Today, I submitted written testimony to the House Committee on Appropriations's Subcommittee on Labor, Health and Human Services, Education, and Related Agencies. I encouraged the subcommittee to protect U.S. postsecondary institutions from malign foreign influence by directing the Department of Education to enforce compliance with Section 117 of the Higher Education Act.
Click here to download a PDF of the testimony.
Chairman Robert Aderholt, Ranking Member Rosa DeLauro, and Members of the Subcommittee:
My name is Lars Erik Schönander. I am a Policy Technologist at Lincoln Network, a think tank working to bridge the gap between Silicon Valley and DC by applying technology and technical talent to governance and policy challenges. I write to encourage the subcommittee to protect U.S. postsecondary institutions from malign foreign influence by directing the Department of Education (ED) to enforce compliance with Section 117 of the Higher Education Act.
ED received $79.6 billion in discretionary funding in FY2023, a $3.2 billion increase from FY2022. While the Department’s activities are broadly focused on facilitating education in the United States, ED also has a responsibility to enforce federal law to provide transparency about foreign influence in the postsecondary education system.
As Congress begins the FY2024 appropriations cycle, the committee should require ED to reform Section 117 of the Higher Education Act of 1965. Added to the Higher Education Act in 1986, Section 117 requires American postsecondary institutions to submit, on an annual basis, data on contributions from foreign entities:
Whenever any institution is owned or controlled by a foreign source or receives a gift from or enters into a contract with a foreign source, the value of which is $250,000 or more, considered alone or in combination with all other gifts from or contracts with that foreign source within a calendar year, the institution shall file a disclosure report with the Secretary on January 31 or July 31, whichever is sooner.
In accordance with Section 117, since 1981, U.S. postsecondary institutions have disclosed to ED $43.9 billion in foreign gifts and contracts. The majority of these contributions—$27 billion—have occurred since 2010. Section 117 is intended to ensure that our postsecondary institutions are not influenced by malign foreign money. However, compliance with Section 117 has been inconsistent for decades, and ED has noted that postsecondary institutions have knowingly failed to report contributions.
Today, lax compliance and enforcement is most concerning in the case of contributions from China. Thanks to Section 117, we know that since 1981, China has donated $2.7 billion to American postsecondary institutions. As the Senate Permanent Subcommittee on Investigations noted in a bipartisan 2019 report, U.S. postsecondary institutions have drastically underreported the amount of money they have received from Chinese entities, especially Confucius Institutes (CI), Chinese government-funded language centers on their campuses. For example, universities reported receiving, from 2012 to 2018, $15 million from CI’s parent organization, Hanban, which is a part of the Chinese government. But after its investigation, the subcommittee discovered that universities had actually received $113 million, more than seven times the previously reported amount. A 2020 ED report on Section 117 compliance identified $6.5 billion in undisclosed foreign contributions to postsecondary institutions.
This foreign money from CIs in our higher education system poses a risk to academic freedom and research security. CIs have repeatedly undermined academic freedom on campuses—for example, they have demanded the removal of Taiwanese flags during Hanban officials’ visits to campus, and CIs are required to use Chinese government-approved learning material. Additionally, the directors of a CI must report their teaching plans to Hanban, and Hanban selects all CI teachers. The Chinese Communist Party thus can thus influence universities, by way of CIs and Hanban.
Thanks to multiple laws, investigations, and other federal actions, the number of CIs has dropped considerably, from 107 in 2017 to seven as of December 2022. But the sources of malign influence go beyond CIs. The Chinese companies Huawei and ZTE, which are now on the Department of Commerce’s Entity List, have contributed to American postsecondary institutions. Additionally, research in U.S. postsecondary institutions has received funding from both the U.S. government and Chinese companies, creating clear conflicts of interest. For example, a professor at the University of Maryland received money from both Chinese company Alibaba and the Department of Defense to build surveillance software.
Given the risks to academic freedom, national security, and the research enterprise, ED has a responsibility to provide transparency about Section 117 disclosures. ED publishes multiple versions of the Section 117 dataset, creating confusion about which versions to use, and ED’s public online dashboard summarizing foreign contributions is of limited use, with data only from 2020 to 2022. ED does not provide summary statistics or any analysis of the data it collects. Since 2020, ED in its Section 117 statistics has not listed publicly the entity for a given contribution, making it difficult for the public to know if a given contribution is from a malign entity.
Although these problems with Section 117 are not new, they have been compounded by the current administration's limited enforcement. According to ED’s website on Section 117, ED’s last public investigative action on Section 117 occurred in 2021, at the very end of the Trump administration.
