Billions of dollars lost in funding for research grants. No more access to federal student aid. A massive endowment tax. That’s what’s at risk for both public and private universities across the country if the Trump administration finds them noncompliant with the president’s crackdown on policies of diversity, equity, and inclusion on elite college campuses. 

This week, President Trump signed executive orders dismantling DEI offices across all federal agencies and banning federal contractors from practicing “affirmative action,” which he calls “Illegal DEI Discrimination and Preferences” in violation of the Civil Rights Act of 1964. The president also targeted the private sector, taking a direct jab at the Ivy League in asserting that agencies should each identify up to nine potential civil compliance investigations of “institutions of higher education with endowments over 1 billion dollars.”

“The DEI party is over,” a former deputy assistant secretary for higher education programs at the Department of Education, Adam Kissel, tells the Sun. “Colleges that have been treating people of different identity groups differently soon will have to meet accountability for their discrimination, especially the richest, most elite universities, which have gotten a pass for far too long.”

Mr. Trump’s orders are dealing yet another blow to diversity preferences after the Supreme Court determined in July of 2023 that race-conscious college admissions programs are unconstitutional and violated the Equal Protection Clause of the 14th Amendment and Title VI of the Civil Rights Act. 

In the next few months, the Attorney General and the Secretary of Education will release guidance to state and local educational institutions on how to comply with the law. The civil rights offices within both the Department of Education and the Department of Justice will be on the lookout for those that appear to be failing. 

At stake are federal student aid programs, including Pell Grants, as well as federal grants such as from the National Science Foundation and the National Institute of Health, a number of higher education experts tell the Sun. At private universities, Mr. Trump’s orders won’t require them to disband their DEI offices, but operating one could prompt unwanted attention or a civil rights investigation upon requests for federal funds.

For schools like Harvard or Princeton, the price tag could be up to billions of dollars a year, Mr. Kissels says. He notes that a dramatic deprivation of federal funding is unlikely — “as soon as that happens, the entire congressional delegation will descend in person with pitchforks and torches on the Education Department and say, you are giving Harvard its money back.” Yet the government’s financial leverage within higher education is powerful, and Mr. Trump has made clear he is willing to use it. 

At Columbia, retaliation from Washington’s new leadership could cost the university $3.5 billion in federal funding, or 55 percent of the school’s annual operating budget. “They have made no secret of their enmity for elite institutions in general, and our alma mater in particular,” a group of faculty, staff, students, and alumni called Stand Columbia estimate. “This forces an uncomfortable reckoning that we can no longer wish away.”

Within higher education, universities seen to continue to participate “in unlawful discrimination under the guise of equity” could also face financial retaliation in the form of an endowment tax and a fine as large as an institution’s entire endowment, as Mr. Trump pledged during his 2024 presidential campaign.

“In the for-profit world, we tax income, and in the personal world, we tax individual income,” Mr. Kissel says. “Why wouldn’t we also tax nonprofit income, especially for institutions that many Americans believe have violated the trust that was given to them to be nonprofit educational institutions when they became activist institutions?”

In 2017, Mr. Trump’s Tax Cuts and Jobs Act required institutions with more than 500 students and endowments greater than $500,000 per student to pay a 1.4-percent tax on their net investment returns. In 2023, 56 colleges paid this tax, raising $380 million in revenue.

That sum could soar if Mr. Trump bumped up the endowment tax to 35 percent, as proposed in a bill Vice President Vance introduced to the Senate last year. The Chronicle of Higher Education estimates that this increase would constitute 23 percent of affected colleges’ annual budgets in a year with typical endowment returns — a “devastating” financial hit that “would deteriorate the educational opportunities they offer.” 

Yet free speech advocates caution that Mr. Trump’s promise of retaliation against the “radical left” on college campuses ought not diminish the quality of academic life.

“When the government tries to use its power to also censor what happens in college classrooms and prevent discussions about certain ideas or topics, that’s a bright line for us,” lead counsel at the Foundation for Individual Rights in Education, Tyler Coward, tells the Sun. “The Supreme Court for 60 plus years now has protected academic freedom as a freedom protected by the First Amendment.”

Mr. Coward notes, though, that censorship can take place across the political spectrum. “DEI policies and procedures, beyond the race-based considerations, often act as speech police,” he says, by “investigating and punishing speech that falls outside of the generally politically left center norms in higher ed.”

During his first term, Mr. Trump signed an executive order “to combat offensive and anti-American race and sex stereotyping and scapegoating,” which he called “divisive concepts.” That fueled lawmakers to take aim at the teaching of Critical Race Theory, or CRT, a decades-old framework that asserts that racism is a social construct and structural force. Attempts to ban CRT from college classrooms were broadly unsuccessful, and President Biden reversed Mr. Trump’s order during his first day in office.

Now with just four years to enact his education agenda, Mr. Trump is waging war against the next bogeyman, DEI, and so far he appears to be winning. Last week, the new governors of Indiana and West Virginia joined a growing list of states that have issued executive orders eliminating DEI in state agencies and public institutions, including public universities. The Indiana governor, Mike Braun, is replacing DEI with what he calls “MEI” — merit, excellence and innovation.

Yet perhaps it won’t be the political strong-arming of the new administration but rather a broader culture change that will have the greatest sway on the direction of higher education.

“The president is in line with what voters want,” an education researcher, Jonathan Butcher, tells the Sun. “The trends were already in this direction of prohibiting racial favoritism, whether it’s in admissions, DEI training for faculty, or loyalty oaths for students or faculty.” Views of DEI efforts within the American workforce have grown slightly more negative since February of 2023, according to Pew Research Center.

“I think people will look back on DEI and say, it’s not what we thought it was. It was not an effort to create equality under the law. It was an effort to unbalance the scales and provide racial preferences, which is what we were trying to get rid of in the first place,” Mr. Butcher says. “If you want to fix the problems of racial discrimination, then let’s get down to brass tacks.”

Take the example of New College of Florida. In 2023, Governor DeSantis and his allies spearheaded a top-down restructuring of the public, liberal arts honors college at Sarasota as part of his war on “woke” that critics denounced as a “hostile takeover.”

New College abolished its gender studies program and dispensed its diversity office, which the interim president, Richard Corcoran, said was done “to ensure that no group is singled out for punishment or preferential treatment.” Between the fall of 2022 and the fall of 2023, the school saw a surge in enrollment of women and minorities.

“We have taken our focus off a fairly ideological elitist niche, and we’ve refocused it on issues of broad interest to the American public, including minority communities,” the admissions director at New College of Florida, Bruce Abramson, tells the Sun. “Our enrollment has shown that.”