Nondiscrimination in Federally Assisted Programs; Title VI of the Civil Rights Act of 1964; Notice

DEPARTMENT OF EDUCATION

Nondiscrimination in Federally Assisted Programs; Title VI of the

Civil Rights Act of 1964

AGENCY: Department of Education.

ACTION: Notice of final policy guidance.

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SUMMARY: The Secretary of Education issues final policy guidance on

Title VI of the Civil Rights Act of 1964 and its implementing

regulations. The final policy guidance discusses the applicability of

the statute's and regulations' nondiscrimination requirement to student

financial aid that is awarded, at least in part, on the basis of race

or national origin.

EFFECTIVE DATE: This policy guidance takes effect on May 24, 1994,

subject to the transition period described in this notice.

FOR FURTHER INFORMATION CONTACT: Jeanette Lim, U.S. Department of

Education, 400 Maryland Avenue, SW., room 5036-I Switzer Building,

Washington, DC 20202-1174. Telephone (202) 205-8635. Individuals who

use a telecommunications device for the deaf (TDD) may call the TDD

number at 1-800-358-8247.

SUPPLEMENTARY INFORMATION: On December 10, 1991, the Department

published a notice of proposed policy guidance and request for public

comment in the Federal Register (56 FR 64548). The purpose of the

proposed guidance and of this final guidance is to help clarify how

colleges can use financial aid to promote campus diversity and access

of minority students to postsecondary education without violating

Federal anti-discrimination laws. The Secretary of Education encourages

continued use of financial aid as a means to provide equal educational

opportunity and to provide a diverse educational environment for all

students. The Secretary also encourages the use by postsecondary

institutions of other efforts to recruit and retain minority students,

which are not affected by this policy guidance.

This guidance is designed to promote these purposes in light of

Title VI of the Civil Rights Act of 1964 (Title VI), which states that

no person in the United States shall, on the ground of race, color, or

national origin, be excluded from participation in, be denied the

benefits of, or be subjected to discrimination under any program or

activity receiving Federal financial assistance.

The Department has completed its review of this issue, taking into

account the results of a recent study by the General Accounting Office

(GAO) and public comments submitted in response to the proposed policy

guidance. The Secretary has determined that the proposed policy

guidance interpreted the requirements of Title VI too narrowly in light

of existing regulations and case law. While Title VI requires that

strong justifications exist before race or national origin is used as a

basis for awarding financial aid, many of the rationales for existing

race-based financial aid programs described by commenters appear to

meet this standard.

The recent report by GAO on current financial aid programs does not

indicate the existence of serious problems of noncompliance with the

law in postsecondary institutions. That report found that race-targeted

scholarships constitute a very small percentage of the scholarships

awarded to students at postsecondary institutions. The Secretary

anticipates that most existing programs will be able to satisfy the

principles set out in this final guidance.

The Department will use the principles described in this final

policy guidance in making determinations concerning discrimination

based on race or national origin in the award of financial aid. These

principles describe the circumstances in which the Department, based on

its interpretation of Title VI and relevant case law, believes

consideration of race or national origin in the award of financial aid

to be permissible. A financial aid program that falls within one or

more of these principles will be, in the Department's view, in

compliance with Title VI.1 This guidance is intended to assist

colleges in fashioning legally defensible affirmative action programs

to promote the access of minority students to postsecondary education.

The Department will offer technical assistance to colleges in

reexamining their financial aid programs based on this guidance.

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\1\In identifying these principles, the Department is not

foreclosing the possibility that there may be other bases on which a

college may support its consideration of race or national origin in

awarding financial aid. The Department will consider any

justifications that are presented during the course of a Title VI

investigation on a case-by-case basis.

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This notice consists of five simply stated principles and a section

containing a legal analysis for each principle. The legal analysis

addresses the major comments received in response to the notice of

proposed policy guidance.

Summary of Changes in the Final Policy Guidance

Almost 600 written responses were received by the Department in

response to the proposed policy guidance, many with detailed

suggestions and analysis. Many additional suggestions and concerns were

raised in meetings between Department officials and representatives of

postsecondary institutions and civil rights groups. The vast majority

of comments expressed support for the objective of clarifying the

options colleges have to use financial aid to promote student diversity

and access of minorities to postsecondary education without violating

Title VI. Many comments, however, took issue with specific principles

in the proposed policy guidance and questioned whether those principles

would be effective in accomplishing this purpose.

As more fully explained in the legal analysis section of this

document, after reviewing the public comments and reexamining the legal

precedents in light of those comments, the Department has revised the

policy guidance in the following respects:

(1) Principle 3--``Financial Aid to Remedy Past Discrimination''--

has been amended to permit a college to award financial aid based on

race or national origin as part of affirmative action to remedy the

effects of its past discrimination without waiting for a finding to be

made by the Office for Civil Rights (OCR), a court, or a legislative

body, if the college has a strong basis in evidence of discrimination

justifying the use of race-targeted scholarships.

(2) Principle 4--``Financial Aid to Create Diversity''--has been

amended to permit the award of financial aid on the basis of race or

national origin if the aid is a necessary and narrowly tailored means

to accomplish a college's goal to have a diverse student body that will

enrich its academic environment.

(3) Principle 5--``Private Gifts Restricted by Race or National

Origin''--has been amended to clarify that a college can administer

financial aid from private donors that is restricted on the basis of

race or national origin only if that aid is consistent with the other

principles in this policy guidance.

(4) A provision has been added to permit historically black

colleges and universities (HBCUs) to participate in race-targeted

programs for black students established by third parties if the

programs are not limited to students at HBCUs.

(5) Provisions in the proposed policy guidance for a transition

period have been revised to provide that, as far as the Department's

enforcement efforts are concerned--

(a) Colleges and other recipients of federal financial assistance

will have a reasonable period of time--up to two years--to review their

financial aid programs and to make any adjustments necessary to come

into compliance with the principles in this final policy guidance;

(b) No student who has received or applied for financial aid at the

time this guidance becomes effective will lose aid as a result of this

guidance. Thus, if an award of financial aid is inconsistent with the

principles in this guidance, a college or other recipient of Federal

financial assistance may continue to provide the aid to a student

during the course of his or her enrollment in the academic program for

which the aid was awarded, if the student had either applied for or

received the aid prior to the effective date of this policy guidance.

