Trump Administration’s Proposed Rule Targets Diversity Programs in Private Education
The Trump administration has announced a new proposal that could remove the tax-exempt status from private schools and colleges if they provide targeted assistance based on race. This is seen as an effort to dismantle diversity programs focused on Black, Hispanic, and other minority students.
The Treasury Department put forth this regulation on Thursday, suggesting it would take effect in May 2027. The rule aims to eliminate race-based benefits in admissions, scholarships, and facilities, stating these practices are incompatible with the proposal.
Higher education leaders have expressed concern over the change. Mike Gavin, CEO of the Alliance for Higher Education, criticized the proposal as an attempt to block working-class Americans and people of color from accessing higher education. He accused the administration of misrepresenting the issues by labeling efforts for equitable opportunities as discriminatory.
Many universities have already adjusted their Diversity, Equity, and Inclusion (DEI) offices due to governmental pressure. Treasury Secretary Scott Bessent has suggested that even renamed or rebranded programs could be subject to scrutiny.
“Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature,” Bessent stated.
The Treasury and IRS estimate that approximately 18,000 educational institutions could be impacted. These private entities have historically benefitted from tax exemptions due to their contributions to the public good, saving millions yearly. President Trump views this tax-exempt status as a tool in targeting institutions he perceives as promoting “wokeness.”
In a noteworthy past case, Bob Jones University lost its tax-exempt status in the 1970s due to a ban on interracial dating, which the Supreme Court upheld. Schools must adhere to IRS rules on lobbying, political activity, and reporting to maintain nonprofit status.
The Trump administration argues for restoring merit in education, with Marjorie Hass from the Council of Independent Colleges noting potential impacts on donations aimed at scholarships. Tim Powers from the National Association of Independent Colleges highlighted the legal uncertainties this proposal could create.
The Justice Department has also begun investigations into medical schools accused of favoring Black and Hispanic applicants, citing violations of the Civil Rights Act of 1964.
IRS CEO Frank J. Bisignano stated that private schools promoting discriminatory practices will face tax penalties.
“Today’s proposed regulations put institutions on notice,” Bisignano said. “Schools that continue to engage in racial discrimination should expect to lose that status.”
Both political parties have generally agreed that nonprofit status should be preserved carefully, recognizing a high standard for revocation. Preston Cooper from the American Enterprise Institute emphasized that aggressive use of this regulation might provoke retaliation from Democrats if they regain power.
This proposal’s outcome will influence future political actions, possibly leading to further discussions or actions depending on its implementation.