U.Va. resignation latest battle in Trump's war on higher education

The extraordinary pressure higher education institutions face from the Trump administration was underscored last week by the forced resignation of the University of Virginia's president.

Much like threats to cut off hundreds of millions of dollars of federal funding for Harvard and Columbia universities, which the Trump administration said were failing in efforts to protect Jewish students from antisemitism, the U.S. Department of Justice threatened to cut off the University of Virginia over alleged discriminatory hiring practices, leading to University President James Ryan's resignation, announced Friday.

Department of Justice Assistant Attorney General Harmeet Dhillon said, "The United States Department of Justice has a zero-tolerance policy toward illegal discrimination in publicly funded universities."

Dhillon, of the department's civil rights division, appeared to reference diversity, equity and inclusion programs that supported non-white, non-male students at U.Va.

"When university leaders lack commitment to ending illegal discrimination in hiring, admissions, and student benefits ? they expose the institutions they lead to legal and financial peril. We welcome leadership changes in higher education that signal institutional commitment to our nation's venerable federal civil rights laws."

The university released a statement from Ryan in which he said fighting for his job would have led to hundreds of university employees losing their jobs, researchers losing their funding and hundreds of students possibly losing financial aid or their visas. "I could not in good conscience cause real and direct harm to my colleagues and our students in order to preserve my own position."

"Three different courts have rejected the Trump administration's efforts to restrict diversity, equity, and inclusion programs," said Center for American Progress Associate Director for Higher Education Policy Sara Partridge.

"Efforts to bully institutions such as the University of Virginia into complying with these illegal orders fly in the face of long-established law that prohibits the federal government from interfering in academic curricula," Partridge said. "Any civil rights investigations of higher education institutions should follow the well-documented procedures that are required and not be weaponized to serve a political agenda."

"This is the most outrageous action [the U.S. Department of Education] has taken on higher education," said U.S. Sen. Mark Warner, D-Va., to the Face the Nation television program on CBS. The DOE leaders "are doing damage to our flagship university. And if they can do it here, they'll do it elsewhere."

Warner asked, "If we don't have some level of academic freedom, what sort of country are we?"

Separately, Florida Gov. Ron DeSantis announced the formation of an alternate accrediting body for public universities Thursday.

Florida, Texas, North Carolina, South Carolina, Tennessee, and Georgia state university leaders have committed to supporting the body, the Commission for Public Higher Education, a conservative national alternative to the current body, the Southern Association of Colleges and Schools Commission on Colleges.

DeSantis said he had been working with the U.S. Department of Education to receive expedited federal approval for the body that will undergo a trial run, which he hoped would entice other states to join, news site The Hill reported.

"Threats to the accreditation process, if it leads to withholding federal grants and loans, would potentially lead to credit deterioration for an institution," said Howard Cure, director of municipal bond research at Evercore (EVR).

Federal student loans are reserved for accredited schools. Between 30% and 40% of all U.S. college students take federal loans. Many colleges couldn't survive without the tuition from students using these loans.

"Today, I announced that a new accreditor, the Commission for Public Higher Education, will offer an alternative that will break the ideological stronghold [of existing accreditation bodies]," DeSantis said. "With transparent, rigorous, outcomes-based standards, this accreditor will help ensure the Free State of Florida leads the way in higher education for decades to come."

Accrediting bodies must be reviewed by the National Advisory Committee on Institutional Quality and Integrity at least every five years, Cure said. Republicans and Democrats evenly choose its 18 members.

New accrediting bodies must be approved by NACIQI and the Department of Education, Cure said.

"There is a lot of federal administration activity targeting higher education institutions right now, with both financial and operational implications," said Lisa Washburn, managing director at Municipal Market Analytics. "But most of the institutions that are directly targeted and featured in the news are ones with strong student demand, scale, significant resources, and pricing power. As a result, the risk of default on their bonds remains minimal."

The University of Virginia is rated triple-A by three rating agencies.

"Some of these institutions may experience rating pressure depending on the specific impacts they face," but most will remain strong credits, she said.

The greater risk lies with smaller, less competitive private colleges and less prominent public colleges, in areas of declining college-age demographics, Washburn said.

The administration's interference at U.Va. is the latest of many fights it has picked with universities. New York Republican Rep. Elise Stefanik, in a letter in mid-June asked the Securities and Exchange Commission to investigate an April bond sale by Harvard University.