In a dramatic reversal of long-standing federal support for minority students, the Department of Justice has declared that key programs serving historically Black and Hispanic-serving institutions are unconstitutional. The ruling targets race-conscious scholarship access and federal aid data sharing, effectively dismantling decades of policy designed to close educational gaps. For many MSIs and their students, the shift represents a Trump-era rollback of racial equity in higher education, leaving institutions scrambling to protect access and funding in a suddenly hostile legal landscape.
The U.S. Department of Justice’s Office of Legal Counsel has delivered what may be one of the most consequential legal opinions affecting federal education policy in decades: a sweeping conclusion that a suite of federal programs tied to minority‑serving institutions (MSIs) and race‑specific scholarships are unconstitutional under current equal‑protection jurisprudence.
At the center of this interpretation is a fundamental shift in how federal racial criteria are viewed post-Students for Fair Admissions v. Harvard/UNC. In that landmark affirmative‑action decision, the Supreme Court significantly tightened the permissible bounds of race‑conscious decision making. The DOJ memo applies that framework beyond admissions, asserting that programs awarding federal funds based on racial or ethnic enrollment thresholds — including MSI grant programs — “effectively employ a racial quota.”
One particularly striking aspect of the opinion is its treatment of access to Free Application for Federal Student Aid (FAFSA) data by the United Negro College Fund and the Hispanic Scholarship Fund — organizations that award scholarships targeted to students of specific racial or ethnic backgrounds. The opinion deems it unconstitutional for these groups to receive FAFSA applicant data because the statute enabling such sharing confers access only to entities that grant race‑specific awards.
Supporters of aiding historically marginalized students and institutions view this as an unprecedented restriction that could severely constrain outreach and support for those populations. Critics charge the move fits a broader administrative pattern of dismantling federal race‑conscious programs and argue that it disregards the statutory authority Congress explicitly provided — including the discretionary authority vested in the Education Secretary to administer FAFSA data sharing.
As one expert aide pointed out in private correspondence, the statutory provision that enabled FAFSA access was framed with Secretary discretion in mind — meaning it was lawful as written. But with DOJ now labeling such practices as impermissibly discriminatory, liability has been reallocated onto the administrative apparatus itself. That shift, in effect, insulates senior officials — including the Secretary — from culpability once the practice ends, leaving career bureaucrats to unwind systems built over years.
The Policy and Legal Stakes
For nearly four decades, the federal government has maintained a suite of targeted programs intended to close longstanding educational opportunity gaps. These include grants for MSIs, race‑specific scholarships, and data‑sharing mechanisms like FAFSA access that enable outreach to underrepresented students seeking financial aid.
Beginning in July 2025, the Department of Education began scaling back discretionary grants to MSIs after the U.S. Solicitor General declined to defend race‑based criteria in court, particularly the Hispanic‑Serving Institutions definition requiring at least 25% Hispanic enrollment. By September, the Department officially announced the planned termination of most MSI discretionary grant funds for FY2025 — a decision informed by the constitutional concerns later articulated in the DOJ opinion.
Until now, many observers assumed that statutory authority and congressional backing provided a stable legal foundation for such programs. But the OLC’s memo challenges that assumption, concluding that race‑based eligibility criteria — whether for institutional support or student scholarships — are no longer defensible under current constitutional interpretation.
The implications extend far beyond MSI grants. If organizations that provide targeted scholarships based on race or ethnicity can no longer receive key federal administrative data, the practical capacity of those groups to serve students could be significantly hampered.
Political and Institutional Reactions
The DOJ opinion has drawn sharply polarized responses. Administration officials frame the memo as an affirmation of equal protection and a necessary correction to federal programs that, in their view, relied on impermissible racial criteria. Congressional allies of the Administration characterize the changes as ending “racial discrimination” in federal education policy.
Conversely, Democratic legislators and MSI leaders condemn the opinion as ideologically driven and harmful to institutions that serve historically underserved populations. Critics say the analysis ignores longstanding bipartisan congressional support for such programs and portends deep cuts in educational opportunity.
Institutional leaders at a range of MSIs have expressed alarm, underlining that funding and support mechanisms now in jeopardy are “vital” to student success and campus mission. Many campuses are scrambling to assess fiscal exposure and consider contingency planning.
Looking Ahead
With federal policy in flux and several legal questions unresolved, higher education professionals face an uncertain environment. Institutions historically supported by race‑conscious federal programs may need to rethink recruitment, financial aid outreach, and partnerships with scholarship providers. Meanwhile, advocates and lawmakers may pursue legislative fixes or constitutional litigation to reshuffle the legal landscape once more.
Whatever the outcome, the DOJ opinion marks a pivotal moment in federal student aid policy — one likely to reshape how race, equity, and opportunity are legally navigated in the years to come.
HEI Reader Context: What This Means for MSIs
Historically Black Colleges and Universities (HBCUs): Loss of FAFSA data access and potential cuts to discretionary MSI grants could disrupt scholarship outreach, enrollment initiatives, and pipeline programs designed to recruit and retain underrepresented students. HBCUs may need to develop alternative channels for financial aid outreach, including direct partnerships with donors and private scholarship organizations.
Hispanic-Serving Institutions (HSIs): Many HSIs rely on federal discretionary grants to supplement state funding and support programs for first-generation and low-income students. The DOJ opinion may force HSIs to reallocate institutional resources to cover programs previously funded through race-conscious federal grants.
Scholarship Organizations: Groups like the United Negro College Fund (UNCF) and the Hispanic Scholarship Fund (HSF) may no longer receive FAFSA data, limiting their ability to identify eligible students efficiently. Expect increased reliance on outreach campaigns, social media, and partnerships with local school districts.
Institutional Planning: MSIs should assess short-term financial exposure, prioritize scholarship communications, and explore private funding alternatives. Legal and policy monitoring will be critical as legislative or judicial responses evolve.
Sources
Inside Higher Ed. “DOJ Report Declares MSIs Unconstitutional.” December 22, 2025. Link
Higher Ed Dive. “DOJ Says MSI Grant Funding Unconstitutional.” December 22, 2025. Link
ED.gov. “US Department of Education Ends Funding for Racially Discriminatory Discretionary Grant Programs, Minority-Serving Institutions.” July 2025. Link
EducationCounsel. “E-Update: September 22, 2025.” Link
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