Defunding Diversity: The Legal and Financial Consequences of a DEI Ban
Students at the University of North Carolina at Chapel Hill, among other North Carolina public universities, can no longer be required to take general education, or major-specific classes related to diversity, equity, and inclusion in order to graduate. This decision follows the Department of Education’s memo ordering public educational institutions to stop incorporating DEI programs and initiatives within two weeks, or risk losing funding. Source: USTMA
On Feb. 14, the United States Department of Education sent a “Dear Colleague” letter to educational institutions ranging from preschools to universities, directing them to stop using “racial preferences and stereotypes” in admissions, hiring, scholarships, and other areas within two weeks or risk losing federal funding. This directive extended President Donald Trump’s executive order, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” to dismantle Diversity, Equity, and Inclusion (DEI) initiatives and programs in his fight against “wokeness.”
Even before the executive order, however, more than 240 colleges across 36 states had started to eliminate aspects of DEI-related programming, including race-based affinity groups or diversity offices to varying degrees, as a result of changes in state law. In 2023, Texas passed Senate Bill 17, prohibiting public universities from establishing DEI offices or initiatives. Almost immediately, university systems like that of Texas A&M University moved to eliminate mandatory training related to race, color, ethnicity, gender identity, or sexual orientation. Similarly, in September 2024, The University of North Carolina at Chapel Hill dissolved its Diversity and Inclusion office in response to the UNC System Board of Governors removing its once-required diversity and inclusion policy.
Following the Education Department’s ultimatum, UNC Chapel Hill quickly suspended all DEI-related general education and major-specific course requirements. Other universities like the University of Akron in Ohio followed suit, terminating its “Rethinking Race” forum, which it had hosted for nearly two decades. On the other hand, while there has been no official communication at the University of California, Berkeley yet, the university’s professors have openly condemned Trump’s executive order. Many of them, along with professors from universities across the country, signed a memorandum spearheaded by Professor Jonathan Feingold at Boston University School of Law. The memorandum states: “We urge university leaders to respond confidently, with both law and moral principle on your side, and not to sacrifice essential and legally defensible DEI initiatives that help universities fulfill their most basic mission to pursue truth and knowledge for the common good.”
In terms of K-12 schools, few are rushing to change their DEI practices so far. While it is unclear how this mandate will affect these schools, which are generally more financially insulated than public universities, the Trump administration has reportedly launched investigations into at least two school districts for their DEI practices: Denver Public Schools in Colorado, and Ithaca City School District in New York. According to the Department of Education, Denver is under investigation for converting one high school girls’ bathroom into a nonbinary bathroom. Ithaca, on the other hand, is being investigated for hosting a series of conferences tailored to students of color, some of which were allegedly not open to white students, according to the advocacy group Equal Protection Project, which filed a federal civil rights complaint against the school district.
But as universities across the country scramble to modify their DEI websites and scrap any related programs, much about the legality and reach of Trump’s executive order remains unclear. Considering how indispensable federal funding is to universities, with hundreds of millions of dollars supporting everything from student financial aid to research grants and other institutional operations, it isn’t unsurprising for schools to react quickly for fear of losing vital federal funding. This potential withdrawal of federal funds could not only stifle groundbreaking research at universities like UNC Chapel Hill, but also impact the thousands of students reliant on federal aid to support their higher education, and faculty drawn to educational institutions that offer financial support for their work.
The Education Department’s directive, therefore, presents a complex dilemma: do universities comply and dismantle DEI programs, or resist at the expense of severe financial and reputational repercussions? Given that previous DEI-related executive orders have faced legal challenges, universities must take a calculated approach, balancing legal arguments with pragmatic decision-making.
In September 2020, the first Trump administration issued Executive Order 13950, which sought to ban federal contractors from conducting diversity training including discussions on systemic racism and implicit bias. The order was widely viewed as a restriction on free speech in the corresponding educational and corporate settings, and was subsequently blocked by a federal judge, who ruled it to be a violation of First Amendment protections. Despite the Biden administration later rescinding the order entirely, similar legal battles have continued — particularly in Republican-led states where, over the past few years, restrictions on DEI have been passed at the state level. This ongoing legal debate is therefore centered around whether federal mandates to eliminate DEI programs infringe on educational institutions’ rights to academic freedom.
With the broader implications of this in mind, several university representatives have taken legal action to challenge the directive, arguing that it violates their constitutional protections and institutional freedom to promote diversity and inclusion. For instance, the American Association of University Professors, along with other higher education organizations, filed a lawsuit contending that the executive orders exceed legal authority and infringe upon the First and Fifth Amendment rights. The lawsuit essentially seeks some form of judicial declaration of the orders being unconstitutional and aims to prevent any further enforcement from the federal government. In addition, universities are coordinating further action with peer institutions to organize joint legal actions, attempting to present a united front against the federal government’s mandate.
The Education Department’s directive also violates Title VI of the Civil Rights Act, which prohibits discrimination based on race, color, or national origin in federally funded programs, according to legal experts in opposition of the ban. Dismantling DEI programs could potentially cause these universities to be liable under Title VI, as institutions previously reliant on DEI initiatives to ensure compliance with civil rights protections may now be vulnerable to lawsuits if students or faculty argue that the removal of these programs has resulted in a hostile educational environment or inequitable access to resources.
Conflicting state and federal directives complicate institutional responses even further, as universities must navigate competing pressures from largely conservative policymakers aiming to restrict DEI efforts, and both on and off-campus civil rights organizations advocating for their preservation. All of these legal uncertainties increase the risk of prolonged litigation, financial burdens, and reputational damage for universities caught in the crossfire of such legal disputes.
Moreover, on Feb. 21, a federal judge in Maryland temporarily blocked Trump from implementing bans on DEI programs that contract with the federal government, stating that they are likely a violation of the First Amendment, and signaling another potential shift in this legal battle. The judge’s decision reflects broader concerns over whether such federal mandates violate constitutional protections and existing civil rights laws. While this ruling temporarily halts the full-fledged implementation of Trump’s executive orders, it is unlikely to be the final word on the matter. The Trump administration stated the president was only targeting DEI programs that violate civil rights laws, and has already signaled its intent to appeal the judge’s decision.
A federal judge temporarily blocked Trump’s push to block federal funding for educational institutions promoting DEI-related programs in a ruling on February 21st. Source: The Harvard Crimson
For institutions that have already started dismantling DEI programs in anticipation of the federal directive, like UNC Chapel Hill, this legal development would present an added dilemma. Universities that acted swiftly to comply may now find themselves misaligned with evolving legal standards and face growing pressure from students, faculty, and advocacy groups to reinstate DEI initiatives.
The broader implications of this legal battle, although currently uncertain, will shape the trajectory of DEI policies in higher education. Should the Trump administration succeed in enforcing the ban, universities will be in a situation similar to the one they are in now, having to choose between risking federal funding by maintaining DEI programs, or restructuring these initiatives under different names and frameworks. However, if the courts rule against the administration, it will reinforce the legal precedent that federal overreach into educational institutions’ policies pertaining to diversity and inclusion is unconstitutional. This ongoing legal uncertainty essentially means that universities must remain agile, and continuously assess their policies in response to federal and judicial actions.
The Education Department’s ultimatum has forced universities across the country into a rather precarious position where they must balance legal, financial, and ideological considerations, representing a larger cultural and political battle over race-conscious policies in education. The outcome of this will not only affect individual institutional commitments to diversity, but has the capacity to leave lasting impacts on higher education, and the broader landscape of academic freedom in the U.S.