Federal officials have emphasized that universities found in violation of Section 117 risk losing federal funding.

On July 15, 2025, a representative from the U.S. Department of Education warned UM about incomplete and inaccurate disclosures that could violate statutory obligations.

This investigation was initiated by the Department of Education, following concerns raised by an executive order signed by President Trump, which mandates transparency regarding foreign influence in American universities.

The scrutiny comes on the heels of UM's January 2025 closure of its joint research institute with Shanghai Jiao Tong University, a decision driven by national security concerns.

According to a Campus Reform audit, UM has accepted over $270 million in foreign funding from 38 countries over the past decade.

The University of Michigan (UM) is currently under federal investigation due to serious inaccuracies found in its financial disclosures related to foreign funding.

Federal officials have expressed concerns that UM may be underreporting its foreign funding, suggesting that the actual total could be significantly higher.

Since January 2021, the university has disclosed approximately $375 million in foreign funding, with over 20% of these disclosures submitted late and some incorrectly identifying counterparties.

This probe is part of the enforcement of Section 117 of the Higher Education Act, which mandates that colleges receiving federal funds report foreign gifts or contracts exceeding $250,000.

This investigation reflects broader concerns about foreign influence at American universities, particularly regarding ties to entities in countries like China that may have conflicting interests with the U.S.

As part of the investigation, UM is required to submit tax records, written procedures, agreements with foreign governments, and a complete inventory of all foreign gifts and contracts since January 1, 2020.

The investigation is further complicated by a complaint from the U.S. Department of Justice regarding reports of Chinese nationals smuggling dangerous biological materials into U.S. laboratories affiliated with the university.