Higher education institutions across the United States are facing a pivotal moment as key advocacy groups launch a federal lawsuit challenging President Donald Trump's latest executive order aimed at curtailing diversity, equity, and inclusion (DEI) initiatives. Filed on April 21, 2026, in the U.S. District Court for the District of Maryland, the case—National Association of Diversity Officers in Higher Education et al. v. Trump—alleges that the March 26, 2026, order unconstitutionally threatens billions in federal contracts essential for university research and operations.

The executive order, titled "Addressing DEI Discrimination by Federal Contractors," mandates that all federal contractors, including universities, cease what it terms "racially discriminatory DEI activities." These are defined broadly as any disparate treatment based on race or ethnicity in areas like hiring, promotions, vendor selection, training programs, or resource allocation. Noncompliance risks contract termination, debarment from future bidding, and potential False Claims Act prosecutions. With agencies required to embed the clause in contracts by April 25, 2026, the stakes could not be higher for colleges dependent on federal funding.

Trump's Ongoing Campaign Against DEI in Higher Education

President Trump's second term has seen an aggressive push to dismantle DEI programs, beginning with executive orders in January 2025 that targeted federal agencies, grants, and contractors. The initial "Ending Illegal Discrimination and Restoring Merit-Based Opportunity" revoked longstanding affirmative action policies like Executive Order 11246 from 1965. Subsequent directives, including "Dear Colleague" letters from the Department of Education, warned schools of funding cuts for race-conscious activities.

Earlier lawsuits by groups like the American Association of University Professors (AAUP) secured temporary injunctions, only for appeals courts to lift them. A February 2025 suit led to a nationwide block by Maryland District Judge Adam Abelson, citing First Amendment violations, but the Fourth Circuit stayed it. This pattern underscores the legal volatility now amplified by the contractor-focused order.

Higher education has been ground zero, with medical schools and research universities hit hardest. DEI efforts, proponents argue, foster inclusive environments vital for innovation and addressing disparities in fields like health sciences.

Breaking Down the Executive Order's Provisions

The March 26 order directs agencies to insert a six-point clause in all contracts and subcontracts. Contractors must certify no engagement in prohibited DEI activities, provide records access, report violations, and recognize compliance as material to payments—triggering False Claims Act liability for misrepresentations.

The White House fact sheet emphasizes efficiency, claiming DEI imposes artificial costs by prioritizing immutable traits over merit, leading to turnover and reduced talent pools. Agencies must review compliance within 120 days, with the Office of Management and Budget issuing sector-specific guidance.

For universities, this encompasses research contracts from the National Institutes of Health (NIH), National Science Foundation (NSF), and Department of Defense (DoD)—often structured as contracts rather than pure grants.

The Lawsuit: Plaintiffs and Core Arguments

Lead plaintiffs include the National Association of Diversity Officers in Higher Education (NADOHE), AAUP, and National Association of Minority Contractors (NAMC), represented by Democracy Forward and the Minority Business Enterprise Legal Defense and Education Fund. The suit, assigned to Judge Abelson, seeks to declare the order unlawful and enjoin its enforcement.

Key claims: The order's vague definitions chill protected speech, violating the First Amendment by presuming all race/ethnicity discussions or DEI as discriminatory. It coerces silence on historic inequities, forcing contractors—including faculty discussing race in curricula or hosting affinity groups—to forgo rights for funding. Due process violations stem from arbitrary enforcement risks.

AAUP President Wendell R. Stemley stated, "This executive order undermines policies addressing centuries of discrimination... We cannot succeed without open discussion free from censorship."

Higher Education's Heavy Reliance on Federal Contracts

U.S. universities secured over $50 billion in federal research funding in FY2024, with contracts comprising a significant portion alongside grants. Research-intensive institutions like the University of Michigan ($876 million in contracts) or Johns Hopkins derive 10-13% of revenue from federal sources. HBCUs and minority-serving institutions often exceed 20%.

NIH alone awarded $35 billion in 2025, much via contracts for clinical trials. DoD funds defense-related research at engineering schools. Disruption could halt projects in biomedicine, AI, and climate science, affecting jobs, students, and U.S. competitiveness.

A Urban Institute analysis highlights vulnerability: Many schools under scrutiny receive over 10% from federal contracts.

Photo by Hakim Menikh on Unsplash

Immediate Campus Impacts and Examples

Universities are scrambling with compliance audits. Medical schools, where AAUP represents many faculty, fear losses in health disparity research. Columbia University, previously cut $400 million over antisemitism probes, exemplifies risks if DEI ties in.

At state flagships like UC system (threatened strikes), DEI offices review programs. Private research powerhouses like Stanford pause affinity trainings. Smaller colleges with DoD contracts for cybersecurity research face existential threats.

• Potential halt to race-focused health studies (e.g., NIH-funded cancer disparities).
• Scrutiny of student clubs, scholarships, mentoring as "program participation."
• Supply chain disruptions if vendors targeted.

Stakeholder Perspectives: A Divided Landscape

Advocates like NADOHE argue DEI addresses inequities, boosting underrepresented talent pipelines essential for innovation. AAUP warns of academic freedom erosion, echoing prior victories.

The administration counters DEI as reverse discrimination, citing settlements like IBM's $17 million. OMB Director defends efficiency gains from merit focus.

Neutral observers note vagueness invites lawsuits, mirroring Biden-era challenges.

Legal Precedents and Path Forward

Prior cases provide blueprint: 2025 injunctions cited vagueness and speech suppression. Fourth Circuit's reversal focused on lack of specific harms, which plaintiffs now bolster with concrete examples.

Experts predict injunction likelihood, given Abelson's history. Supreme Court review possible, post-Students for Fair Admissions v. Harvard (2023) narrowing affirmative action but preserving speech.

A Inside Higher Ed analysis forecasts prolonged battles.

Broader Implications for U.S. Higher Education

Beyond contracts, the order signals intensified scrutiny. Universities pivot to "merit-based inclusion," rebranding DEI as belonging initiatives. Faculty unions mobilize; some states like California shield via local funds.

Long-term: Potential exodus of diverse talent, slowed research, enrollment dips at affected schools. Positive for critics: Reduced bureaucracy, focus on excellence.

What Universities Are Doing Now

Proactive steps include:

• Legal reviews of DEI by counsel.
• Training reframed as universal skills.
• Diversifying funding via philanthropy, states.
• Advocacy coalitions forming.

Leaders urge calm, emphasizing compliance while litigating.

Photo by Finde Zukunft on Unsplash

Future Outlook and Actionable Insights

Resolution may take months; interim compliance minimizes risks. Institutions should document merit processes, audit programs. Faculty: Protect speech via unions. Students: Engage via comments on FAR amendments.

Balanced DEI evolution could emerge, prioritizing outcomes over labels. For higher ed careers, monitor via resources like higher ed career advice.