Principles

Definitions

For purposes of these principles--

College means any postsecondary institution that receives federal

financial assistance from the Department of Education.

Financial aid includes scholarships, grants, loans, work-study, and

fellowships that are made available to assist a student to pay for his

or her education at a college.

Race-neutral means not based, in whole or in part, on race or

national origin.

Race-targeted, race-based, and awarded on the basis of race or

national origin mean limited to individuals of a particular race or

races or national origin or origins.

Principle 1: Financial Aid for Disadvantaged Students

A college may make awards of financial aid to disadvantaged

students, without regard to race or national origin, even if that means

that these awards go disproportionately to minority students.

Financial aid may be earmarked for students from low-income

families. Financial aid also may be earmarked for students from school

districts with high dropout rates, or students from single-parent

families, or students from families in which few or no members have

attended college. None of these or other race-neutral ways of

identifying and providing aid to disadvantaged students present Title

VI problems. A college may use funds from any source to provide

financial aid to disadvantaged students.

Principle 2: Financial Aid Authorized by Congress

A college may award financial aid on the basis of race or national

origin if the aid is awarded under a Federal statute that authorizes

the use of race or national origin.

Principle 3: Financial Aid To Remedy Past Discrimination

A college may award financial aid on the basis of race or national

origin if the aid is necessary to overcome the effects of past

discrimination. A finding of discrimination may be made by a court or

by an administrative agency--such as the Department's Office for Civil

Rights. Such a finding may also be made by a State or local legislative

body, as long as the legislature has a strong basis in evidence

identifying discrimination within its jurisdiction for which that

remedial action is necessary.

In addition, a college may award financial aid on the basis of race

or national origin to remedy its past discrimination without a formal

finding of discrimination by a court or by an administrative or

legislative body. The college must be prepared to demonstrate to a

court or administrative agency that there is a strong basis in evidence

for concluding that the college's action was necessary to remedy the

effects of its past discrimination. If the award of financial aid based

on race or national origin is justified as a remedy for past

discrimination, the college may use funds from any source, including

unrestricted institutional funds and privately donated funds restricted

by the donor for aid based on race or national origin.

A State may award financial aid on the basis of race or national

origin, under the preceding standards, if the aid is necessary to

overcome its own past discrimination or discrimination at colleges in

the State.

Principle 4: Financial Aid To Create Diversity

America is unique because it has forged one Nation from many people

of a remarkable number of different backgrounds. Many colleges seek to

create on campus an intellectual environment that reflects that

diversity. A college should have substantial discretion to weigh many

factors--including race and national origin--in its efforts to attract

and retain a student population of many different experiences,

opinions, backgrounds, and cultures--provided that the use of race or

national origin is consistent with the constitutional standards

reflected in Title VI, i.e., that it is a narrowly tailored means to

achieve the goal of a diverse student body.

There are several possible options for a college to promote its

First Amendment interest in diversity. First, a college may, of course,

use its financial aid program to promote diversity by considering

factors other than race or national origin, such as geographic origin,

diverse experiences, or socioeconomic background. Second, a college may

consider race or national origin with other factors in awarding

financial aid if the aid is necessary to further the college's interest

in diversity. Third, a college may use race or national origin as a

condition of eligibility in awarding financial aid if this use is

narrowly tailored, or, in other words, if it is necessary to further

its interest in diversity and does not unduly restrict access to

financial aid for students who do not meet the race-based eligibility

criteria.

Among the considerations that affect a determination of whether

awarding race-targeted financial aid is narrowly tailored to the goal

of diversity are (1) whether race-neutral means of achieving that goal

have been or would be ineffective; (2) whether a less extensive or

intrusive use of race or national origin in awarding financial aid as a

means of achieving that goal has been or would be ineffective; (3)

whether the use of race or national origin is of limited extent and

duration and is applied in a flexible manner; (4) whether the

institution regularly reexamines its use of race or national origin in

awarding financial aid to determine whether it is still necessary to

achieve its goal; and (5) whether the effect of the use of race or

national origin on students who are not beneficiaries of that use is

sufficiently small and diffuse so as not to create an undue burden on

their opportunity to receive financial aid.

If the use of race or national origin in awarding financial aid is

justified under this principle, the college may use funds from any

source.

Principle 5: Private Gifts Restricted by Race or National Origin

Title VI does not prohibit an individual or an organization that is

not a recipient of Federal financial assistance from directly giving

scholarships or other forms of financial aid to students based on their

race or national origin. Title VI simply does not apply.

The provisions of Principles 3 and 4 apply to the use of race-

targeted privately donated funds by a college and may justify awarding

these funds on the basis of race or national origin if the college is

remedying its past discrimination pursuant to Principle 3 or attempting

to achieve a diverse student body pursuant to Principle 4. In addition,

a college may use privately donated funds that are not restricted by

their donor on the basis of race or national origin to make awards to

disadvantaged students as described in Principle 1.

Additional Guidance

Financial Aid at Historically Black Colleges and Universities

Historically black colleges and universities (HBCUs), as defined in

Title III of the Higher Education Act (Title III), 20 U.S.C. 1061, are

unique among institutions of higher education in America because of

their role in serving students who were denied access to postsecondary

education based on their race.2 Congress has made numerous

findings reflecting the special role and needs of these institutions in

light of the history of discrimination by States and the Federal

Government against both the institutions and their students and has

required enhancement of these institutions as a remedy for this history

of discrimination.

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\2\Title III states a number of requirements that an institution

must meet in order to be considered an historically black college or

university, including the requirement that the college or university

was established prior to 1964. 20 U.S.C. 1061. In regulations

implementing Title III, the Secretary has identified the

institutions that meet these requirements. 34 CFR 608.2(b).

