Trump administration moves to revoke tax-exempt status of schools with race-based programs
New regulations proposed Thursday by the Treasury Department and Internal Revenue Service would strip tax-exempt status from private schools and colleges that use race in admissions, scholarships, or other school-administered programs. Treasury Secretary Scott Bessent framed the measure as an effort to end discrimination against white students in favor of students of color. The proposal, which Treasury estimates could affect as many as 18,000 schools at all education levels, enters a public comment period with legal challenges expected to follow if adopted.
Key takeaways
- The Treasury Department and IRS proposed regulations Thursday that would strip tax-exempt status from private schools and colleges that use race in admissions, scholarships, or other school-administered programs.
- Treasury Secretary Scott Bessent framed the measure as ending discrimination against white students in favor of students of color, and estimates it could affect as many as 18,000 schools.
- The proposal bars considering race, color, and national or ethnic origin for any purpose, including programs meant to address past racial discrimination, though it includes carve-outs for religious schools and race-neutral criteria like income, geography, or first-generation stat
- Treasury estimates 750,000 students could be affected because they may qualify for race-based scholarships.
- The proposal enters a public comment period, with legal challenges expected, and the American Association of University Professors said it is considering legal action.
New regulations proposed Thursday by the Treasury Department and Internal Revenue Service would strip tax-exempt status from private schools and colleges that use race in admissions, scholarships, or other school-administered programs. Treasury Secretary Scott Bessent framed the measure as an effort to end discrimination against white students in favor of students of color. The proposal, which Treasury estimates could affect as many as 18,000 schools at all education levels, enters a public comment period with legal challenges expected to follow if adopted.
What the rules cover
The proposed regulations extend to admissions, educational policies, scholarships, loans, athletics, and every other school-administered or school-supported program. Race, color, and national or ethnic origin may not be considered "for any purpose" under the proposal, including in programs designed to address past racial discrimination. Bessent, in a statement, said schools that rebrand race-based preferences as equitable or diversity-enhancing do not change the discriminatory nature of those programs.
The proposal follows the Supreme Court's 2023 Students for Fair Admissions decisions, which prohibited most race-conscious admissions policies at colleges and universities. The Trump administration has pushed to eliminate diversity, equity and inclusion policies across K-12 and higher education since President Donald Trump returned to the White House in January 2025. Treasury estimates 750,000 students could be affected because they may qualify for race-based scholarships. The rules carry carve-outs. Religious schools may maintain a religious mission and select students based on religious affiliation. Schools may also assist disadvantaged students through race-neutral criteria, including income, geography, or first-generation college status.
What to watch
The American Association of University Professors, which has previously sued the administration to block funding cuts, said it is considering legal action against the proposal. AAUP President Todd Wolfson said the measure represents an attempt to turn civil-rights law against the people it was enacted to protect, arguing that decades of federal policy recognized a distinction between policies designed to dismantle entrenched racial exclusion and those designed to preserve it. The public comment window is the next formal step before adoption. Harvard University remains the administration's most prominent education target, already facing funding cuts, federal investigations, and a separate Department of Justice probe into its financial aid over alleged discrimination against American students.
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Filed by the newsroom of MarketPR on September 4, 2026. Source: foxnews.com. Indicative figures are not investment advice.