The U.S. Department of Education’s FY26 eligibility notice may preview a shift from funding Minority-Serving Institution (MSI) programs to a broader, race-neutral Strengthening Institutions Program (SIP) competition.

On 3/24/26, the U.S. Department of Education (USED) issued its FY26 eligibility notice for institutional aid grants under Title III and Title V of the Higher Education Act (HEA). Those programs are the main federal capacity-building grants for under-resourced colleges and universities. They include the general Strengthening Institutions Program (SIP), as well as several Minority-Serving Institutions (MSI) programs. Each year, colleges use this eligibility process to establish that they can compete for various grants. The baseline statutory test for eligibility comes from Section 312 of the HEA, which generally asks whether an institution serves a substantial share of needy students and has relatively low educational and general expenditures. USED’s annual “Eligibility Matrix” is the tool it uses to identify institutions that meet those thresholds. Unlike SIP, which is a race-neutral, general Title III-A institutional-aid program open to any college that meets Section 312’s low-resource and high-need criteria, MSI programs are targeted set-asides for institutions that also meet additional statutory enrollment thresholds tied to particular racial or ethnic student populations.

What is noteworthy about this year’s eligibility notice is not an express announcement or inclusion of new requirements, but the conspicuous absence of MSIs. Previous years’ materials expressly identified the broader Title III/Title V program and specifically listed both SIP and several MSI programs, including Alaska Native and Native Hawaiian-Serving Institutions, Native American-Serving Nontribal Institutions, Hispanic-Serving Institutions, Asian American and Native American Pacific Islander-Serving Institutions, and Predominantly Black Institutions (among others). By contrast, this year’s notice and application package instead refer only to designating institutions as eligible under Section 312 of the HEA. USED has not announced specifically that it is replacing separate MSI competitions with a more general, race-neutral program that only considers Section 312 eligibility, but the omission is a material departure from previous years’ notices. It most likely signals the Administration’s next attempt to effectively eliminate the MSI designation as a matter of practice, even if not explicitly eliminated by Congress in law.

The significance of this most recent development comes into clearer focus when viewed in light of the Administration’s previous actions and statements regarding MSIs. In September 2025, USED announced that it would end discretionary funding for several MSI programs and reprogram roughly $350 million in FY25 funding into programs that did not include any requirements of minimum racial or ethnic enrollment. Then, in December, Secretary McMahon publicly embraced a DOJ Office of Legal Counsel opinion arguing that multiple race- or ethnicity-based higher-education grant programs are unconstitutional or unseverable from their race-based eligibility rules. Taken together, the FY25 reprogramming decision, the OLC memo, and the new FY26 eligibility materials all point in the same direction: the Administration appears to be signaling its intent to discontinue discretionary competitions defined by MSI enrollment thresholds.

If USED goes that route, the result will be some version of a broader, race-neutral SIP-style competition for funds that previously would have been competed separately among several of the MSI categories. (These changes should not affect grant programs for Historically Black Colleges and Universities (HBCU) and Tribal Colleges and Universities (TCCU) because those institutions are named in statute rather than identified via their enrollment. Accordingly, the Administration’s legal analysis differs for grant programs supporting those institutions.) The central eligibility change would be removing program-specific racial and ethnic enrollment thresholds that serve to target funds towards institutions serving students above those thresholds. Institutions would still need to satisfy the (race-neutral) Section 312 baselines relating to needy students and educational expenditure requirements. But they would no longer need to meet added demographic requirements such as the 25 percent Hispanic undergraduate full-time-equivalent enrollment threshold for Hispanic-Serving Institutions or the 40 percent Black undergraduate enrollment threshold for Predominantly Black Institutions. The practical effect would be a much larger competitive field in which more non-MSI colleges could compete for dollars that previously were only available to institutions that qualified as MSIs.

Although existing MSI grant recipients would likely still be eligible for a broader SIP competition, competing with a larger group of institutions would make it relatively less likely that the incumbent institutions will receive the same grant award amounts, or in some cases any grant dollars at all. The purpose of running distinct MSI competitions is not merely to define who qualifies as an MSI. The approach reserves funding for institutions serving particular student populations, although it does not reserve those funds for particular student populations within those institutions. A consolidated, SIP-only competition (if that is in fact what the Administration is planning) would likely advantage colleges with stronger grants-management, compliance, and proposal-writing capacity, while making it harder for lower-resourced eligible campuses to prevail in a much larger pool.