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Based upon the extensive congressional findings concerning HBCUs,

and consistent with congressional and Executive Branch efforts to

enhance and strengthen HBCUs, the Department interprets Title VI to

permit these institutions to participate in student aid programs

established by third parties that target financial aid to black

students, if those programs are not limited to students at the HBCUs.

These would include programs to which HBCUs contribute their own

institutional funds if necessary for participation in the programs.

Precluding HBCUs from these programs would have an unintended negative

effect on their ability to recruit talented student bodies and would

undermine congressional actions aimed at enhancing these institutions.

HBCUs may not create their own race-targeted programs using

institutional funds, nor may they accept privately donated race-

targeted aid limited to students at the HBCUs, unless they satisfy the

requirements of any of the other principles in this guidance.3

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\3\For example, an HBCU might award race-targeted aid to Mexican

American students or to white students to promote diversity under

Principle 4.

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Transition Period

Although the Department anticipates that most financial aid

programs that consider race or national origin in awarding assistance

will be found to be consistent with one or more of the principles in

this final policy guidance, there will be some programs that require

adjustment to comply with Title VI. In order to permit colleges time to

assess their programs and to make any necessary adjustments in an

orderly manner--and to ensure that students who already have either

applied for or received financial aid do not lose their student aid as

a result of the issuance of this policy guidance--there will be a

transition period during which the Department will work with colleges

that require assistance to bring them into compliance.4

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\4\This transition period also applies to recipients of Federal

financial assistance that are not colleges, e.g., a nonprofit

organization that operates a scholarship program.

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The Department will afford colleges up to two academic years to

adjust their programs for new students. However, to the extent that a

college does not need the full two years to make adjustments to its

financial aid programs, the Department expects that the adjustments

will be made as soon as practicable.

No student who is currently receiving financial aid, or who has

applied for aid prior to the effective date of this policy guidance,

should lose aid as a result of this guidance. Thus, if a college

determines that a financial aid program is not permissible under this

policy guidance, the college may continue to provide assistance awarded

on the basis of race or national origin to students during the entire

course of their academic program at the college, even if that period

extends beyond the two-year transition period, if the students had

either applied for or received that assistance prior to the effective

date of this policy.

Legal Analysis

Introduction

The Department of Education is responsible for enforcing Title VI

of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq., at

institutions receiving Federal education funds. Section 601 of Title VI

provides that no person in the United States shall, on the ground of

race, color, or national origin, be excluded from participation in, be

denied the benefits of, or be subjected to discrimination under any

program or activity receiving Federal financial assistance. 42 U.S.C.

2000d.

The Department has issued regulations implementing Title VI that

are applicable to all recipients of financial assistance from the

Department. 34 CFR part 100. The regulations prohibit discrimination in

the administration of financial aid programs. Specifically, they

prohibit a recipient, on the basis of race, color, or national origin,

from denying financial aid; providing different aid; subjecting anyone

to separate or different treatment in any matter related to financial

aid; restricting the enjoyment of any advantage or privilege enjoyed by

others receiving financial aid; and treating anyone differently in

determining eligibility or other requirements for financial aid. 34 CFR

100.3(b)(1); see also 34 CFR 100.3(b)(2).

In addition to prohibiting discrimination, the Title VI regulations

require that a recipient that has previously discriminated ``must take

affirmative action to overcome the effects of prior discrimination.''

34 CFR 100.3(b)(6)(i). The regulations also permit recipients to take

voluntary affirmative action ``[e]ven in the absence of such prior

discrimination * * * to overcome the effects of conditions which

resulted in limiting participation by persons of a particular race,

color, or national origin'' in the recipient's programs. 34 CFR

100.3(b)(6)(ii); see 34 CFR 100.5(i).

The permissibility of awarding student financial aid based, in

whole or in part, on a student's race or national origin involves an

interpretation of the preceding provisions concerning affirmative

action. The Supreme Court has made clear that Title VI prohibits

intentional classifications based on race or national origin for the

purpose of affirmative action to the same extent and under the same

standards as the Equal Protection Clause of the Fourteenth

Amendment.5 Guardians Ass'n v. Civil Service Commission of the

City of New York, 463 U.S. 582 (1983); Regents of the University of

California v. Bakke, 438 U.S. 265 (1978). Thus, the Department's

interpretation of the general language of the Title VI regulations

concerning permissible affirmative action is based on case law under

both Title VI and the Fourteenth Amendment.

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\5\Some commenters suggested that Native Americans and Native

Hawaiians--because of their special relationship with the Federal

Government--should be exempt from the restrictions outlined in the

policy guidance. The Department has found no legal authority for

treating affirmative action by recipients of Federal assistance any

differently if the group involved is Native Americans or Native

Hawaiians. Thus, the principles in this policy guidance--including

Principle 2, which states that a college may award financial aid on

the basis of race or national origin if authorized by Federal

statute--apply to financial aid that is limited to Native Americans

and Native Hawaiians. However, the policy does not address the

authority of tribal governments or tribally controlled colleges to

restrict aid to members of their tribes.

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The following discussion addresses the legal basis for each of the

five principles set out in the Department's policy guidance.

1. Financial Aid for Disadvantaged Students

The first principle provides that colleges may award financial aid

to disadvantaged students. Colleges are free to define the

circumstances under which students will be considered to be

disadvantaged, as long as that determination is not based on race or

national origin.

As some commenters noted, the Title VI regulations prohibit actions

that, while not intentionally discriminatory, have the effect of

discriminating on the basis of race or national origin. 34 CFR

100.3(b)(2); see Guardians Ass'n v. Civil Service Commission of the

City of New York, supra; Lau v. Nichols, 414 U.S. 563 (1974). However,

actions that have a disproportionate effect on students of a particular

race or national origin are permissible under Title VI if they bear a

``manifest demonstrable relationship'' to the recipient's educational

mission. Georgia State Conference of Branches of NAACP v. State of

Georgia, 775 F.2d 1403, 1418 11th Cir. (1985). It is the Department's

view that awarding financial aid to disadvantaged students provides a

sufficiently strong educational purpose to justify any racially

disproportionate effect the use of this criterion may entail. In

particular, the Department believes that an applicant's character,

motivation, and ability to overcome economic and educational

disadvantage are educationally justified considerations in both

admission and financial aid decisions. Therefore, the award of

financial assistance to disadvantaged students does not violate Title

VI.

