Trump administration proposes stripping tax-exempt status from schools using race-based programs

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In a push to overhaul the nation's school system, Education Secretary Linda McMahon and President Donald Trump outline the administration's efforts to dismantle federal micromanagement and restore parental rights, Monday, Aug. 24, 2026, in the Rose Garden of the White House. The policy shifts redirect billions from DEI programs to classrooms while granting states waivers to bypass Washington bureaucracy.

The Trump administration proposed new regulations on Thursday to revoke the tax-exempt status of private schools and colleges if ​they use race in admissions, scholarships or other school-administered programs, the latest effort by the federal government to root out diversity initiatives in education.
The rules, proposed by the Treasury Department ‌and Internal Revenue Service, aim to end what administration officials argue is discrimination against white students in favor of students of 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 follows the Supreme Court's 2023 Students for Fair Admissions decisions, which prohibited most race-conscious admissions policies at colleges and universities.
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The rules aim to end what administration officials argue is discrimination against white students in favor of students of color. (Mark Schiefelbein/AP)

Admissions, educational policies, scholarships and loans, athletics and "every other school-administered or ​school-supported program" would be covered by the Treasury's proposal.
It would apply to any program that considers race, color, or national or ethnic origin "for any purpose," including efforts to address past racial discrimination.
The ​Treasury estimated that the rules ​could impact as many ⁠as 18,000 schools at all education levels and 750,000 students who could be affected because they may qualify for race-based scholarships.
The proposal would not prevent private schools from having a ​religious mission, curriculum or program. Religious schools could continue to choose students ​based on religious ⁠affiliation, according to the Treasury.
The ​Treasury estimated that the rules ​could impact as many ⁠as 18,000 schools at all education levels and 750,000 students who may qualify for race-based scholarships. (Anna Moneymaker/Getty Images)

The Treasury also said the proposal would not prohibit schools from helping disadvantaged students using race-neutral criteria, including income, geography or first-generation status.
The new proposal is subject to a public comment period and would likely spark legal challenges if ⁠adopted.
The American Association of University Professors, which advocates for academic freedom and has sued the administration ​to block funding cuts in the past, said it is considering legal action against the proposal.
"This is not neutral enforcement ‌of ⁠civil-rights law. It is an affirmative attempt to turn civil-rights law against the very people it was enacted to protect," AAUP President Todd Wolfson said in a statement. "For half a century, federal policy recognized that measures intended to dismantle entrenched racial exclusion are not equivalent to policies designed to preserve it."
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The administration has sought to eliminate ⁠diversity, equity and inclusion policies ​in K-12 schools and higher education since President Donald Trump returned to the White House. (Sophie Park/Bloomberg via Getty Images)

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The administration has sought to eliminate ⁠diversity, equity and inclusion policies ​in K-12 schools and higher education since President Donald Trump returned to the White House in January 2025.
In addition to DEI, the administration has targeted educational institutions across the nation for issues such as race-based admissions and scholarships and alleged antisemitism on campus.
Trump has singled out Harvard University in particular with federal funding cuts, investigations ​and threats to the institution's tax-exempt status.
Reuters contributed to this report.