resolution process as a vehicle for mandatory‑program changes: House and Senate instructions to committees could lead to large, distributed spending cuts. For example, Harnish said the energy and commerce committee has been instructed to find roughly $880 billion in savings and the education and workforce committee roughly $330 billion, amounts that could put pressure on Medicaid and education programs at the state level.

Harnish warned of a Congressional Budget Office estimate that the Pell Grant program faces about a $2.7 billion shortfall and that the projected deficit is expected to grow over time. He said Congress will need to decide whether to increase Pell funding or make program changes to close the gap.

On the Department of Education, Harnish summarized public reporting that about 1,300 staff positions—roughly one‑third of agency personnel—were slated for layoff, with a notable share from Federal Student Aid, the Office for Civil Rights and the Institute for Education Sciences. He said the cuts have raised concerns about timely FAFSA assistance, capacity to handle civil‑rights complaints and the agency's ability to sustain research and data services that higher education relies on.

Harnish also discussed other federal items of interest to campuses: a Feb. 14 letter from the Department of Education on diversity, equity and inclusion that broadens the scope of a 2023 court decision on race‑conscious admissions; ongoing litigation over an administrative cap on NIH indirect costs (the administration's 15% cap remains subject to a preliminary injunction); and proposals floated in some congressional corners such as risk sharing for unpaid student loans or changing Grad PLUS rules.

Regents asked whether federal actions could change the availability of student loans; Harnish said any change to federal student loan programs would require Congressional action but added that operational capacity at Federal Student Aid to process questions and forms could be affected by the staffing reductions. Regent Mayer asked specifically about Pell; Harnish reiterated the CBO's projected shortfall and said Congress will need to act to address it.

Harnish closed by saying SHEO will continue to monitor these developments and provide information to state systems and institutions as federal processes unfold.