2. Financial Aid Authorized by Congress

This principle states that a college may award financial aid on the

basis of race or national origin if the use of race or national origin

in awarding that aid is authorized by Federal statute. This is because

financial aid programs for minority students that are authorized by a

specific Federal law cannot be considered to violate another Federal

law, i.e., Title VI. In the case of the establishment of federally

funded financial aid programs, such as the Patricia Roberts Harris

Fellowship, the authorization of specific minority scholarships by that

legislation prevails over the general prohibition of discrimination in

Title VI.6 This result also is consistent with the canon of

construction under which the specific provisions of a statute prevail

over the general provisions of the same or a different statute. See 2A

N. Singer Sutherland Statutory Construction section 46.05 (5th ed.

1992); Radzanower v. Touche Ross and Co., 426 U.S. 148, 153 (1976);

Morton v. Mancari, 417 U.S. 535, 550-51 (1974); Fourco Glass Co. v.

Transmira Products Corp., 353 U.S. 225, 228-29 (1957).

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\6\Of course, an individual may challenge the statute under

which the aid is provided as violative of the Constitution. The

statute would then be evaluated under the constitutional standards

for racial classifications authorized by Federal statute that were

established in Metro Broadcasting, Inc. v. FCC, 497 U.S. 547 (1990)

and Fullilove v. Klutznick, 448 U.S. 448 (1980). However, as

explained previously, such a suit would not be viable under Title

VI, for which the Department has enforcement responsibility.

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Some commenters argued that the existence of congressionally

authorized race-targeted financial aid programs supports the position

that all race-targeted financial aid programs are permissible under

Title VI. However, the fact that Congress has enacted specific Federal

programs for race-targeted financial aid does not serve as an

authorization for States or colleges to create their own programs for

awarding student financial aid based on race or national origin.

3. Financial Aid To Remedy Past Discrimination

Classifications based on race or national origin, including

affirmative action measures, are ``suspect'' classifications that are

subject to strict scrutiny by the courts. Regents of the University of

California v. Bakke, 438 U.S. at 292. The use of those classifications

must be based on a compelling governmental interest and must be

narrowly tailored to serve that interest. Richmond v. J.A. Croson Co.,

488 U.S. 469 (1989); Wygant v. Jackson Board of Education, 476 U.S. 267

(1986).

The Supreme Court has repeatedly held that the Government has a

compelling interest in ensuring the elimination of discrimination on

the basis of race or national origin. To further this governmental

interest, the Supreme Court has sanctioned the use of race-conscious

measures to eliminate discrimination. United States v. Fordice, ______

U.S. ______ (1992); United States v. Paradise, 480 U.S. 149, 167

(1987); Swann v. Charlotte-Mecklenberg Board of Education, 402 U.S. 1,

15-16 (1971); McDaniel v. Barresi, 402 U.S. 39 (1971); Green v. County

School Board of New Kent County, 391 U.S. 430, 438 (1968). Most

recently, in United States v. Fordice, supra, the Court found that

States that operated de jure systems of higher education have an

affirmative obligation to ensure that no vestiges of the de jure system

continue to have a discriminatory effect on the basis of race.

The implementing regulations for Title VI provide that a recipient

of Federal financial assistance that has previously discriminated in

violation of the statute or regulations must take affirmative action to

overcome the effects of the past discrimination. 34 CFR 100.3(b)(6)(i).

Thus, a college that has been found to have discriminated against

students on the basis of race or national origin must take steps to

remedy that discrimination. That remedial action may include the

awarding of financial aid to students from the racial or national

origin groups that have been discriminated against.

The proposed policy guidance provided that a finding of past

discrimination could be made by a court or by an administrative agency,

such as the Department's Office for Civil Rights. It also could be made

by a State or local legislative body, as long as the legislature

requiring the affirmative action had a strong basis in evidence

identifying discrimination within its jurisdiction for which that

remedial action is required.

A number of commenters argued that colleges should be able to take

remedial action without waiting for a formal finding by a court,

administrative agency, or legislature. The Department agrees. The final

policy guidance provides that, even in the absence of a finding by a

court, legislature, or administrative agency, a college--in order to

remedy its past discrimination--may implement a remedial race-targeted

financial aid program. It may do so if it has a strong basis in

evidence for concluding that this affirmative action is necessary to

remedy the effects of its past discrimination and its financial aid

program is narrowly tailored to remedy that discrimination. Permitting

colleges to remedy the effects of their past discrimination without

waiting for a formal finding is consistent with the approach taken by

the Supreme Court in Wygant v. Jackson Board of Education, supra. In

Wygant, the Court clarified that a school district's race-conscious

voluntary affirmative action plan could be upheld based on subsequent

judicial findings of past discrimination by the district. Wygant v.

Jackson Board of Education, 476 U.S. at 277.

In the Wygant case, teachers challenged their school board's

adoption, through a collective bargaining agreement, of a layoff plan

that included provisions protecting employees from layoffs on the basis

of their race. The school board contended, among other things, that the

plan's race-conscious layoff provisions were constitutional because

they were adopted to remedy the school board's own prior

discrimination. Id., at 276, 277. Justice Powell, in a plurality

opinion, stated that a public employer must have ``convincing

evidence'' that an affirmative action plan is warranted by past

discrimination before undertaking that plan. Id., at 277. If the plan

is challenged by employees who are harmed by the plan, the court must

then make a determination that the employer had a ``strong basis in

evidence for its conclusion that remedial action was necessary.'' Id.

In a concurring opinion, Justice O'Connor agreed that a

``contemporaneous or antecedent finding of past discrimination by a

court was not a constitutional prerequisite to a public employer's

voluntary agreement to an affirmative action plan.'' Id., at 289. She

explained that contemporaneous or antecedent findings were not

necessary because ``A violation of Federal statutory or constitutional

requirements does not arise with the making of findings; it arises when

the wrong is committed.'' Moreover, she explained that important values

would be sacrificed if contemporaneous findings were required because

``a requirement that public employers make findings that they engaged

in illegal discrimination before they engage in affirmative action

programs would severely undermine public employers' incentive to meet

voluntarily their civil rights obligations.'' Id., at 289, 290

(citations omitted).

