Trump Administration Targets Tax Breaks for Colleges With DEI Policies.

The Treasury Department and IRS released proposed regulations Thursday that would end federal tax-exempt status for private schools engaging in race-based practices. The rule covers admissions, scholarships, athletics, loans, and other school programs.

• 18,000 private schools could be affected, agencies estimated.
• The rule applies to K-12 schools, colleges, professional schools, and trade schools.
• May 31, 2027 is the earliest taxable year the rule would cover.
• Religious schools may still select students based on genuine religious affiliation.

Why it matters: Tax-exempt status is a significant federal subsidy; losing it would raise costs for affected institutions and potentially their students.

• Agencies cited Brown v. Board of Education, Bob Jones University v. United States, and Students for Fair Admissions v. Harvard as legal basis.
• Schools may still use income, geography, first-generation status, hardship, military status, or academic achievement — if race-neutral.

How 44 sources split on this story

Where they split: Coverage splits on whether the rule targets illegal racial discrimination or whether it broadly targets diversity programs that institutions and critics say are lawful.

What’s next: The Justice Department has already targeted Harvard, UCLA, and Yale over race-based policies.

• IRS CEO Frank Bisignano said schools using racial discrimination "should expect to lose" exempt status.
• Which specific schools will face enforcement, and by what process, is not detailed in the proposal.
• Whether courts will uphold the regulations' definition of discriminatory practices — including DEI-branded programs — is unresolved.
• How institutions will respond, and whether legal challenges will delay implementation, is unknown.