Trump Administration Targets Race-Based Aid: Colleges Risk Losing Tax-Exempt Status

The Trump administration has launched a major push to revoke the tax-exempt status of private schools and colleges that offer assistance to students based on race. On Thursday, the US Treasury Department and Internal Revenue Service (IRS) unveiled proposed regulations aimed at institutions that use 'race-based preferences' in admissions, scholarships, athletics, and other programs. This move is a direct escalation of the administration's ongoing campaign against Diversity, Equity, and Inclusion (DEI) initiatives across higher education. Wesleyan University President Michael Roth has sharply criticized the proposal, calling it an 'extraordinary overreach' and stating his institution has no plans to alter its programs. The administration justifies its stance by referencing a 'public policy doctrine,' citing the 2023 Supreme Court decision in Students for Fair Admissions v. Harvard, which outlawed race-conscious admissions, and the 1983 Bob Jones University v. United States ruling on racial discrimination. This latest federal action, however, targets private schools' core financial lifeline – their tax-exempt status – potentially impacting up to 18,000 institutions. The proposed regulations are now open for a public comment period, expected to close in early November. If finalized, they would take effect after May 31, 2027. Legal experts are already predicting significant challenges, arguing the new rules are 'blatantly illegal' and could face lengthy court battles. Nevertheless, universities face immense pressure for 'anticipatory compliance,' potentially leading some to preemptively change their policies to avoid costly legal fights, even before the regulations are set in stone.