Washington, D.C. — The Trump administration is proposing new rules that could strip tax-exempt status from private schools and colleges that use race-conscious policies in admissions, scholarships or other programs.
The Treasury Department said Thursday that the proposal is intended to enforce what it calls a longstanding public policy against racial discrimination. Officials cited the Supreme Court’s 1983 Bob Jones University decision and the court’s 2023 ruling against race-conscious admissions at Harvard and the University of North Carolina.
The proposed rules would replace older IRS guidance and could affect an estimated 18,000 private educational institutions, from K-12 schools to universities.
Losing tax-exempt status could have significant financial consequences. Donations to affected institutions would no longer qualify for federal tax deductions, potentially making fundraising more difficult.
The administration says the rules would still permit race-neutral programs aimed at helping disadvantaged students, including aid based on income or other socioeconomic factors.
IRS Chief Executive Officer Frank Bisignano said schools would have until May 31, 2027, to bring their policies into compliance.
Critics argue the proposal could be used to pressure schools to abandon diversity initiatives even when those programs are designed to address inequality without imposing explicit racial quotas.
One tax-law expert warned the rules could give the IRS broad leverage over schools and trigger years of litigation over how far the government can go in defining discriminatory practices.
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