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Financial Aid

The Lingering Question of Race

How have race-conscious aid policies changed since the court's U of Michigan ruling?
University Business, Jun 2005

In split decisions on two landmark cases, the U.S. Supreme Court in June 2003 ruled that the University of Michigan could continue to consider race--among many other factors--when determining undergraduate and graduate admissions. While the rulings pertained specifically to admissions policies, institutions are assuming that the same or similar strictures would apply to the awarding of student financial assistance, though there has been no specific guidance from the courts.

The two cases marked the first time affirmative action in admissions had been examined by the nation's highest court since the 1978 Bakke vs. University of California case, which ruled that admissions officers could take race into account, but could not use racial "quotas" to fill a set number of minority slots.

The good news for affirmative action supporters was tempered by the court's decision in Gratz and Hamacher vs. Bollinger that UM's undergraduate policy of awarding extra "points" toward admissions for members of underrepresented minority groups was unconstitutional.

Prior to the ruling, UM awarded an extra 20 points--one-fifth of the points needed to be offered admission--to every underrepresented minority applicant. In the majority opinion for the case, Chief Justice William Rehnquist said the policy was "not narrowly tailored to achieve the interest in educational diversity."

In the majority opinion for the law school case, Grutter vs. Bollinger, Justice Sandra Day O'Connor noted that "the law school's interest is not simply 'to assure within its student body some specified percentage of a particular group merely because of its race or ethnic origin,'" as specified in the Bakke majority opinion. "That would amount to outright racial balancing, which is patently unconstitutional," she said.

Financial aid administrators
must decide whether to continue
to award race-conscious aid.

O'Connor also suggested that the court's ruling should have a 25-year time limit, and that a future court could reexamine this issue if it is determined that race-based admissions have achieved their purpose of providing a "critical mass" of racial/ethnic minorities at the nation's elite higher education institutions.

UM faced major opposition to its admissions policies. In 2003, the Bush administration and numerous conservative civil rights groups filed briefs stating their opposition to policies that take an applicant's race into account.

But a large group of universities, former and current military personnel, corporate leaders, and higher education groups, including the National Association of Student Financial Aid Administrators (NASFAA), showed solidarity with UM and filed briefs highlighting the benefits of considering race as one means to achieving diversity.

NASFAA President Dallas Martin called the rulings "a welcome affirmation of the principles of diversity." He adds that "the court's action provides a clear signal to educational institutions across America that they can enroll a diverse student population, thereby helping to ensure a more fully integrated society, sooner rather than later."

Elizabeth Meers, a partner in the Washington, D.C.-based law firm of Hogan & Hartson, and director of the firm's education practice group, says, "The main issue for financial aid administrators is whether to continue to award race-conscious financial aid--to the extent that institutions have existing programs--and how to handle future donors who'd like to make a race-restricted gift."

While the Michigan decisions confirmed that higher education institutions have a compelling interest in the diversity of their student bodies, the court ruled that only a program "narrowly tailored" to serve the purpose of diversity is allowable, according to Meers.

Meers says that schools may question why they have this program. "Is that objective legally permissible, and have we adequately explained it and documented the basis for it? And how is the program structured--is it narrowly tailored to achieve the institution's objectives?"

In assessing legality of existing or new programs, institutions may consider four basic questions set forth by the court, Meers says. Those are:

Has each applicant been given individualized consideration?

Has the institution considered race-neutral alternatives?

What is the effect on non-minorities?

How long is the program expected to last and how often does the institution review it to determine if it is still needed?

Interpretations on exactly how the UM decisions might apply to financial aid will likely vary from school to school and state to state.

No precedent exists that directly addresses financial aid, and private institutions that do not receive federal financial assistance may or may not be subject to the court's prohibition on admissions policies that show preference to minority students based on quotas or "point" scales.

In a recent case, Doe v. Kamehameha Schools, the federal district court for Hawaii ruled that an independent school that receives no federal financial assistance was not barred by Section 1981 of U.S. Code from giving preference to Native Hawaiians in admission. The case is currently on appeal to the U.S. Court of Appeals for the Ninth Circuit.

According to Meers, the same legal standard would usually apply whether the institution is public or private. "The legal reason is that the UM case was based on the Constitution, but the court has ruled that under Title VI of the Civil Rights Act of 1964, the same standards apply to all institutions that receive federal financial assistance, including federal student financial aid, so that includes private institutions as well as public," she says.

The same standards would also apply to any program the institution administers, whether the funds are institutional or the institution has received a gift from a third-party donor, Meers adds.

The Department of Education issued policy guidance on minority-targeted financial aid in 1994. The DOE hasn't revised the guidance since the UM cases, and it remains a resource concerning the Department's interpretation of Title VI in this area.

But so far, "absent any additional guidance from the courts, states have taken very different stances on this issue," notes Kenneth Redd, NASFAA's director for research and policy analysis in an article for Student Aid Transcript magazine.

For example, "Virginia's state attorney general has urged its public colleges not to use race as a criterion for admissions or aid, while Texas officials announced that they would begin to use race as a factor in admissions and (probably) financial assistance," Redd wrote.

"Still other state officials believe that public and private colleges may continue to use race as a criterion in aid decisions, as long as the funds provided are raised by private donors and distributed by the institutions' private scholarship foundations rather than directly by financial aid offices," according to Redd.

Experts agree that seeking legal advice is vital. "I'd encourage aid administrators to consult with their legal counsel to determine the legality of race-conscious aid programs," Meers says.

Elizabeth Guerard is assistant director for communications, National Association of Student Financial Aid Administrators (

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