Are Race-Based Scholarships Disappearing, or Will They Survive a Hostile Political Climate?
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The Iowa Supreme Court ruled this month that the University of Iowa cannot redirect a private scholarship meant for Black students to first-generation students—yet it may also be unable to use the funds for their original intent, highlighting the uncertain legal landscape surrounding race-based scholarships nationwide.
The University of Iowa contended that awarding the funds to Black chemistry majors, as the donor specified, became a legal risk following the U.S. Supreme Court’s ban on considering race in college admissions in *Students for Fair Admissions v. Harvard*. The Trump administration has since interpreted that ruling to prohibit any race-based program or policy.
Against this backdrop, Iowa is not alone in reconsidering scholarships with racial criteria. Colleges, businesses, and nonprofits across the country have been rushing to eliminate or replace such programs, fearing lawsuits or federal scrutiny.
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The Iowa Supreme Court agreed with the University of Iowa that the scholarship is now “impracticable” as currently structured, adopting a broader reading of the SFFA decision, and that the university “would be subject to litigation risk with the federal government.” However, the judge ultimately determined that Black students and first-generation students are not interchangeable, making the change contrary to the donor’s wishes. She sent the case back to district court, recommending that an advocate for the donor’s intent be included in the proceedings.
The ruling is a mixed outcome for supporters of race-based scholarships, as programs designed to help minority students pay for college face challenges nationwide amid expanding state and federal DEI bans. Some advocates fear these scholarships will disappear, while others believe they have a future—or can evolve to serve students with similar needs.
Although the SFFA decision did not directly address scholarships, the Trump administration has issued guidance and memos declaring race-based scholarships and programs “unlawful practices.” At the same time, advocacy groups like the American Alliance for Equal Rights—led by Edward Blum, who also founded Students for Fair Admissions—have targeted these programs in recent years.
For instance, AAER sued the Hispanic Scholarship Fund and the Congressional Black Caucus Foundation over their scholarships designated for minority students. The group Do No Harm has taken similar action against health-care student scholarships for underrepresented groups, filing numerous lawsuits and federal civil rights complaints against such programs. An appeals court in Wisconsin ruled against the state’s Minority Undergraduate Retention Grant Program last year after parents sued the Higher Educational Aids Board, claiming their son was ineligible due to his race. The case is now being considered by the Wisconsin Supreme Court.
Trump’s second term has “certainly amplified and sped a lot of this up,” said Jeffrey Tenenbaum, managing partner at Tenenbaum Law Group PLLC, “but this was going on well before that.”
In some cases, universities are yielding to the threats. The University of Missouri system, for example, removed racial criteria from endowed scholarships shortly after the SFFA decision at the request of the state’s attorney general. The University of Alabama ended its National Recognition Scholarship for minority students in 2024 and replaced it with the race-neutral UA Competitive Achievement Scholarship to provide “a more sustainable scholarship program for talented first-year students,” according to a university statement at the time.
“This decision was informed by a recent review of all scholarships to ensure The University of Alabama can continue offering robust financial support to as many students as possible,” the statement read.
A ‘Clear Shift’
These scholarships are not vanishing, but they are evolving, experts say.
Jackie Bright, president and CEO of the National Scholarship Providers Association, said their data shows a “clear shift” away from race-based eligibility criteria for scholarships. Scholarships with diversity-related criteria made up 12 percent of NSPA’s database of more than 33,000 scholarships in 2023; that share has since dropped to about 8 percent.
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However, the overall number of scholarships continues to grow, suggesting these awards are not “disappearing altogether” but are more often undergoing changes to their eligibility criteria, Bright told Inside Higher Ed in an email. For example, some have shifted their programs to focus on low-income and first-generation students or students from specific geographic areas rather than particular racial or ethnic groups.
Bright said scholarship providers are being pulled in multiple directions. Some are reassessing their programs, worried about legal and federal scrutiny, while others are relying on guidance from legal experts “that privately funded scholarships are distinct from federally funded programs and that donor intent remains an important consideration.”
“Much of the focus right now is on compliance: how to structure eligibility criteria appropriately, how to align program intent with evolving guidance, and how to communicate any changes clearly to applicants and stakeholders,” Bright wrote. “Overall, this appears to be more of a period of adjustment than a reduction in opportunity, as providers work to balance their mission with a rapidly evolving legal and policy landscape.”
It’s part of a piece-by-piece dismantling of our recognition that race matters on campus.” —Julie J. Park, a professor in the University of Maryland’s College of Education
It’s part of a piece-by-piece dismantling of our recognition that race matters on campus.”
