Trump administration proposes stripping private colleges of tax-exempt status over DEI policies
Good afternoon, and welcome to September’s edition of Beyond High School. The Trump administration continued its push against diversity, equity, and inclusion programs at U.S. colleges this month with a proposal that could strip private universities of their tax-exempt status if they provide students with benefits based on race. Under longstanding federal tax rules, private schools must have…
The Trump administration has proposed a rule that could strip private colleges of their tax-exempt status if they implement diversity, equity, and inclusion (DEI) policies based on race. Currently, private schools are allowed to favor students of color in admissions, programs, and financial aid as long as it adheres to their nondiscrimination policies.
Under the proposed changes, racial considerations could potentially lead to a private school losing its 501(c)(3) status, which would affect their tax-exempt status. This proposal is expected to take effect for taxable years beginning after May 31, 2027. The public will have a 60-day comment period before the Treasury Department finalizes the rules, and legal challenges may further delay implementation.
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