Accounting
Harvard intensifies funding fight with Trump administration
Harvard University sued several U.S. agencies and top officials for freezing billions of dollars in federal funding, significantly ratcheting up a high-stakes showdown with the Trump administration.
The government unlawfully suspended Harvard’s funding after it refused to comply with “unconstitutional demands” to overhaul governance, discipline and hiring policies, as well as diversity programs, lawyers for the university argued in a
“Over the course of the past week, the federal government has taken several actions following Harvard’s refusal to comply with its illegal demands,” the university’s president Alan Garber said. “We filed a lawsuit to halt the funding freeze because it is unlawful and beyond the government’s authority.”
In a statement on the university’s website, Garber cited the government’s pause in federal funding, threats to block an additional $1.1 billion in grants, a crackdown on foreign students, and the possible revocation of Harvard’s tax-exempt status.
The White House is pushing for sweeping changes at the most elite U.S. universities, and has frozen or is reviewing federal funding to Princeton, Cornell, Northwestern and Columbia universities. At Harvard, the government halted $2.2 billion of multiyear grants on April 14, claiming the school failed to enforce civil rights laws to protect Jewish students.
Harvard’s lawsuit claims that the funding freeze violates its First Amendment guarantee of free speech and the Administrative Procedures Act. It asks a judge to bar the U.S. from freezing the funding and declare the government’s actions unconstitutional.
“The government has not — and cannot — identify any rational connection between antisemitism concerns and the medical, scientific, technological, and other research it has frozen that aims to save American lives, foster American success, preserve American security, and maintain America’s position as a global leader in innovation,” the lawsuit claims.
The White House and the Education Department didn’t immediately respond to a request for comment.
Education Secretary Linda McMahon on Tuesday morning emphasized that the government’s actions were designed to protect students’ civil rights rather than infringe on universities’ free speech. She said she hopes Harvard comes back to the table, signaling there may be a path to deescalating the situation.
“We remain open to talking to Harvard, but they responded by filing a lawsuit,” McMahon said in an interview on CNBC.
Trump escalated his fight with Harvard after the school refused to bow to his administration’s demands. Since threatening its funding, Trump suggested the Internal Revenue Service should tax the university as a “political entity,” a move that would significantly hit the school’s finances and make it harder to raise money from wealthy donors.
Government demands
The showdown began last month when the government threatened about $9 billion in federal funding to Harvard. Days later, the administration demanded that Harvard remake its governance, transform admissions and faculty hiring, stop admitting international students hostile to US values and enforce viewpoint diversity.
The government also called for scrapping any hiring preferences based on race or national origin, adopting a broad ban on masks and adding oversight for “biased programs that fuel antisemitism.”
Harvard rejected those demands on April 14, saying it “will not surrender its independence or relinquish its constitutional rights” and that a private university “cannot allow itself to be taken over” by the U.S. government.
McMahon said on CNBC that the demand letter to Harvard was a “point of negotiation” and that she had hoped the university would “come back to the table.”
As part of its legal team, Harvard has hired two conservative lawyers with connections to the Trump administration — William Burck and Robert Hur. Harvard also tapped a lobbying firm, Ballard Partners, where Trump’s chief of staff used to be a partner. The school also named John Manning, a
“The government has only ratcheted up cuts to funding, investigations and threats that will hurt students from every state in the country and around the world, as well as research that improves the lives of millions of Americans,” the complaint claims.
The school has a $53 billion endowment but that money is restricted in how it can be spent, meaning the university relies on federal funding. Without that support, the school said in its complaint, it will be forced to either reduce or halt ongoing research projects and terminate employment contracts with researchers, staff and administrators, or make other cuts to departments or programs.
Campuses across the U.S. were roiled by protests after Hamas, which the U.S. considers a terrorist organization, murdered 1,200 Israelis and took more than 200 hostages in October 2023. Israel’s retaliation against Hamas in Gaza has killed more than 48,000 Palestinians, according to the Hamas-run health ministry.
Other university leaders, including Princeton’s, have expressed support for Harvard’s stance, but they also face pressure from the White House. The administration has already canceled $400 million in federal money to Columbia University and frozen dozens of research contracts at Princeton, Cornell and Northwestern universities.
“All told, the tradeoff put to Harvard and other universities is clear: allow the government to micromanage your academic institution or jeopardize the institution’s ability to pursue medical breakthroughs, scientific discoveries and innovative solutions,” Harvard argued in its lawsuit.
Presidents of some of the most prestigious universities and small colleges signed a joint letter opposing “undue government intrusion in the lives of those who learn, live, and work on our campuses,” according to a
“As leaders of America’s colleges, universities and scholarly societies, we speak with one voice against the unprecedented government overreach and political interference now endangering American higher education,” according to the letter, signed by leaders of schools including Princeton, Amherst College and the Massachusetts Institute of Technology.
Harvard named several cabinet secretaries as defendants in the lawsuit, including Robert F. Kennedy Jr., whose agency, Health and Human Services, funds the most research, as well as other agencies including the Department of Defense and the National Aeronautics and Space Administration.