Tiffany Gusbeth, vice president of student success services at the American Indian College Fund, a scholarship provider for Native American students, said her organization has not changed its criteria, given that tribal affiliation is a political classification, not a racial identity, and the fund provides scholarships to both tribal descendants and non-Native students at tribal colleges. However, some of the organization’s donors have paused support or sought to “reframe” their giving as focused on “student access” or “workforce pathways” rather than Native students specifically. The fund has not altered its messaging.
“What I’m seeing more is that they’re adjusting how they’re communicating internally, about the ways they’re engaging in philanthropic efforts and partnering with the College Fund or organizations like ours,” Gusbeth said. “At the end of the day, it’s OK if it brings them to the table to support Native students.”
She said scholarship providers are “navigating really dynamic and sometimes challenging conversations, but they’re focused on strengthening systems and supports for students for the good of the communities where these students are from.”
For some, concerns remain that the shift away from race-based language and criteria will come at a cost to students historically underrepresented in higher ed.
Julie J. Park, a professor in the University of Maryland’s College of Education, said the positive side is that these scholarships “will still be supporting students who have some sort of need” in cases where universities seek to replace race-based criteria with socioeconomic criteria.
But “the con is the erasure of the reason why these scholarships … existed in the first place,” she said. “It’s part of a piece-by-piece dismantling of our recognition that race matters on campus,” that race has been and still can be the basis for “exclusion,” and “that you really need to be specific around race in certain contexts in order to expand opportunity in higher education.”
Sometimes race-conscious scholarships are also “a way of keeping the donor’s story alive,” she added.
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The University of Iowa’s Ezra L. Totton Scholarship, for example, is named for a Black alum who earned his master’s degree in chemistry at Iowa after the University of Tennessee denied him admission based on his race in 1939. He and other Black students sued the University of Tennessee, but the suit was dismissed.
The scholarship was Totton’s attempt to “give back” to the university that trained him, Park said. “There’s so much just rich, important history that is easy to forget or easy to overlook.”
A Thorny Legal Issue
As universities and scholarship providers navigate this difficult terrain, legal experts say they have been in high demand for advice—and their guidance on race-based scholarships varies.
Tenenbaum’s law firm has conducted at least three dozen “DEI audits” for nonprofits, often involving scholarships with race-based criteria.
And “we’ve advised them those are likely illegal,” he said. “If you don’t want to risk being sued or being subject of a federal investigation … you need to either abandon your program or change your eligibility criteria to something else, something that’s not race and that’s not a proxy for race.”
But there are “unanswered questions” about what constitutes a proxy for race, he added. For example, if students discuss race in response to broader scholarship application essay questions, that is arguably safe for a scholarship provider to consider, according to Chief Justice John Roberts, who wrote the majority opinion in SFFA.
Tenenbaum said his firm has developed a “laundry list” of alternatives to race-based criteria for clients “that should pass muster under the law,” including income-based criteria.
Audrey Anderson, former general counsel for Dartmouth and Vanderbilt Universities and a higher education attorney at Bass, Berry and Sims, believes there are legal ways colleges can continue to award scholarships that consider race, notably the “pool-and-match” approach.
Many colleges and universities choose which students will receive scholarships based on race-neutral criteria, such as financial need or high school GPA, then match students to available scholarships relevant to them. For example, a Latino student from Texas might receive a scholarship specifically designated for Latino Texans, but the university did not select the student to receive funding based on those criteria.
Anderson said the government has not yet targeted pooling and matching. Still, she finds some higher ed institutions are avoiding the practice or asking donors not to create scholarships with race-based criteria in the first place.
These days, “most universities are going to talk to the person who wants to give the gift and say, ‘Can we meet your goal by structuring this in a way that does not have a racial component to it?’” she said.
But even those conversations come with some risk, she noted. If an institution is sued or faces a federal investigation, the opposition might argue “any other criteria you come up with is just a pretext for the race-based criteria that the donor really wanted,” so she urged institutions to approach those discussions carefully and document them.
Anderson stressed that higher ed institutions ultimately need to make decisions based on their goals and risk tolerance.
“They have to think about their mission,” she said. “What is important to them? What is it that they are trying to accomplish? How tolerant of a state are they in? How likely is it that … they’re going to get a whole lot of negative feedback from legislators who might make their lives really difficult? How willing are they to put up with that distraction, or worse yet, legal activity?”
Institutions’ answers to those questions will vary, she said, but despite opposition, she believes some race-based scholarships will survive the current anti-DEI moment.
“They’re going to continue to exist in some places and not in others,” she said. “I don’t think that the government is going to be able to get rid of all of them.”
This story was corrected to update that Jackie Bright is president of the National Scholarship Providers Association.