The University of Michigan is under federal investigation for failing to properly disclose hundreds of millions in foreign funds, according to a July 2025 announcement by the U.S. Department of Education. The probe focuses on violations of Section 117 of the Higher Education Act, which requires colleges to report foreign gifts and contracts above $250,000.
The department alleges that between 2013 and 2023, the University of Michigan received over $270 million in foreign funding from at least 38 countries. Of that, $86 million was misreported, delayed, or misclassified. Officials cited instances where foreign government donors were wrongly identified as non-government entities. The investigation also raised concerns over potential national security risks, particularly regarding ties to China.
The inquiry was partially prompted by the recent arrest of two Chinese nationals—one a University of Michigan postdoctoral researcher—who were charged with attempting to smuggle a biological fungus classified as an agroterrorism threat. Federal officials said the incident highlights vulnerabilities within the university’s research programs.
The Department of Education has demanded tax documents, internal procedures, personnel data, and all foreign-source contracts dating back to January 2020. The university has 30 days to comply. Investigators noted discrepancies in how administrators viewed compliance and national security, pointing to concerns about a “culture of non-disclosure” within certain academic circles.
University of Michigan interim president Domenico Grasso has stated the school will cooperate fully. Spokesperson Colleen Mastony emphasized a commitment to transparency and national security standards.
This investigation is part of a broader effort under the Trump administration to crack down on elite universities underreporting foreign influence. Previous federal inquiries have targeted institutions like Harvard, UC Berkeley, and Cornell for similar violations.
Legal experts note that failure to comply with Section 117 can lead to steep penalties, including restrictions on access to federal research funding. Lawmakers have called for stricter enforcement to ensure that American universities are not vulnerable to foreign influence or espionage.