The case is President and Fellows of Harvard College v. U.S. Department of Health and Human Services et al, 25-cv-11048, U.S. District Court, District of Massachusetts (Boston).
The U.S. Department of Education plans to resume collecting defaulted student loans on May 5 after a yearslong pause since the pandemic.
The Education Department said it hasn’t collected on defaulted student loans since May 5. The resumption of collections under the Trump administration comes after courts blocked the Biden administration’s attempts to offer student loan forgiveness. The Department of Education said it would start a communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” said U.S. Secretary of Education Linda McMahon in a statement Monday. “The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear. Hundreds of billions have already been transferred to taxpayers. Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook.”
The department noted that 42.7 million borrowers currently owe more than $1.6 trillion in student debt. More than 5 million borrowers have not made a monthly payment in over 360 days and sit in default — many for more than seven years — and 4 million borrowers are in late-stage delinquency (91-180 days). As a result, there could be almost 10 million borrowers in default in a few months. When this happens, nearly 25% of the federal student loan portfolio will be in default.
Only 38% of borrowers are in repayment and current on their student loans. Most of the remaining borrowers are either delinquent on their payments, in an interest-free forbearance, or in an interest-free deferment. A small percentage of borrowers are in a six-month grace period or in-school.
Currently, almost 1.9 million borrowers have been unable to even begin repayment because of a processing pause put in place by the previous administration. Since August 2024, the Education Department has not processed applications for enrollment in any repayment plan such as Income-Based Repayment, Income-Contingent Repayment. The Education Department is already working with federal student loan servicers and expects processing to begin next month.
Federal Student Aid plans to restart the Treasury Offset Program, administered by the Treasury Department, on Monday, May 5, 2025. All borrowers in default will receive email communications from FSA over the next two weeks making them aware of these developments and urging them to contact the
The Education Department also plans to authorize guaranty agencies that they can begin involuntary collections activities on loans under the Federal Family Education Loan Program after student and parent borrowers have been given sufficient notice and an opportunity to repay their loans under the law.
Over the next two months, FSA will conduct a communications campaign to engage all borrowers on the importance of repayment. FSA will conduct outreach to borrowers through emails and social media reminding them of their obligations and providing resources and support to assist them in selecting the best repayment plan, like the new Loan Simulator, AI Assistant (Aiden), and extended servicers call times. FSA will also launch an enhanced Income-Driven Repayment (IDR) process, simplifying the time that it will take borrowers to enroll in IDR plans and eliminating the need for borrowers to recertify their income every year. More information will be posted on StudentAid.gov next week. FSA said there will not be any mass loan forgiveness.
More information is available at
In response to the announcement, a student loan advocacy group blasted the move.
“For five million people in default, federal law gives borrowers a way out of default and the right to make loan payments they can afford,” said Student Borrower Protection Center executive director Mike Pierce in a statement. “Since February, Donald Trump and Linda McMahon have blocked these borrowers’ path out of default and are now feeding them into the maw of the government debt collection machine. This is cruel, unnecessary, and will further fan the flames of economic chaos for working families across this country.”
The group said that earlier this year, the Trump administration chose to block access to affordable student loan payments by removing the Income-Driven Repayment and consolidation application and secretly ordered student loan servicers to halt all application processing.
Prior to the Trump administration’s decision to remove IDR applications and halt application processing, over 1 million borrowers remained in a backlog waiting for their application to be processed. Only after pressure from a lawsuit filed by SBPC and Berger Montague on behalf of the AFT did the Administration restore the application. But to date, the administration has yet to begin widespread processing of IDR applications, leaving borrowers in economic limbo.
The Public Company Accounting Oversight Board sanctioned Adeptus Partners and its partner Howard Krant for violations related to supervision, review and quality control.
Krant and the firm violated PCAOB rules and standards in connection with the audits of two issuers: Blockchain of Things and Applied UV.
“Substandard audit work and inadequate quality control put investors at risk,” PCAOB Chair Erica Williams said in a statement. ”When violations like these occur, the PCAOB will take enforcement actions to hold auditors and firms accountable.”
The violations committed by Krant include failing to adequately supervise the engagement teams on the 2020 Blockchain of Things and Applied UV audits, including failing to review the workpapers or obtain computer access to review the workpapers. according to the PCAOB. Krant also failed to properly review the engagement team’s work on deferred revenue for the Blockchain of Things 2021 audit to ensure appropriate audit evidence was obtained.
The firm was also sanctioned for failing to provide reasonable assurance engagement teams performed the audits in accordance with the applicable standards and regulations.
“The firm and one of its partners violated PCAOB standards in the conduct of the audits and failed to implement quality control policies and procedures to safeguard against these violations. The sanctions imposed by the board hold the respondents accountable for those failures,” Robert Rice, director of the PCAOB’s Division of Enforcement and Investigations, said in a statement.
Without admitting or denying the findings, Krant and the firm consented to the PCAOB’s order, which:
- Censures both respondents;
- Imposes a $75,000 civil money penalty on the firm, and a $50,000 penalty on Krant;
- Suspends Krant from associating with a registered firm for one year; and,
- Requires the firm to hire an independent consultant to review and make recommendations to the firm’s system of quality control.
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