In Richmond v. J.A. Croson, supra, the Court again emphasized that

remedial race-conscious action must be based on strong evidence of

discrimination. That case involved the constitutionality of a city

ordinance establishing a plan to remedy past discrimination by

requiring prime contractors awarded city construction contracts to

subcontract at least 30% of the dollar amount of each contract to

minority-controlled businesses. The Court found that the city council

had failed to make sufficient factual findings to demonstrate a

``strong basis in evidence'' of racial discrimination ``by anyone in

the Richmond construction industry.'' Richmond v. J.A. Croson, 488 U.S.

at 500.

Evidence of past discrimination may, but need not, include

documentation of specific incidents of intentional discrimination.

Instead, evidence of a statistically significant disparity between the

percentage of minority students in a college's student body and the

percentage of qualified minorities in the relevant pool of college-

bound high school graduates may be sufficient. Such an approach is

analogous to cases of employment discrimination where the courts accept

statistical evidence to infer intentional discrimination against

minority job applicants. See Hazelwood School District v. United

States, 433 U.S. 299 (1977).

Based on this case law, Principle 3 provides that a college may

award race-targeted scholarships to remedy discrimination as found by a

court or by an administrative agency, such as the Department's Office

for Civil Rights. OCR often has approved race-targeted financial aid

programs as part of a Title VI remedial plan to eliminate the vestiges

of prior discrimination within a State higher education system that

previously was operated as a racially segregated dual system. As

indicated by the Croson decision, a finding of past discrimination also

may be made by a State or local legislative body, as long as the

legislature has a strong basis in evidence identifying discrimination

within its jurisdiction. The remedial use of race-targeted financial

aid must be narrowly tailored to remedy the effects of the

discrimination.

As revised, Principle 3 also allows a college to award student aid

on the basis of race or national origin as part of affirmative action

to remedy the effects of the school's past discrimination without

waiting for a finding to be made by OCR, a court, or a legislative

body, if the college has convincing evidence of past discrimination

justifying the affirmative action. The Department's Title VI

regulations, like the Fourteenth Amendment, do not require that

antecedent or contemporaneous findings of past discrimination be made

before remedial affirmative action is implemented, as long as the

college has a strong basis in evidence of its past discrimination.

Allowing colleges to implement narrowly tailored remedial affirmative

action if there is strong evidentiary support for it--without requiring

that it be delayed until a finding is made by OCR, a court, or a

legislative body--will assist in ensuring that Title VI's mandate

against discrimination based on race or national origin is achieved.

4. Financial Aid To Create Diversity

The Title VI regulations permit a college to take voluntary

affirmative action, even in the absence of past discrimination, in

response to conditions that have limited the participation at the

college of students of a particular race or national origin. 34 CFR

100.3(b)(6)(ii); see 34 CFR 100.5(i). In Regents of the University of

California v. Bakke, supra, the Supreme Court considered whether the

University could take voluntary affirmative action by setting aside

places in each medical school class for which only minority students

could compete.7

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\7\The Court noted that the University ``does not purport to

have made'' a determination that its affirmative action plan was

necessary to remedy any past discrimination at the medical school.

Regents of the University of California v. Bakke, 438 U.S. at 309.

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The Court considered four rationales provided by the University of

California for taking race and national origin into account in making

admissions decisions: (1) To reduce the historic deficit of

traditionally disfavored minorities in medical schools and the medical

profession. (2) To counter the effects of societal discrimination. (3)

To increase the number of physicians who would practice in communities

lacking medical services. (4) To obtain the educational benefits of a

diverse student body. Similar arguments have been advanced in response

to the Department's proposed policy guidance on student financial

assistance awarded on the basis of race or national origin.

The Court rejected the first three justifications. The first reason

was rejected as facially invalid because setting aside a fixed number

of admission spaces only to ensure that members of a specified race are

admitted was found to be racial ``discrimination for its own sake.''

Regents of the University of California v. Bakke, 438 U.S. at 307. In

rejecting the second contention that the effects of societal

discrimination warranted the racial preferences, the Court recognized

that the State had a substantial interest in eliminating the effects of

discrimination, but that interest was found to be limited to

``redress[ing] the wrongs worked by specific instances of

discrimination.'' Id. The third contention, concerning the provision of

health care services to underserved communities, was rejected by the

Bakke Court as an evidentiary matter because the State had ``not

carried its burden of demonstrating that it must prefer members of

particular ethnic groups over all other individuals in order to promote

better health-care delivery to deprived citizens.'' Id., at 311.

With respect to the final objective, the ``attainment of a diverse

student body,'' Justice Powell found that--

This clearly is a constitutionally permissible goal for an

institution of higher education. Academic freedom, though not a

specifically enumerated constitutional right, long has been viewed

as a special concern of the First Amendment. The freedom of a

university to make its own judgments as to education includes the

selection of its student body.

Id., at 311, 312. Thus, colleges have a First Amendment right to seek

diversity in admissions to fulfill their academic mission through the

``robust exchange of ideas'' that flows from a diverse student body.

Id., at 312-313.8 However, the means to achieve this

``countervailing constitutional interest'' under the First Amendment

must comport with the requirements of the Fourteenth Amendment. The

Medical School's policy of setting aside a fixed number of admission

spaces solely for minorities was found not to pass the Fourteenth

Amendment's strict scrutiny test, because the policy's use of race as a

condition of eligibility for the slots was not necessary to promote the

school's diversity interest. Id., at 315-316. Justice Powell found that

the Medical School could advance its diversity interest under the First

Amendment in a narrowly tailored manner that passed the Fourteenth

Amendment's strict scrutiny test by using race or national origin as

one of several factors that would be considered as a plus factor for an

applicant in the admissions process. Id., at 317-319.

