Treasury Moves to End Race-Based Programs at Schools Nationwide

Clear Facts

• Treasury Department and IRS proposed new regulations Thursday to revoke tax-exempt status from private schools and colleges using race in admissions, scholarships, or other programs
• The rules would cover approximately 18,000 schools at all education levels and could affect 750,000 students currently receiving race-based scholarships
• The proposal follows the Supreme Court’s 2023 decision prohibiting most race-conscious admissions policies at colleges and universities

The Trump administration took decisive action Thursday to eliminate racial preferences in American education, proposing sweeping new regulations that would strip tax-exempt status from private schools and colleges engaged in race-based discrimination.

The rules, put forward by the Treasury Department and Internal Revenue Service, represent the most comprehensive federal effort yet to enforce equal treatment under the law in educational institutions.

“Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature,” Treasury Secretary Scott Bessent said in a statement.

The proposed regulations build directly on the Supreme Court’s 2023 Students for Fair Admissions decisions, which prohibited most race-conscious admissions policies at colleges and universities. The new Treasury rules would extend that principle across the entire educational landscape.

Admissions, educational policies, scholarships and loans, athletics and “every other school-administered or school-supported program” would be covered by the Treasury’s proposal. It would apply to any program that considers race, color, or national or ethnic origin “for any purpose,” including efforts to address past racial discrimination.

The Treasury estimated that the rules could impact as many as 18,000 schools at all education levels and 750,000 students who could be affected because they may qualify for race-based scholarships. The scope reflects how deeply identity-based programs have penetrated American education.

The proposal would not prevent private schools from having a religious mission, curriculum or program. Religious schools could continue to choose students based on religious affiliation, according to the Treasury.

The Treasury also said the proposal would not prohibit schools from helping disadvantaged students using race-neutral criteria, including income, geography or first-generation status. The administration emphasized that genuine need-based assistance remains fully permissible under the new framework.

The new proposal is subject to a public comment period and would likely spark legal challenges if adopted. Opposition groups have already signaled their intent to fight the regulations in court.

The American Association of University Professors, which advocates for academic freedom and has sued the administration to block funding cuts in the past, said it is considering legal action against the proposal.

“This is not neutral enforcement of civil-rights law. It is an affirmative attempt to turn civil-rights law against the very people it was enacted to protect,” AAUP President Todd Wolfson said in a statement.

“For half a century, federal policy recognized that measures intended to dismantle entrenched racial exclusion are not equivalent to policies designed to preserve it.”

The administration has sought to eliminate diversity, equity and inclusion policies in K-12 schools and higher education since President Donald Trump returned to the White House in January 2025. The effort reflects a broader commitment to colorblind policies and merit-based standards across American institutions.

In addition to DEI, the administration has targeted educational institutions across the nation for issues such as race-based admissions and scholarships and alleged antisemitism on campus. Trump has singled out Harvard University in particular with federal funding cuts, investigations and threats to the institution’s tax-exempt status.

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