The proposal comes after the Supreme Court’s 2023 Students for Fair Admissions decisions, which barred most race‑conscious admissions policies at colleges and universities.

According to the Treasury’s own estimate, the rule could affect up to 18,000 schools at all education levels and about 750,000 students who might qualify for race‑based scholarships.

Religious schools would be exempt from the rule and could continue to admit students based on religious affiliation.

Schools would still be allowed to help disadvantaged students by using race‑neutral criteria such as family income, geographic location, or first‑generation college status.

The proposal is now open for public comment and is expected to face legal challenges before any final rule is adopted.