The U.S. Treasury Department issued new rules on Thursday that would threaten the tax-exempt status of private schools if they have programs that support students who are part of a racial minority. The proposed regulations would apply to K-12 schools, colleges and universities that engage in what the Trump administration considers “racial discrimination.”
“Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature,” U.S. Treasury Secretary Scott Bessent said in a press release. “(These) proposed regulations establish a clear standard, and the institutions that continue to use discriminatory practices will no longer receive the benefits of federal tax-exempt status.”
The rules would apply to admissions policies, scholarships and other forms of financial aid. Currently, federal law grants tax-exempt status to organizations that operate exclusively for educational purposes.
Matthew Boedy, a rhetoric professor at the University of North Georgia and president of the Georgia chapter of the American Association of University Professors, said he expects educational organizations to sue to stop what he called an “attack on higher education.”
“It is a gross broadside on the freedom of private schools to decide how they want to admit and fund students,” Boedy said. “And the impact would kneecap thousands of schools, deter millions of students, and likely gut donations to those places. This is the anti-woke defunding higher education as promised by Trump.”
Boedy pointed out that the University System of Georgia promoted a longstanding program for African American males as recently as 2024.
“If such a program was good for public schools, it is good for private schools,” he said. “And that broad acceptance debunks the absurd legal rationale the Trump administration is using here: turning on its head ‘fundamental public policy.’”
USG did not immediately respond to a request for comment about the program or the new rules. Neither have some metro Atlanta colleges and universities. The rules do not mention historically Black colleges and universities.
K-12 schools and colleges and universities across the country have closed Diversity, Equity and Inclusion programs and stopped scholarships targeting minority students under pressure from the Trump administration. When Emory University announced its plan to dismantle DEI programs last fall, it sent shockwaves throughout the student body. Emory declined to discuss the Treasury Department’s proposed rules.
The City Schools of Decatur’s board of education repealed some of its DEI policies in the spring of 2025 when Trump issued an order threatening schools would lose federal funding for enacting such practices. The board reversed course weeks later.
Efforts by schools and colleges to support Black, Hispanic and other minority students are meant to address longstanding racial prejudice in the U.S., but the Trump administration has argued the policies discriminate against white and Asian students.
Boedy said expanding who is admitted to U.S. colleges is good public policy.
“It is a fundamental tenet of America to offer opportunity to its citizens through higher education,” he said. “What the Trump administration is doing with the IRS joins a long line of attacks from the federal government and some states across the spectrum of accreditation, research and curriculum.”
The proposed regulations are open for public comment until Nov. 3. The Treasury Department says the final rules would affect private schools in taxable years after May 31, 2027, after the final regulations are expected to be published.
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