Trump Administration Proposes Regulations to Revoke Tax-Exempt Status for Schools Using Race in Programs

<p>The Trump administration proposed new regulations on September 3, 2026, to revoke the tax-exempt status of private schools and colleges that use race in admissions, scholarships, or other school-administered programs. This initiative is part of the federal government's efforts to address diversity initiatives in education.</p><p>The proposed rules, put forward by the Treasury Department and the Internal Revenue Service, aim to eliminate what administration officials describe as discrimination against white students in favor of students of color.</p><p>Treasury Secretary Scott Bessent stated, "Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature."</p><p>This proposal follows the Supreme Court's 2023 decisions in <i>Students for Fair Admissions</i>, which prohibited most race-conscious admissions policies at colleges and universities.</p><p>The regulations would cover admissions, educational policies, scholarships and loans, athletics, and all other school-administered or school-supported programs. They would apply to any program that considers race, color, or national or ethnic origin for any purpose, including efforts to address past racial discrimination.</p><p>The Treasury estimated that these rules could impact as many as 18,000 schools at all education levels and affect approximately 750,000 students who may qualify for race-based scholarships.</p><p>The proposal would not prevent private schools from maintaining a religious mission, curriculum, or program, allowing religious schools to choose students based on religious affiliation. Additionally, the proposal would not prohibit schools from assisting disadvantaged students using race-neutral criteria, such as income, geography, or first-generation status.</p><p>The proposal is currently subject to a public comment period and may face legal challenges if adopted. The American Association of University Professors (AAUP), which advocates for academic freedom and has previously sued the administration to block funding cuts, is considering legal action against this proposal. AAUP President Todd Wolfson remarked, "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. For half a century, federal policy recognized that measures intended to dismantle entrenched racial exclusion are not equivalent to policies designed to preserve it."</p><p>The administration has aimed 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. In addition to targeting DEI initiatives, the administration has addressed issues such as race-based admissions and scholarships and alleged antisemitism on campus. Trump has specifically focused on Harvard University with federal funding cuts, investigations, and threats to the institution's tax-exempt status.</p><p><i>Reuters contributed to this report.</i></p>