New Bill Forces Colleges to Reveal Foreign Cash, Threatens Loss of Federal Aid for Repeat Offenders

The Defending Education Transparency and Ending Rogue Regimes Engaging in Nefarious Transactions Act—or the DETERRENT Act—is a massive regulatory overhaul aimed squarely at how U.S. colleges and universities handle money and contracts from foreign sources. Essentially, this bill lowers the boom on institutions, demanding near-total transparency about foreign funding and imposing harsh penalties, including the potential loss of federal student aid, for non-compliance.

The New Rules of Engagement for Foreign Funding

Currently, schools have to report foreign gifts and contracts over a certain threshold. The DETERRENT Act changes this game entirely, especially when a “foreign country of concern” or “foreign entity of concern” is involved. If the foreign source is deemed risky by the government, the school must report the gift or contract regardless of the dollar amount (SEC. 2). That means even a small, seemingly benign research grant from a flagged source now triggers a full federal disclosure, unlike the previous $50,000 threshold for standard foreign sources. For schools, this is a massive administrative headache, requiring them to constantly monitor the origin of every single dollar.

Crucially, the bill bans institutions from entering into contracts with these "countries of concern" altogether. They can apply for a waiver, but it only lasts for one year and requires a lengthy security review by the Secretary of Education in consultation with agencies like the FBI and CIA (SEC. 2). If your university has existing research partnerships or academic exchange programs in a country that gets flagged, those relationships could be severed almost immediately, disrupting years of work and international collaboration. This is a big deal for researchers and professors who rely on global partnerships.

Your Tuition Dollars and the Compliance Burden

This bill doesn't just affect the university administration; it reaches deep into the faculty and staff payroll. It requires institutions that receive significant federal research funding to make staff and faculty report any foreign gifts and contracts over a minimal threshold annually (SEC. 3). The school must then take all this personal financial data and put it into a public, searchable database on its website within 30 days of receiving the report. While the name of the staff member is protected from public view, this still creates a huge new layer of personal disclosure and potential scrutiny for academics.

For students, the biggest risk is outlined in the enforcement section. The bill introduces massive financial penalties for non-compliance. For example, failing to report an investment of concern could result in a fine of up to 200% of the value of that investment (SEC. 5). If a school is found liable in court three separate times for violating these rules and has been fined for subsequent offenses, the Secretary must block that institution from participating in federal student aid programs for at least two full fiscal years (SEC. 5). This is an existential threat. If your school loses access to federal aid, every student relying on Pell Grants, federal loans, or work-study programs would immediately lose that funding.

The Billion-Dollar Endowments Get Noticed

Section 4 targets the big players: private institutions with over $6 billion in total assets. If these schools also hold more than $250 million in "investments of concern" (meaning financial stakes in flagged foreign entities), they must file an annual Investment Disclosure Report. This report must detail every stock, debt, or financial derivative they hold in these entities, along with the total market value and capital gains (SEC. 4). Like the other disclosures, this information will be posted in a public, searchable database maintained by the Department of Education.

This provision is designed to expose what large university endowments are doing with their money, specifically targeting investments that might indirectly support geopolitical rivals. While the public gains transparency, the administrative complexity of tracking pooled investment funds to ensure compliance will be significant for the financial teams managing these multi-billion-dollar portfolios.

The Final Word: Compliance Officer, Meet Your Liability

To ensure schools don't just pay lip service to these rules, the bill requires every reporting institution to designate at least one compliance officer who must formally certify that all reports are accurate and that the school used "good faith efforts and reasonable due diligence" to verify the information (SEC. 5). This puts a massive personal and institutional liability on a single employee. Given the complexity and the massive fines at stake, this certification requirement raises the stakes considerably, making compliance a matter of survival rather than just paperwork.