The Trump administration has unveiled proposed regulations that would revoke the tax-exempt status of private educational institutions if they consider race in admissions or other key decisions. The move is the latest salvo in the administration's campaign against affirmative action, building on last year's Supreme Court ruling that banned race-conscious admissions at colleges and universities.
The proposed rules, issued jointly by the Treasury Department and the IRS, would apply to taxable years beginning on or after May 31, 2027, giving affected schools time to adjust. They would cover admissions, scholarships, loans, athletics, and all other school-administered programs. The administration estimates that as many as 18,000 private institutions could be affected.
Treasury Secretary Scott Bessent defended the proposal, saying, "Rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature." But critics argue that the administration is misusing the tax code to impose its own political agenda. As Chief Justice John Marshall once observed, "The power to tax is the power to destroy."
The regulations would not bar schools from helping disadvantaged students through race-neutral criteria such as family income, geographic location, or first-generation status. However, they would prohibit any consideration of race, even if intended to benefit minority students.
Legal experts question whether the administration's interpretation of "fundamental public policy" will hold up in court. In the landmark case Bob Jones University v. U.S., the Supreme Court upheld the IRS's revocation of tax-exempt status for a school that banned interracial dating, ruling that "racial discrimination in education violates a most fundamental public policy." But Phil Hackney, a law professor at the University of Pittsburgh, noted that "fundamental public policy is not something that the IRS can just go and grab; it needs to be something that is deeply anchored."
The proposal is part of a broader administration effort to dismantle diversity initiatives. Earlier this year, the administration opened investigations into several universities and medical schools over alleged discrimination against white and Asian applicants. It has also targeted other institutions, including Trump's use of emergency rulings to advance his agenda.
Critics see the move as an attempt to chill affirmative action through financial coercion. Todd Wolfson, president of the American Association of University Professors, called it "a blatantly racist political coercion intended to deny minority students reparative opportunities to further their education."
The proposed regulations are now open for public comment, and changes are possible before they are finalized. But if upheld, they would mark the end of affirmative action in private education, effectively killing race-conscious admissions. As former federal prosecutor James D. Zirin wrote, "If upheld, affirmative action in education benefiting Black and other racial minority students is dead as a doornail."
The administration's actions have also drawn attention to its broader use of tax policy for political ends, a strategy that has raised concerns among legal scholars and civil rights advocates. The fight over these regulations is likely to end up in court, where the definition of "fundamental public policy" will be tested once again.