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\8\The Secretary believes that a college's academic freedom

interest in the ``robust exchange of ideas'' also includes an

interest in the existence of a diverse faculty and, more generally,

in diversity of professors nationally, since scholars engage in the

interchange of ideas with others in their field, and not merely with

faculty at their particular school. A university could contribute to

this interest by enrolling graduate students who are committed to

becoming professors and who will promote the overall diversity of

scholars in their field of study, regardless of the diversity of the

students who are admitted to the university's own graduate program.

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Following the Bakke decision, the Department reexamined its Title

VI regulations to determine whether any changes were necessary. In a

policy interpretation published in the Federal Register (44 FR 58509),

the Department concluded that no change was warranted. The Department

determined that the Title VI regulatory provision authorizing voluntary

affirmative action was consistent with the Court's decision and that

the provision would be interpreted to incorporate the limitations on

voluntary affirmative action announced by the Court.9 Thus, if a

college's use of race or national origin in awarding financial aid

meets the Supreme Court's test under the Fourteenth Amendment for

permissible voluntary affirmative action, it will also meet the

requirements of Title VI.

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\9\The present policy guidance on student financial assistance

supplements the 1979 policy interpretation.

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In the Department's proposed policy guidance on financial aid, a

principle was included permitting the use of race or national origin as

a ``plus'' factor in awarding student aid. The basis for the principle

was the Bakke decision and the Department's assessment that using an

approach that had been approved by the Supreme Court as narrowly

tailored to achieve diversity in the admissions context also would be

permissible in awarding financial aid.10

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\1\0The Department will presume that a college's use of race or

national origin as a plus factor, with other factors, is narrowly

tailored to further the compelling governmental interest in

diversity, as long as the college periodically reexamines whether

its use of race or national origin as a plus factor continues to be

necessary to achieve a diverse student body.

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In response to the proposed policy, many colleges submitted

comments arguing that the use of race or national origin as a plus

factor in awarding financial aid may be inadequate to achieve

diversity. They contended that, in some cases, it may be necessary to

designate a limited amount of aid for students of a particular race or

national origin. According to those commenters, a college's financial

aid program can serve a critical role in achieving a diverse student

body in at least three respects: First, the availability of financial

aid set aside for members of a particular race or national origin

serves as a recruitment tool, encouraging applicants to consider the

school. Second, it provides a means of encouraging students who are

offered admission to accept the offer and enroll at the school.

Finally, it assists colleges in retaining students until they complete

their program of studies.

The commenters argued that a college--because of its location, its

reputation (whether deserved or not) of being inhospitable to minority

students, or its number of minority graduates--may be unable to recruit

sufficient minority applicants even if race or national origin is

considered a positive factor in admissions and the award of aid. That

is, the failure to attract a sufficient number of minority applicants

who meet the academic requirements of the college will make it

impossible for the college to enroll a diverse student body, even if

race or national origin is given a competitive ``plus'' in the

admissions process. In addition, a college that has sufficient minority

applicants to offer admission to a diverse group of applicants may find

that, absent the availability of financial aid set aside for minority

students, its offers of admission are disproportionately rejected by

minority applicants.

Furthermore, commenters were concerned that, while there may be

large amounts of financial aid available for undergraduates at their

institutions, there may be insufficient aid for graduate students,

almost all of whom are able to demonstrate financial need. Thus, it is

possible that a college that is able to achieve a diverse student body

in some of its programs using race-neutral financial aid criteria or

using race or national origin as a ``plus'' factor may find it

necessary to use race or national origin as a condition of eligibility

in awarding limited amounts of financial aid to achieve diversity in

some of its other programs, such as its graduate school or particular

undergraduate schools.

The Department agrees with the commenters that in the circumstances

they have described it may be necessary for a college to set aside

financial aid to be awarded on the basis of race or national origin in

order to achieve a diverse student body. Whether a college's use of

race-targeted financial aid is ``narrowly tailored'' to achieve this

compelling interest involves a case-by-case determination that is based

on the particular circumstances involved. The Department has

determined, based on the comments, to expand Principle 4 to permit

those case-by-case determinations.

The Court in Bakke indicated that race or national origin could be

used in making admissions decisions to further the compelling interest

of a diverse student body even though the effect might be to deny

admission to some students who did not receive a competitive ``plus''

based on race or ethnicity.11 However, the use of a set-aside of

places in the entering class was impermissible because it was not

necessary to the goal of diversity. In cases since Bakke, the Supreme

Court has provided additional guidance on the factors to be considered

in determining whether a classification based on race or national

origin is narrowly tailored to its purpose. These factors will be

considered by the Department in assessing whether a college's race-

targeted financial aid program meets the requirements of Title VI.

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\1\1Bakke was the Supreme Court's first decision in an

affirmative action case. Since that time, the Court has decided a

number of affirmative action cases, none of which have invalidated

Justice Powell's opinion in Bakke that the promotion of diversity in

the higher education setting is a compelling interest.

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First, it is necessary to determine the efficacy of alternative

approaches. United States v. Paradise, 480 U.S. at 171. Thus, it is

important that consideration has been given to the use of alternative

approaches that are less intrusive (e.g., the use of race or national

origin as a ``plus'' factor rather than as a condition of eligibility).

Metro Broadcasting, Inc. v. F.C.C., 497 U.S. at 583; Richmond v. J.A.

Croson, 488 U.S. at 507. Financial aid that is restricted to students

of a particular race or national origin should be used only if a

college determines that these alternative approaches have not or will

not be effective.

Second, the extent, duration, and flexibility of the racial

classification must be addressed. Metro Broadcasting, Inc. v. F.C.C.,

497 U.S. at 594; United States v. Paradise, 480 U.S. at 171. The extent

of the use of the classification should be no greater than is necessary

to carry out its purpose. Richmond v. J.A. Croson, 488 U.S. at 507.

That is, the amount of financial aid that is awarded based on race or

national origin should be no greater than is necessary to achieve a

diverse student body.

