A coalition of 17 attorneys general is suing to stop what it alleges is an unlawful data demand by the Trump Administration that could subject colleges and universities to costly probes and enforcement actions based on unreliable data.
The lawsuit, filed March 11, relates to a recently added component to the Integrated Postsecondary Education Data System, a collection of interrelated surveys conducted annually by the U.S. Department of Education's National Center for Education Statistics. IPEDS collects information from colleges, universities and other institutions that participate in federal student financial aid programs.
Historically, IPEDS has been "a trusted data source for universities, lawmakers, and the public," according to the lawsuit, which was filed by a coalition co-led by attorneys general from Massachusetts, California and Maryland.
"The defendants, however, seek to fundamentally change IPEDS, converting it from a reliable tool for methodical statistical reporting to a mechanism for law enforcement and the furthering of partisan policy aims," the coalition said in its complaint.
Educational institutions risk "hefty fines and other serious consequences, including potential loss of federal funding," should they fail to submit timely and complete data through IPEDS, according to the complaint.
From a monetary standpoint, "the attorneys general are correct in pushing back on this," said Matt Fabian, president of Municipal Market Analytics, an independent research and consulting firm. In addition to concerns related to federal funding, colleges and universities are also facing other pressures including changing U.S. demographics that will mean fewer college-age kids.
Consequently, "the states have to fight for all the federal dollars that they can" to help support universities under their care, Fabian said, adding that "a big part of being a state in 2026 is fighting federal initiatives to reduce funding that goes to states."
On Aug. 7, 2025, President Donald Trump "issued the presidential memorandum, Ensuring Transparency in Higher Education Admissions, stating that IPEDS would now become a tool to track 'consideration of race in higher education admissions' and monitor university compliance with Students for Fair Admissions, Inc. v. President & Fellows of Harvard College," the complaint said, referencing a landmark 2023 U.S. Supreme Court decision.
In its 6-2 ruling in SFFA's favor, the Supreme Court held that Harvard's admissions program violated the Equal Protection Clause of the Fourteenth Amendment.
"The presidential memorandum claims that 'the persistent lack of available data – paired with the rampant use of 'diversity statements' and other overt and hidden racial proxies – continues to raise concerns about whether race is actually used in practice,'" the coalition said in its complaint, which also referenced a Department of Education press release regarding a directive from Secretary of Education Linda McMahon that was issued the same day as the memorandum.
The Aug. 7, 2025, release said that institutions of higher education, as part of their regular reporting process, "will now have to report data disaggregated by race and sex relating to their applicant pool, admitted cohort, and enrolled cohort at the undergraduate level and for specific graduate and professional programs."
Last December, the Office of Management and Budget approved the IPEDS Admissions and Consumer Transparency Supplement – or ACTS – survey component, implementing McMahon's guidance and the presidential memorandum, the complaint said.
"The IPEDS ACTS survey is unprecedented in scope, seeking a vast array of disaggregated data from the 2025-2026 academic year and six prior years," the coalition's complaint said. "Never before has IPEDS sought retroactive data; never before has IPEDS sought such a vast array of disaggregated data; and never before has the Department of Education so quickly effected a major change to IPEDS."
Higher education institutions "face an untenable dilemma: quickly compiling data they typically would have years to collect and submit, all the while knowing that the data may suffer from inconsistencies given the haste with which it has been prepared and the lack of guidance from the Department of Education on what key definitions and data elements mean," the complaint said.
"As the presidential memorandum and agency guidance make clear, the defendants plan to rely on this data to assess compliance with SFFA and drive enforcement actions," the complaint said. "The consequences from the defendants' sloppy implementation of the IPEDS ACTS survey are therefore severe: [higher education institutions] will face costly investigations based on unreliable data."
ACTS survey responses are due by March 18, the complaint said.
"Holistically, this should not have a meaningful credit impact on any of these institutions," said Jeff Timlin, a managing partner at Sage Advisory Services where he serves as lead portfolio manager of the firm's municipal bond strategies.
It's possible, however, that very small colleges already facing fiscal challenges could see some additional strain "because of the reporting and the need for additional staffing or … systems to get that reporting to the government," Timlin said.
However, for the majority of issuers within the higher education sector, "I would say this is not a credit event unless they kind of make it one," he said.
The complaint named the Department of Education, Secretary McMahon, the Office of Management and Budget and OMB Director Russell Vought as defendants.
Asked to comment regarding the lawsuit, the Department of Education on Friday provided a statement from Ellen Keast, press secretary for higher education.
"American taxpayers invest over $100 billion into higher education each year and deserve transparency on how their dollars are being spent," Keast said. "The department's efforts will expand an existing transparency tool to show how universities are taking race into consideration in admissions. What exactly are state AGs trying to shield universities from?"