Recent bipartisan efforts have shown support for reforming Section 117 to improve transparency and enforcement. In the 117th Congress, the Senate passed the U.S. Innovation and Competition (USICA) Act of 2021, and the House of Representatives passed the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science (COMPETES) Act. Both bills included language to reform Section 117. USICA would have lowered the reporting threshold for contributions from $250,000 to $50,000, required ED to increase the accessibility of payment data, and allowed the Secretary of Education to penalize noncompliance. It also would have required postsecondary institutions to establish an “institutional policy regarding foreign gifts and contracts to faculty and staff” and required them to “effectively identify and manage potential information gathering by foreign sources through espionage targeting faculty, professional staff, and other staff engaged in research and development.” COMPETES would have lowered the reporting threshold to $100,000 and similarly would have allowed the Secretary of Education to fine postsecondary institutions for noncompliance. Unfortunately, the CHIPS and Science Act that became law in 2022 did not include any provisions reforming Section 117.
In the 118th Congress, Congress should provide additional resources to the Department of Education to strengthen enforcement of Section 117 and improve public transparency about postsecondary institutions’ Section 117 disclosures. In FY2024 appropriations, Congress should provide ED with sufficient resources to effectively enforce Section 117 and to provide transparency about foreign contributions to U.S. postsecondary institutions. In its Congressional Budget Justification, ED has not reported what is spent on enforcing Section 117, collecting disclosure, and publicly reporting information. But it appears that insufficient resources are focused on this critical work.
While providing ED with additional resources, Congress should require the Department to do the following:
- Update, on a quarterly basis, its public database and website dashboard reporting Section 117 disclosures.
- Produce an annual report for Congress on enforcement actions and other activities to require postsecondary institutions to comply with Section 117 and disclose foreign contributions. This report should also describe how ED works with other federal agencies, including the National Science Foundation, to monitor foreign contributions and mitigate potential security threats.
- Include Section 117 activities in future Congressional Budget Justifications.
Without proper oversight into how organizations donate to American postsecondary institutions, it is difficult to know how our postsecondary institutions are being influenced by malign foreign interests. Improving enforcement of Section 117 would allow the American people and Congress to understand the full extent of foreign countries' influence in U.S. higher education.
 House Appropriations Committee, Summary of Appropriations Provisions by Subcommittee (2023), https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/FY23%20Summary%20of%20Appropriations%20Provisions.pdf.
 “Foreign Gift and Contract Report,” Federal Student Aid, ED,, accessed September 1, 2022, https://studentaid.gov/datacenter/school/foreign-gifts.
 Higher Education Education Act of 1965, 20 U.S.C. § 1011f (2020). See “Section 117 of the Higher Education Act of 1965,” ED, last updated July 19, 2022, https://www2.ed.gov/policy/highered/leg/foreign-gifts.html.
 Author’s analysis of the latest Section 117 data. See https://sites.ed.gov/foreigngifts/files/2022/12/Section-117_Public-Records_complete_10-17-22.xlsx.
 Lars Erik Schönander and Dan Lips, “Foreign Influence in American Higher Education: The Case for Additional Transparency and Enforcement,” Lincoln Network, October 11, 2022, https://lincolnpolicy.org/wp-content/uploads/2022/10/Foreign-Influence-in-American-Higher-Education.pdf.
 Office of the General Counsel, ED, Institutional Compliance with Section 117 of the Higher Education Act of 1965 (October 2020), https://www2.ed.gov/policy/highered/leg/institutional-compliance-section-117.pdf.
 Ibid., p. 10.
 U.S. Permanent Subcommittee on Investigations, China’s Impact on the U.S. Education System (2019), https://www.hsgac.senate.gov/wp-content/uploads/imo/media/doc/PSI%20Report%20China's%20Impact%20on%20the%20US%20Education%20System.pdf.
 Office of the General Counsel, Institutional Compliance with Section 117 of the Higher Education Act of 1965.
 Rachelle Peterson, “Confucius Institutes and Soft Power in American Higher Education,” National Association of Scholars (April 5th, 2017), https://www.nas.org/reports/outsourced-to-china/full-report; National Academies of Sciences, Confucius Institutes at U.S. Institutions of Higher Education: Waiver Criteria for the Department of Defense, (2023), https://nap.nationalacademies.org/catalog/26747/confucius-institutes-at-us-institutions-of-higher-education-waiver-criteria.
 Lars Erik Schönander and Dan Lips, “Foreign Influence in American Higher Education; Yuichiro Kakutani “Star American Professor Masterminded a Surveillance Machine for Chinese Big Tech,” Daily Beast, August 22, 2022, https://www.thedailybeast.com/university-of-maryland-professor-dinesh-manocha-built-surveillancemachine-for-chinas-alibaba?ref=home.
 Ibid., p. 12.
 Ibid., p. 7.
 Ibid., p. 7.
 “Section 117 of the Higher Education Act of 1965,” ED, accessed Friday 3, 2023, https://www2.ed.gov/policy/highered/leg/foreign-gifts.html. It is possible that the Biden administration is conducting nonpublic investigations, but there is no way to know.
 United States Innovation and Competition Act of 2021, S.1260, 117th Cong. (2022).
 United States Innovation and Competition Act of 2021, H.R.4521, 117th Cong. (2022).
 Supreme Court Security Funding Act of 2022, Pub. L. No. 117-167 (2022)