The duration of the use of a racial classification should be no

longer than is necessary to its purpose, and the classification should

be periodically reexamined to determine whether there is a continued

need for its use. Metro Broadcasting, Inc. v. F.C.C., 497 U.S. at 594.

Thus, the use of race-targeted financial aid should continue only while

it is necessary to achieve a diverse student body, and an assessment as

to whether that continues to be the case should be made on a regular

basis.

In addition, the use of the classification should be sufficiently

flexible that exceptions can be made if appropriate. For example, the

Supreme Court in United States v. Paradise found that a race-conscious

promotion requirement was flexible in operation because it could be

waived if no qualified candidates were available. 480 U.S. at 177.

Similarly, racial restrictions on the award of financial aid could be

waived if there were no qualified applicants.

Finally, the burden on those who are excluded from the benefit

conferred by the classification based on race or national origin (i.e.,

non-minority students) must be considered. Id., at 171. A use of race

or national origin may impose such a severe burden on particular

individuals--for example, eliminating scholarships currently received

by non-minority students in order to start a scholarship program for

minority students--that it is too intrusive to be considered narrowly

tailored. See Wygant v. Jackson Board of Education, 476 U.S. at 283

(use of race in imposing layoffs involves severe disruption to lives of

identifiable individuals). Generally, the less severe and more diffuse

the impact on non-minority students, the more likely a classification

based on race or national origin will address this factor

satisfactorily. However, it is not necessary to show that no student's

opportunity to receive financial aid has been in any way diminished by

the use of the race-targeted aid. Rather, the use of race-targeted

financial aid must not place an undue burden on students who are not

eligible for that aid.

A number of commenters argued that race-targeted financial aid is a

minimally intrusive method to attain a diverse student body, far more

limited in its impact on non-minority students, for example, than race-

targeted admissions policies. Under this view, and unlike the

admissions plan at issue in Bakke, a race-targeted financial aid award

could be a narrowly tailored means of achieving the compelling interest

in diversity.

The Department agrees that there are important differences between

admissions and financial aid. The affirmative action admissions program

struck down in Bakke had the effect of excluding applicants from the

university on the basis of their race. The use of race-targeted

financial aid, on the other hand, does not, in and of itself, dictate

that a student would be foreclosed from attending a college solely on

the basis of race. Moreover, in contrast to the number of admissions

slots, the amount of financial aid available to students is not

necessarily fixed. For example, a college's receipt of privately

donated monies restricted to an underrepresented group might increase

the total pool of funds for student aid in a situation in which, absent

the ability to impose such a limitation, the donor might not provide

any aid at all.

Even in the case of a college's own funds, a decision to bar the

award of race-targeted financial aid will not necessarily translate

into increased resources for students from non-targeted groups. Funds

for financial aid restricted by race or national origin that are viewed

as a recruitment device might be rechanneled into other methods of

recruitment if restricted financial aid is barred. In other words,

unlike admission to a class with a fixed number of places, the amount

of financial aid may increase or decrease based on the functions it is

perceived to promote.

In summary, a college can use its financial aid program to promote

diversity by considering factors other than race or national origin,

such as geographic origin, diverse experiences, or socioeconomic

background. In addition, a college may take race or national origin

into account as one factor, with other factors, in awarding financial

aid if necessary to promote diversity. Finally, a college may use race

or national origin as a condition of eligibility in awarding financial

aid if it is narrowly tailored to promote diversity.

5. Private Gifts Restricted by Race or National Origin

The fifth principle sets out the circumstances under which a

recipient college can award financial aid provided by private donors

that is restricted on the basis of race or national origin.

As noted by many commenters, pursuant to the Civil Rights

Restoration Act of 1987, all of the operations of a college are covered

by Title VI if the college receives any Federal financial assistance.

42 U.S.C. 2000d-4a(2)(A). Since a college's award of privately donated

financial aid is within the operations of the college, the college must

comply with the requirements of Title VI in awarding those

funds.12

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\1\2Similarly, other organizations that receive Federal

financial assistance must comply with Title VI in their award of

student financial aid. On the other hand, individuals or

organizations not receiving Federal funds are not subject to Title

VI. They may thus, as far as Title VI is concerned, directly award

financial aid to students on the basis of race or national origin.

---------------------------------------------------------------------------

A college may award privately donated financial aid on the basis of

race or national origin if the college is remedying its past

discrimination pursuant to Principle 3 or attempting to achieve a

diverse student body pursuant to Principle 4. In other words,

Principles 3 and 4 apply to the use of privately donated funds and may

justify awarding these funds on the basis of race or national origin in

accordance with the wishes of the donor. Similarly, under Principle 1,

a college may award privately donated financial aid that is restricted

to disadvantaged students.

Some commenters were uncertain whether it is permissible under

Title VI for a college to solicit private donations of student

financial aid that are restricted to students of a particular race or

national origin. If the receipt and award of these funds is permitted

by Title VI, that is, in the circumstances previously described, it is

similarly permissible to solicit the funds from private sources.

Financial Aid at Historically Black Colleges and Universities

To ensure that the principles in this policy guidance do not

subvert congressional efforts to enhance historically black colleges

and universities (HBCUs), these institutions may participate in student

aid programs established by third parties for black students that are

not limited to students at the HBCUs and may use their own

institutional funds in those programs if necessary for

participation.13 See 20 U.S.C. 1051, 1060, and 1132c

(congressional findings of past discrimination against HBCUs and of the

need for enhancement).

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\1\3This provision is limited to HBCUs as defined in Title III

of the Higher Education Act. It does not apply generally to

predominantly black institutions of higher education. The reason for

this distinction is that Congress has made specific findings

concerning the unique status of the HBCUs that serve as the basis

for this provision.

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This finding is based upon congressional findings of past

discrimination against HBCUs and the students they have traditionally

served, as well as the Department's determination that these

institutions and their students would be harmed if precluded from

participation in programs created by third parties that designate

financial aid for black students. That action would have an unintended

negative effect on their ability to recruit excellent student bodies

and could undermine congressional actions aimed at enhancing these

institutions.

