Federal Guidance on Equity-Conscious Programs: What Educational Institutions Need to Know

By Bill Ojile, Carrie Schaffer, and Kristen Iteen

The debate over race-conscious policies in higher education has been ongoing for decades, with affirmative action and diversity, equity, and inclusion (DEI) initiatives at the forefront of discussion about equity and representation in recent years. In 2023, the Supreme Court ruled against race-based preferences in college admissions. See Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 600 U.S. 181 (2023) (SFFA).  On January 21, 2025, the Trump administration, through executive order, instructed the Secretary of Education to issue guidance to all State and local educational agencies that receive federal funds, as well as all institutions of higher education that receive federal grants or participate in the federal student loan assistance program under Title IV of the Higher Education Act, 20 U.S.C. 1070 et seq., regarding measures and practices required to comply with SFFA.¹ The U.S. Department of Education has begun to implement policies to enforce President Trump’s directive, which may have widespread financial and structural implications for universities and K-12 institutions across the country.
 
Key Developments:
 
On February 14, 2025, the Department of Education issued guidance warning universities that they risked losing federal funding if they continued to take race into account when making scholarship or hiring decisions, or consider race in “all other aspects of student, academic, and campus life.”
 
To explain the breadth of its new guidance, the Department of Education stated, “[a]t its core, the test is simple: [i]f an education institution treats a person of one race differently than it treats another person because of that person’s race, the educational institution violates the law.” The Department provides examples of activities barred by this guidance, such as prohibiting schools from using race in promotions, compensation, financial aid, scholarships, prizes, administrative support, discipline, housing, and graduation ceremonies.
 
Despite announcing that institutions have a 14-day period to review and amend their policies and practices to align with new federal guidelines, the Department of Education took a major step on Monday, February 17, 2025, announcing that it had already cut $600 million in grants to institutions and nonprofits that are used to train teachers and education agencies on “diverse ideologies.”


Potential Complexities for Universities:
 
For institutions that rely heavily on federal funding, noncompliance with the Department of Education’s new guidelines may have significant financial ramifications. Institutions that fail to comply with the new guidance risk enforcement proceedings, which could result in financial penalties or even disqualification from receiving federal grants and student aid programs.
 
Compounding this issue is the complexity of compliance, as many race-focused organizations on campus — such as professional societies, fraternities, sororities, and cultural student clubs — are often run by students rather than an institution’s administration but may also receive funding by the institution from student fees. This will create a gray area where universities may struggle to determine their level of responsibility in enforcing the new guidance. While administrators might be expected to oversee campus-wide policies, directly regulating student-led organizations could raise concerns over free association and student autonomy. As a practical solution, institutions may want to consider requiring these organizations to offer membership to all students as a condition to receiving any institutional funding or recognition.   
 
The complexity arising from the Department guidance is simply: If universities take a hands-off approach, they risk federal scrutiny, but if they intervene too aggressively, they may face backlash from students, alumni, and faculty who view such actions as an infringement on campus diversity efforts. The balance between compliance and maintaining an inclusive campus culture may be vital in the wake of these policy changes.
 
What Universities Should Consider Doing Now:
1. Review Existing Policies: Institutions should conduct an internal audit of policies and all programs that may fall under scrutiny, including scholarships, hiring, campus support initiatives, housing, and ceremonial practices.
2. Seek Legal Counsel: Given this complexity, institutions should consult legal counsel to review policies that state the institution’s commitment to a diverse learning environment for compliance with the new guidance.
3. Engage Stakeholders: Faculty, students, and administrators should be informed about the implications of these policy changes and involved in discussions about future strategies.
4. Monitor Department Actions: As the Department continues to refine its guidance and enforcement priorities, institutions should stay informed about further developments and prepare to adjust accordingly.
 
The recent directives by President Trump and the resulting guidance from the Department mark a pivotal moment for institutions navigating the evolving legal and political landscape surrounding race-conscious campus activities. While challenges may lie ahead, proactive planning and strategic adaptation can help universities and K-12 institutions navigate these new directives.

**Any opinions expressed are those of the authors and not the firm or their colleagues.