The Trump administration is proposing to remove the federal tax-exempt status of private schools that use race-based admission or diversity, equity and inclusion in certain school policies and programs.
The proposed regulation by the U.S. Department of the Treasury and the Internal Revenue Service would cover admissions, scholarships and loans, athletics, educational policies and other programs administered or supported by private schools.
While the regulation is still open to public comment, if finalized, it would apply beginning on May 31, 2027.
The regulation would apply to tax-exempt private elementary and secondary schools, colleges, universities, professional schools and trade schools. The Treasury Department and Internal Revenue Service estimate as many as 18,000 private educational institutions could be affected.
Under the Trump administration proposal, private schools would not qualify for federal tax-exempt status under Section 501(c)(3) if they adopt or enforce a policy that discriminates based on race and color.
“Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature,” Treasury Secretary Scott Bessent said in a statement.
The proposal will “establish a clear standard, and the institutions that continue to use discriminatory practices will no longer receive the benefits of federal tax-exempt status,” Bessent said.
While colleges and universities have not received an official notice, higher education leaders criticize the proposal, saying it could affect programs designed to expand access to college for students from historically underrepresented groups.
“The administration’s latest rule changes are its most blatant attack to keep working-class Americans and people of color from accessing higher education and a better life,” Mike Gavin, Alliance for Higher Education president and CEO, said in a statement. “By claiming that efforts to increase fair opportunity for all students are discriminatory, the administration is trying to gaslight the American people into believing that up is down and black is white.”
The Center Square reached out to the White House and the Department of Education for further comment but did not receive a response.
