Private schools that provide targeted support to minority students could lose their tax-exempt status under regulations proposed by the U.S. Treasury Department on Thursday.
The rules would add to existing guidelines schools and organizations must follow to qualify for tax-exempt status.
Download the Straight Arrow app today to get the stories that matter free from manipulation, bias or agenda.™
Point phone camera here
The rules would deny tax-exempt status to schools offering programs or policies the IRS finds racially discriminatory.
“Today’s proposed regulations put institutions on notice and schools that participate in racial discrimination should expect to lose that status,” said Frank Bisignano, IRS chief executive officer.
Treasury Secretary Scott Bessent added the regulations “establish a clear standard,” and schools that continue to “use discriminatory practices will no longer receive the benefits of federal tax-exempt status.”
What would this mean for schools and universities?
In its announcement, the Treasury Department said the rules would take effect on May 31 and apply to as many as 18,000 private schools and universities.
“The rule would apply across admissions, educational policies, scholarships and loans, athletics, and every other school-administered or school-supported program,” the IRS said in its news release.
It noted the regulations would not prevent schools from maintaining religious missions, curriculum or programs.
It also added that schools can still expand educational opportunities based on family income, geographic location, first-generation status, individual hardship, military family status or academic achievement.
However, the IRS says schools “may not make decisions or confer benefits on the basis of race, color, or national or ethnic origin.”
Losing tax-exemptions could put additional financial strain on private schools and universities that often rely on donations to maintain and upgrade facilities and programs.
Tax-exempt status doesn’t just benefit schools; it also benefits donors. Under the exemption, donors can deduct donations they make directly to schools, thereby helping fundraising efforts.
A changing financial landscape
The regulations are the latest development in the Trump administration’s efforts to abandon initiatives aimed at supporting Black and minority students. It claims those initiatives and programs are a form of discrimination against white and Asian Americans.
If the tax-exempt status guidelines change, it could affect schools already facing other financial challenges from the administration.
Last year, the administration froze about $3 billion in grants to Harvard University as part of President Donald Trump’s efforts to end what he calls “liberal bias” at private universities.
As Straight Arrow previously reported, several schools – including other Ivy League institutions such as Columbia University – capitulated, ending diversity and equity programs, agreeing to crack down on protests and revamping programs like Middle Eastern studies.
Harvard, however, resisted, escalating conflicts with the president.
Next steps
As of now, the regulations are proposed and will be subject to a public comment period that could result in changes to the proposals.
If implemented, enforcement would likely involve IRS audits at universities to see whether they were considering race in their programs. Those audits would give universities time to challenge the new regulations.
Round out your reading
- Former Fetterman staffers create social media account to expose former boss.
- Why Gen Z finally wants Boomer hand-me-downs.
- Want a copy of Pete Hegseth’s driver’s license? It’s for sale on the dark web.
- Smart glasses helped a man see the world. The privacy panic took it away.
- Americans are keeping cars longer, so the auto industry is making it easier to pay for repairs.
