Key facts
- The Treasury Department proposed new regulations that could strip private schools of tax-exempt status.
- The rule targets institutions offering race-based programs for students.
- Benefits in admissions, scholarships, and facilities based on race would be considered incompatible with tax-exempt status.
- The proposed change affects over 18,000 private institutions nationwide, including colleges and K-12 schools.
- Critics deem the move illegal and counterproductive to educational equity, while supporters see it as enforcing civil rights law.
The Trump administration is proposing new regulations that would revoke the tax-exempt status of private colleges and K-12 schools if they provide targeted assistance to students based on their race. The Treasury Department released the proposed rules, which could take effect after May 2027, stating that such race-based benefits in admissions, scholarships, and facilities are incompatible with tax-exempt status.
This action represents a significant escalation in the administration's campaign against diversity, equity, and inclusion (DEI) programs, which President Trump has vowed to eliminate. Officials have previously used civil rights laws, arguing that DEI policies discriminate against white and Asian American students. IRS Chief Executive Frank Bisignano asserted that institutions promoting discriminatory practices will no longer receive federal tax benefits.
The proposed change could impose substantial tax liabilities on affected schools and potentially deter donors who benefit from tax deductions. The rule impacts over 18,000 private institutions nationwide, including prominent universities like Stanford and USC, as well as private K-12 schools. Public institutions are not directly affected by this specific regulation.
Critics, such as Denise Forte of EdTrust, argue that the move is illegal and does not promote educational fairness, especially for students of color who still face barriers to access. Conversely, groups like Defending Education support the proposal, viewing it as a necessary enforcement of federal civil rights law. Legal experts, like UC Berkeley law professor Brian Galle, predict the regulations will face significant legal challenges and may not withstand court scrutiny, suggesting the administration's actions are an attempt to intimidate higher education institutions.