• The Trump administration proposes new regulations affecting private schools and colleges on race-based benefits.
• If finalized, the rule could impact up to 18,000 educational institutions across the U.S.
• The proposal aims to eliminate diversity programs that provide aid based on race.
• Compliance could result in significant fundraising challenges for affected schools.
• The rule is designed to be in line with recent Supreme Court decisions on race in education.

The Trump administration has introduced a significant proposal that would remove tax-exempt status from private schools, colleges, and universities if they offer admissions, scholarships, or other programs based on race. This initiative was announced by the Treasury Department and aims to target policies promoting diversity and equity for minority students. It could impact approximately 18,000 educational institutions if implemented, reflecting Trump's broader efforts to curtail such diversity programs, according to latimes and indiatimes.

Treasury Secretary Scott Bessent emphasized that schools cannot disguise race-based aid by rebranding it as equitable or inclusive, stating, “Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature.” The rule would apply to a range of educational benefits, affecting not only admissions but also scholarships, loans, and athletics, as noted by reuters.

The proposed regulations could lead to severe fundraising impacts as losing tax-exempt status would make donations less appealing to potential donors due to the lack of tax deductions. Critics argue that this move undermines efforts to address racial inequities in educational systems. However, the administration defends the proposal as a step towards ensuring compliance with federal civil rights law, emphasizing merit-based education, according to latimes and reuters.

The proposal follows recent U.S. Supreme Court rulings that have limited the ability of colleges to consider race in admissions decisions, further tightening restrictions on race-based programs. Following a precedent set by the denial of tax-exempt status to Bob Jones University in the 1970s, institutions that maintain racially discriminatory practices could face similar consequences now, according to indiatimes and reuters.