The U.S. Department of Education has withdrawn its appeal of a federal court order that blocked its guidance threatening to cut funding from colleges and schools for diversity, equity and inclusion programs. The department’s move preserves the August ruling that found the guidance violated First Amendment and procedural rules, leaving in place protections for institutions and educators. Legal advocates and university leaders hailed the decision as a major procedural victory that reduces the immediate risk of federal funding being conditioned on campus ideological changes. The withdrawal follows sustained litigation brought by unions and higher‑education groups and signals a tactical retreat by the administration after courts and civil liberties advocates pushed back. Colleges now face fewer immediate federal enforcement threats tied directly to DEI program funding, though policy uncertainty persists about the department’s other maneuvers and executive actions affecting campus programs. Campus compliance teams and legal counsels should continue tracking follow‑on administrative guidance and potential legislative efforts that could reframe funding conditions.