Treasury proposes ending tax breaks for schools with minority preferences
The Trump administration proposed a new regulation to strip tax-exempt status from private schools that give preferential treatment to minority students. Treasury Secretary Scott Bessent said the rule clarifies that such practices are discriminatory and against public policy. The proposal would affect thousands of educational institutions.
The proposed regulation would apply across a school's admissions, scholarship, athletic, and other policies, with Bessent arguing that rebranding race-based preferences as diversity-enhancing measures does not alter their discriminatory nature. The Treasury cited three Supreme Court decisions, including the 2023 Students for Fair Admissions ruling that struck down affirmative action at Harvard and UNC, as justification for the change.
The rule could affect roughly 18,000 private primary and secondary schools, colleges, universities, professional schools, and trade schools. The Justice Department separately concluded in August that Duke University's law school discriminated through "diversity" essay questions in admissions. Schumer characterized the move as part of a broader administration assault on American education.
This proposal could significantly reshape private education funding and admissions practices nationwide. Minority students may lose access to targeted scholarships and support programs at private institutions, while schools face pressure to eliminate race-conscious policies or forfeit their tax-exempt status. The rule may also invite legal challenges over its interpretation of Supreme Court precedent, potentially influencing how educational institutions approach diversity initiatives for years to come