Higher education lobbyists are concerned that colleges and universities could be disqualified from getting millions of dollars in federal grants under a draft Trump administration rule, which is aimed at increasing the legal rights of campus religious groups to be able to exclude gay students and others.

Colleges could face substantial penalties under the proposal, said Terry Hartle, the American Council on Education’s senior vice president for government and public affairs.

“Like any proposed rule, it’s as serious as a heart attack,” he said. “If legally binding requirements are going to be imposed on a very diverse industry, we want to make sure we understand the proposal in advance.”

In addition, Americans United for Separation of Church and State described the proposal as a way to sidestep a 2010 U.S. Supreme Court decision that upheld the right of colleges to require student groups be open to all types of people in order to be recognized or receive funding.

Despite that ruling, the draft rule would bar higher education institutions from denying religious student organizations the same rights, benefits and privileges provided to nonreligious student groups, based on their "beliefs, practices, policies, speech, membership standards or leadership standards."

In other words, a college couldn’t withhold recognition or funding from a student group because -- based on the group's religious beliefs -- it bars LGBTQ students from joining or holding leadership positions, said Joe Cohn, legislative and policy director for the Foundation for Individual Rights in Education (FIRE).

In addition, Cohn said, public colleges could lose Education Department grants for refusing to recognize a group because of membership restrictions. That’s because the draft rule would disqualify institutions from being eligible to receive grants, except federal student loans, if they treat religious student groups differently from secular groups.

Even if an institution were to demand that all student groups, religious or not, be open to all people, Cohn said it would be deemed discriminatory toward religious groups under the rule. The ability to set membership rules tends to be more important to these campus organizations than to secular groups, Cohn said.

"Forcing a chess club to accept everyone who wants to join or run for office doesn’t compromise a chess club’s mission in the same way," said Cohn. "Applying that rule to a chapter of Hillel, for example, could undermine the group’s identity as a Jewish organization."

Colleges and universities in particular could find their federal funding threatened if the only groups they do not recognize are religious ones, said Kim Colby, director of the Christian Legal Society’s Center for Law and Religious Freedom.

Public colleges also would be disqualified from funding under the proposed rule if they are found by the courts to have violated First Amendment rights, Cohn said, such as by disciplining a faculty member for making controversial comments.

The department unveiled the draft rule last month in part to implement an executive order President Trump signed in March 2019 on “Improving Free Inquiry, Transparency, and Accountability at Colleges and Universities.” Trump’s order aimed “to avoid creating environments that stifle competing perspectives, thereby potentially impeding beneficial research and undermining learning.”

Hartle said other agencies covered by the order that provide research grants to universities could follow suit, including the National Science Foundation, the Department of Defense and the Department of Health and Human Services. The Education Department is the first to issue a proposed rule.

Possible Conflicts With State Laws

The rule comes amid a debate over whether religious student groups should be allowed to get recognition, receive funding and use publicly funded college facilities if they exclude groups of people. Many colleges have an “all comers” nondiscrimination policy requiring recognized groups to be open to anyone.

However, in one case, the Christian Legal Society’s chapter at the University of California, Berkeley's Hastings College of the Law sued the university after it was denied recognition based on a "statement of faith" that chapters have to agree to, including that sexual activity should not occur outside marriage between a man and a woman. The law school believed that requirement would exclude people from the group who are gay or have different beliefs.

A federal judge last year also ruled in favor of a campus group called Business Leaders in Christ, which sued the University of Iowa for not granting it recognition after it wouldn’t allow a gay student to be vice president.

Taking the side of religious groups, the department said the draft rule is intended to “restore religious liberty and prevent discrimination against faith-based organizations and to act in a manner consistent with our obligation to be neutral in matters of religion.”

To its supporters, the rule would keep colleges from preventing groups from being able to set standards in the same way an environmental group would want to require that its president believe that climate change is real, Colby said.

Cohn said the campus policies can have a chilling effect on diversity of thought.

“Rather than end discrimination, these policies perversely chill the ability of students who want to form and run groups organized around sincerely-held beliefs to do so,” said Cohn in an email. “A better way to promote diversity and inclusion is to foster an environment where a diverse array of student organizations are part of the campus community and where the barrier to creating new belief-based student groups is low.”

But a concern, said Hartle, is that the draft rule could conflict with laws in some states and the Supreme Court decision.

Some states have antidiscrimination laws, so upholding them could mean violating the department's rule and a potential loss of federal funding. Not following the state law, meanwhile, could open the institutions to sanctions or civil suits.

“Universities shouldn’t be in a situation where they are caught between federal and state law,” he said.

In addition, the rule appears to run contrary to the Supreme Court’s decision in the Hastings Law School suit, which found that it was reasonable for Berkeley to withhold recognition of the Christian student group.

Hartle noted that the draft rule doesn't mention Supreme Court ruling.

"If we are in fact reading it correctly, the proposed rule puts public universities in an untenable spot," he said, "caught between a Supreme Court decision that gives schools a specific authority and an executive branch regulation that takes it away."

Dena Sher, assistant director for public policy at Americans United for Separation of Church and State, said she thought the administration's goal was to do an “end run” around the court’s decision to allow colleges to set antidiscrimination policies.

“In that case, the Supreme Court said the nondiscrimination policies are entirely permissible,” Sher said in a statement. “Yet these proposed rules would severely punish public colleges and universities -- and their students -- for doing precisely what the Supreme Court held that they have the right to do.”

Hartle and Craig Lindwarm, vice president of congressional and governmental affairs at the Association of Public and Land-grant Universities, said their groups are still researching the proposal before submitting comments before a Feb. 18 deadline.

Lindwarm said First Amendment rights are “fundamental” to public universities, and that these disputes should be settled in the courts. Instead, Lindwarm said, the threat of potentially losing federal funding if an institution were to lose a lawsuit would raise the stakes for colleges. “It will do nothing more than force an increase in spending on lawyers when we want to invest more on students,” he said.

The proposed rule excludes private colleges and universities from its portions dealing with student groups but requires them to follow its “stated institutional policies regarding freedom of speech, including academic freedom” to be eligible for federal grants.

“Freedom of expression is a core value for private, nonprofit institutions of higher education, however, this proposal is likely to provide inappropriate incentives for litigants to file frivolous lawsuits,” Jody Feder, director of accountability and regulatory affairs for the National Association of Independent Colleges and Universities, said in a statement. “Given the variation in how courts in different jurisdictions handle free speech claims, we’re also worried that the proposed rule could lead to inconsistent findings and sanctions against institutions for the same conduct.”