NAICU Washington Update

Education Department Highlights Pervasive Foreign Influence in Higher Education

October 23, 2020

During an event at the Department of Education, Secretary of Education Betsy DeVos released the findings of the Department’s 18-month investigation into the influence of foreign governments on 12 institutions.  The agency’s investigation showed there is a “pervasive noncompliance and significant foreign connections and entanglements with American colleges and universities.” 
Calling education the “theater of economic warfare in the 21st century,” the Department noted that the colleges under investigation all have connections to technology companies in China and Russia.”
The threat is real,” according to Secretary DeVos, and foreign entities are “exploiting American higher education to advance their own agendas.”  As a result, after decades of lax enforcement of Section 117 foreign gift reporting rules, the Department will begin vigorously enforcing the law so “students, parents, and taxpayers can know what foreign influence might be happening” at their colleges.
The Department also presented the results of its recent collection of foreign gift reporting by colleges and universities.  Among the findings, Secretary DeVos highlighted that there was at least $6.5 billion in unreported foreign gifts from the 12 investigated institutions. In addition, since the new reporting portal opened, institutions that have submitted information have disclosed an additional $3.8 billion in previously unreported foreign gifts from prior years.
Reed Rubenstein, Principal Deputy General Counsel of the Department of Education, when introducing the report Institutional Compliance with Section 117 of the Higher Education Act of 1965, accused the institutions of being evasive about the sources of their foreign gifts, whom he claims are nefarious players.  The purpose of the report, he said, is to provide transparency about the degree to which colleges are soliciting foreign funding. 
Bucky Methfessel, Senior Counsel for Information and Technology in the Office of General Counsel, a career position at the Department that also includes intelligence work, noted that the interest in heightened oversight is not partisan, that compliance with Section 117 reporting has been significantly low since the provision was enacted in 1986, and that it is in the national security interest to have colleges comply. He gave the example that until the new reporting portal was launched in June, between 500 and 1,000 reports were made annually.  Since then, however there have been 7,000 reports in the three months the portal has been live.
In addition to the new reporting portal, Methfessel highlighted a new Notice of Interpretation on Section 117, which will soon be published in the Federal Register and will make clear that “institutions need to be reporting under their existing Program Participation Agreements (PPA).” Institutions that fail to adequately report could be in violation of the PPA, which could lead to the loss of Title IV aid.
The Department is also sharing its Section 117 reporting findings in intelligence collaborations with other federal agencies. The intelligence collaborations also analyze research funds at institutions of higher education that bridge military and soft sciences and can be vulnerable to exploitation. Methfessel noted that hundreds of billions of dollars in research and intellectual property have been stolen from U. S. universities, and that there are 2,500 active counterintelligence cases as a result.
Finally, Under Secretary of State Keith Krach ended the event highlighting his recent warning to college and university leaders to be cautious of China’s interest in their students and schools. He reiterated that the Chinese Communist Party applies influence by censoring Chinese students and professors via Confucius Institutes, exploiting research and intellectual property, and entangling university endowments in emerging Chinese companies. He encouraged college and university leaders to divest from companies in countries with human rights violations, and stated it is boards of trustees’ moral and fiduciary responsibility to look into these investments.   
For more information, the Department recently updated its website to include a dedicated page on Section 117 Reporting, which includes a searchable database of institutional reports, a spreadsheet version of reports, and links to recent Department communications on the issue, and background on the institutional investigations.

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