U.S. Department of Education Stops Hispanic-Serving Institution Discretionary Funding
From September 10th to September 15th, the U.S Department of Education (DOE) announced two major decisions that will reshape the federal funding landscape for minority serving institutions (MSIs). These decisions will decrease support for Latino students in higher education and decrease economic opportunity, and health and well-being of our communities.
Ending Discretionary MSI Programs
On September 10th, 2025, the DOE announced it would end discretionary funding for several MSI programs, including Hispanic Serving Institutions (HSIs), Predominantly Black Institutions, and Asian American and Native American and Pacific Islander Serving Institutions.
The decision followed a July 2025 determination by the U.S Solicitor General that HSI programs violated the equal protection component of the 5th Amendment’s Due Process Clause. The Department of Justice declined to defend these programs in ongoing litigation.
In response, the Department concluded that eligibility requirements based on race or ethnicity, such as requiring an institution’s student body to be 25% Hispanic, 40% Black, or 10% Asian Americans or Native American Pacific Islanders, constituted unconstitutional racial quotas. As a result, roughly $350 million in discretionary MSI funding will no longer be awarded in FY 2025. While approximately $132 million in mandatory funds appropriated by Congress will continue flowing to some MSI programs, even those are under legal review.
Redirecting Funds to “Priority Programs”
On September 15, 2025, the Department unveiled where much of this money will go instead, framing the changes as “historic investments” in educational outcomes. The investments include:
- Charter Schools: $500 million, the largest Charter Schools Program investment in DOE history
- Historically Black Colleges and Universities (HBCUs): a one-time $495 million boost, raising total FY 2025 support to more than $1.34 billion (a 48.4% increase)
- Tribally Controlled Colleges and Universities (TCCUs): A $495 million increase, doubling funding to $108 million (a 109.3% increase).
- American History and Civics Programs: more than $160 million to expand civics education ahead of America’s 250th anniversary.
With the announcement of these shifts, Secretary of Education Linda McMahon argued that the DOE is redirecting taxpayer dollars “away from ineffective and discriminatory programs” and towards those that “promote merit and excellence”.
Implications
Together, these announcements underscore a fundamental change in federal higher education funding strategy. Discretionary support that once went to HSIs and other MSIs based on student demographics is now being discontinued, while charter schools, HBCUs, and TCCUs are seeing historic boosts.
The Department frames this as a constitutional correction and an investment into “effective interventions”, but the practical effect is clear: HSIs and many other MSIs will lose a significant stream of federal discretionary funding, while HBCUs and TCCUs emerge as major beneficiaries.
As Congress and the courts weigh in on the future of mandatory MSI funds, the landscape for institutions serving diverse student populations remains uncertain.
Sources
U.S. Department of Education Ends Funding to Racially Discriminatory Discretionary Grant Programs at Minority-Serving Institutions. (2025, September 10). U.S. Department of Education. https://www.ed.gov/about/news/press-release/us-department-of-education-ends-funding-racially-discriminatory-discretionary-grant-programs-minority-serving-institutions
U.S. Department of Education Makes Historic Grant Investments in Programs That Bolster Educational Outcomes. (2025, September 15). U.S. Department of Education. https://www.ed.gov/about/news/press-release/us-department-of-education-makes-historic-grant-investments-programs-bolster-educational-outcomes