Treasury Proposals Take Aim at Hundreds of Colleges’ Tax Status

The US Treasury Department is considering changing rules to revoke tax-exempt status for colleges that consider race in student admissions, scholarships and other areas — potentially threatening the financial stability of hundreds of institutions.

The proposals would bar private, nonprofit schools from remaining tax exempt if they favor any racial groups in matters such as financial assistance, loans, use of facilities or other programs, according to people with knowledge of the deliberations, who include a staffer in the Treasury’s Office of Tax Policy.

That office has been reviewing the draft language, said the people, who asked not to be named ...