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 nondiscrimination policies to maintain tax-exempt status. Current guidance allows private universities to favor students of color in admissions, programs, and financial aid if it promotes the school’s nondiscrimination policies.

The Trump administration’s proposal would eliminate those exceptions, meaning racial considerations could cause a private school to lose its 501(c)(3) status. If approved, the rules are expected to apply to taxable years beginning after May 31, 2027.

How this will affect Colorado’s private universities will take some time to become clear. The federal government requires a 60-day public comment period before the Treasury Department can finalize the rules, so it’s possible the proposal could be revised. Legal challenges could also delay implementation.

Colorado has several prominent private universities, including the University of Denver, Colorado College, Regis University, and Colorado Christian University.

Losing tax-exempt status would require private universities to pay federal income tax. Donations to these institutions would also generally no longer be tax deductible. Losing that status could also hurt a school’s ability to access certain foundation and government grants.

Nationwide, the IRS and Treasury Department estimate the rule change may affect up to 18,000 private educational institutions, including private elementary schools, high schools, and trade schools.

The proposal represents the administration’s latest attempt to end programs that benefit certain racial groups, many of which help Black, Hispanic, and Native American students. Those groups have historically had a tougher time getting to and graduating from college compared with their white and Asian peers, including in Colorado.

The Trump administration has cited the 2023 Supreme Court ruling banning race-conscious admissions in its reasoning to target diversity, equity, and inclusion programs at colleges and universities.

Already, the proposal has drawn criticism among some higher education associations. One such group, the National Association of College and University Business Officers, issued a statement from Kara Freeman, president and CEO, saying the Sept. 3 proposal "far exceeds agency authority."

Thank you for reading. I will continue to monitor this latest proposal, and if you have any comments or questions about it, you can drop me a note at [email protected].

Local education coverage is disappearing. Chalkbeat helps families and educators understand what’s changing. We can’t do it without you.

Support Chalkbeat Colorado

Stories From Chalkbeat

Trump administration higher education letter: Most Colorado universities have yet to decide response — The Education Department letter asks college officials about their approaches to free speech, research, admissions, campus protests, and more. One Colorado campus won’t respond to the letter. Other university leaders haven’t decided.

A free Commerce City program might foreshadow the demand for Workforce Pell in Colorado — Commerce City Promise, a tuition-free college program for the city’s residents, offers an early look at the work required to make programs eligible for Workforce Pell.

A new Colorado report is unlikely to quiet renewed national debate about test-optional admissions — Colorado has banned four-year institutions since 2021 from using national assessments such as the SAT or ACT in admissions decisions.