The Treasury Department and IRS proposed new regulations that would revoke tax-exempt status from private schools and colleges that use race in admissions, scholarships, or other school-run programs, according to the source report. Treasury officials describe the move as targeting discrimination against white students in favor of students of color. Treasury Secretary Scott Bessent said in a statement that “schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature,” per the source.
What the proposal covers
Under the proposal, “every other school-administered or school-supported program” would be covered—including admissions, educational policies, scholarships and loans, and athletics—if they consider race, color, or national or ethnic origin for any purpose, including programs meant to address past discrimination, the source report states. The plan follows the Supreme Court’s 2023 Students for Fair Admissions ruling, which barred most race-conscious admissions policies at colleges and universities.
How many schools could be affected
The Treasury Department estimated the rule could affect as many as 18,000 schools across all education levels and 750,000 students who might qualify for race-based scholarships, according to the source report.
Religious schools and race-neutral aid
The proposal would not stop private schools from maintaining a religious mission, curriculum, or program, and religious schools could still select students based on religious affiliation, the source reports. Treasury also said schools would remain free to aid disadvantaged students using race-neutral factors such as income, geography, or first-generation status.
Legal pushback forming
The rule will go through a public comment period and is expected to face legal challenges if adopted, per the source. The American Association of University Professors said it is considering legal action. “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 quoted by the source. He added that, for half a century, federal policy recognized that measures intended to dismantle entrenched racial exclusion are not equivalent to policies designed to preserve it.
Context: post-SFFA and the administration’s DEI rollback
According to the source report, the proposal extends the Trump administration’s campaign against diversity, equity, and inclusion policies in K–12 and higher education. Since President Donald Trump returned to the White House in January 2025, the administration has scrutinized institutions over race-based admissions and scholarships and alleged antisemitism on campus, the source states. Harvard University has been a particular focus, facing federal funding cuts, investigations, and threats to its own tax-exempt status, according to the source.