San José State Claps Back at Trump Threats to Withhold Student Funding

San José State University is challenging the Trump administration’s threats to withhold funding over policies supporting transgender student-athletes.

The lawsuit filed in federal court last week by the California State University system comes after the U.S. Department of Education presented San José State with an ultimatum in January, saying that if the school does not make a set of sweeping policy changes and public statements barring transgender students from athletic programs, it could risk losing hundreds of millions of dollars in federal financial aid and research funding.

“That is no choice at all,” the lawsuit reads. “SJSU has filed this action to defend the rule of law and protect itself and its community against such lawless acts by the federal government.”

The school made national headlines when a series of opponents forfeited games against its women’s volleyball team, which had a transgender player, in 2024. Shortly after, the department’s Office for Civil Rights opened an investigation into San José State University in February 2025, alleging the school violated federal Title IX law.

The same month, President Donald Trump issued an executive order barring transgender athletes from participating in women’s sports, and the NCAA said it would change its policies in line with the directive.

The moves followed a lawsuit filed during the 2024 season by San José State’s co-captain, Brooke Slusser and a slew of players on teams that had forfeited attempting to bar the transgender athlete from playing on San José State’s team, alleging that the school and the Big Mountain West athletic conference violated the rights of women by allowing transgender players to compete. At the time, the university had not acknowledged publicly whether a transgender athlete played on the team, and the player had not yet publicly come out as trans.

In January, the federal government threatened to withhold federal funding if it didn’t make changes to school policies that state that there are only two sexes and that “the sex of a human — female or male — is unchangeable,” issue public and personal apologies to women who forfeited games against the volleyball team and bar transgender women from women’s sports teams and gendered facilities.

The school receives nearly $200 million in research funding from the federal government. About two-thirds of its students also rely on a total of about $130 million in federal financial aid, according to the lawsuit. Without the funding, the lawsuit states, those students, many of whom are the first in their families to go to college, could lose necessary financial support and may not be able to afford tuition.

Still, the CSU rejected the proposed resolution agreement from the Department of Education last week.

Attorneys for the school said that its policies allowing transgender players to participate on the team between 2022 and 2024 were in line with federal law, and the DOE’s own interpretation of Title IX at the time. The 9th U.S. Circuit Court of Appeals also issued rulings in 2023 and 2024 upholding the rights of transgender athletes.

“Our position is simple: We have followed the law and cannot be punished for doing so,” SJSU President Cynthia Teniente-Matson said in a statement.

Attorneys for the CSU added that any future change cannot be applied retroactively.

“The President does not have the authority to override judicial decisions interpreting the Constitution or federal statutes — much less to go back in time and change the rules that applied before he took office,” the suit reads.

In a statement on its website, the CSU said its policies supporting transgender students and prohibiting gender identity discrimination remain in place, and “remains unwavering in its commitment to fostering an inclusive, respectful, and safe environment for all students, faculty, and staff — including LGBTQ+ community members.”

Still, the question of whether transgender athletes could be barred from competing in women’s sports more broadly in the future remains unclear.

Trump’s executive order restricting transgender athletes’ participation is currently being challenged in multiple lawsuits — both alleging that its enforcement violates Title IX precedent, like the CSU case, and that the administration’s process for rescinding federal funding is unlawful.

Shiwali Patel, a senior director of education justice at the National Women’s Law Center and a Title IX attorney, said that federal law limits the government from rescinding funds from an entire institution, as opposed to the program that’s been found in noncompliance with Title IX.

The Supreme Court is also expected to rule on a pair of state laws banning transgender athletes from women’s teams this summer.

During oral arguments in January, the court appeared poised to uphold the bans, though depending on how narrowly the court chooses to rule, that decision might not directly impact schools in California, which has state laws protecting transgender students’ rights to participate in sports.

“Assuming that the court does that, and does not hold that Title IX mandates an anti-trans sports ban, then there is even stronger grounds for CSU to fight back against the Trump administration,” Patel said.

Still, some schools that have faced federal funding threats have made concessions or come to agreements with the Trump administration, and the suit said that if the Supreme Court or Ninth Circuit changes the law and imposes new or different requirements, “SJSU will comply going forward.”