Congress has repeatedly made findings that recognize the unique

historical mission and important role that HBCUs play in the American

system of higher education, and particularly in providing equal

educational opportunity for black students. 20 U.S.C. 1051, 1060, and

1132c. Congress has created programs that strengthen and enhance HBCUs

in Titles II through VII of the Higher Education Act, as amended by

Public Law 99-498, 20 U.S.C. 1021-1132i-2. It has found that ``there is

a particular national interest in aiding institutions of higher

education that have historically served students who have been denied

access to postsecondary education because of race or national origin .

. . so that equality of access and quality of postsecondary education

opportunities may be enhanced for all students.'' 20 U.S.C. 1051. ``A

key link to the chain of expanding college opportunity for African

American youth is strengthening the Nation's historically Black

colleges and universities.'' House Report No. 102-447, 1992 U.S. Code

Cong. and Adm. News p. 353.

Congress has found that ``the current state of HBCUs is partly

attributable to the discriminatory action of the States and the Federal

Government and this discriminatory action requires the remedy of

enhancement of Black postsecondary institutions to ensure their

continuation and participation in fulfilling the Federal mission of

equality of educational opportunity.'' 20 U.S.C. 1060. See also, House

Report No. 102-447, 1992 U.S. Code Cong. and Adm. News p. 353; House

Report No. 99-383, 1986 U.S. Code Cong. and Adm. News 2592-2596. This

includes providing access and quality education to low-income and

minority students, and improving HBCUs' academic quality. 20 U.S.C.

1051.

For these same reasons, every Administration in recent years has

recognized the special role and contributions of HBCUs and expressed

support for their enhancement. See ``Revised Criteria Specifying the

Ingredients of Acceptable Plans to Desegregate State Systems of Public

Higher Education,'' 43 FR 6658 (1977); Exec. Orders Nos. 12232, 45 FR

53437 (1980); 12320, 46 FR 48107 (1981); 12677, 54 FR 18869 (1989); and

12876, 58 FR 58735 (1993). The Department's own data indicate that

HBCUs continue to play a vital role in providing higher education for

many black students. In 1989 and 1990, more than one in four black

bachelor's degree recipients received their degree from an HBCU

(26.7%). See, ``Historically Black Colleges and Universities, 1976-90''

(U.S. Department of Education, Office of Educational Research and

Improvement, July 1992).

This policy guidance is not intended to limit the efforts to

enhance HBCUs called for by Congress and the President. The Department

recognizes, however, that Principle 3 (remedying past discrimination)

and Principle 4 (creating diversity) may not provide for HBCUs the same

possibility of participating in race-targeted programs of financial aid

for black students established by third parties as are provided for

other colleges and universities. As some commenters pointed out, HBCUs

continue to enroll a disproportionate percentage of black students and

need to be able to compete for the most talented black students if they

are to improve the quality and prestige of their academic environments

and, therefore, enhance their attractiveness to all students regardless

of race or national origin.

HBCUs' abilities to recruit, enroll and retain talented students

will be undermined unless HBCUs are permitted to attract talented black

students by participating in aid programs for black students that are

established by third parties in which other colleges, i.e., those that

meet Principle 3 or 4, participate. Limiting or precluding HBCUs'

participation in private programs, such as the National Achievement

Scholarship program, would have an unintended negative effect on their

ability to recruit a talented student body. Under this scholarship

program, which is restricted to academically excellent black students,

one type of National Achievement Scholarship is funded by the

institution. If HBCUs were unable to participate in this program, some

top black students might be forced to choose between (1) receiving a

National Achievement Scholarship to attend a school that met Principle

3 or 4 and (2) attending an HBCU. For these reasons, the Department

interprets Title VI to permit HBCUs to participate in certain race-

targeted aid programs for black students, such as the National

Achievement Scholarship program.

The Department reads Title VI consistent with other statutes and

Executive orders addressing the special needs and history of HBCUs. In

particular, the Department notes congressional findings of

discrimination against black students that are the basis for

enhancement efforts at HBCUs. Additionally, the Department interprets

Title VI to permit limited use of race to avoid an anomalous and absurd

result, i.e., penalizing HBCUs and students who seek admission to

HBCUs, and putting HBCUs at a disadvantage with respect to other

schools precisely because of the special history and composition of the

HBCUs.

The use of race-targeted aid by HBCUs that the Department is

interpreting Title VI to permit under this provision is narrowly

tailored to further the congressionally recognized purpose of

enhancement of HBCUs. HBCUs may not discriminate on the basis of race

or national origin in admitting students. They may not create their own

race-targeted financial aid programs using their own institutional

funds unless they satisfy the requirements of any of the other

principles in this guidance. Nor may they accept private donations of

race-targeted aid for black students that are limited to students at

the institution unless otherwise permitted by the guidance. Because

HBCUs have traditionally enrolled black students, it should not subvert

the goal of enhancing the institutions to require that they not

restrict aid to black students if using their own funds or funds from

private donors that wish to set up financial aid programs at these

institutions. However, because the applicant pool that is attracted to

HBCUs presently consists primarily of black students, HBCUs would be

placed at a distinct disadvantage with regard to other colleges in

attracting talented students if they could not participate in financial

aid programs set up by third parties for black students. Thus, the

Department interprets Title VI to permit an HBCU to participate in

race-targeted financial aid programs for black students that are

created by third parties, if the programs are not restricted to

students at HBCUs.

The participation by HBCUs in those race-targeted aid programs will

be subject to periodic reassessment by the Department. The Department

will regularly review the results of enhancement efforts at HBCUs,

including the annual report to the President on the progress achieved

in enhancing the role and capabilities of HBCUs required by Section 7

of Executive Order 12876. If an HBCU has been enhanced to the point

that the institution is attractive to individuals regardless of their

race or national origin to the same extent as a non-HBCU, then that

institution may participate in only those race-targeted aid programs

that are consistent with the other principles in this policy guidance.

Transition Period

The proposed policy guidance would have provided a four-year

transition period for individual students to ensure that they did not

lose their financial aid as a result of the guidance. Commenters

pointed out that, in some cases, four years may not be a sufficient

time for a student to complete his or her academic program at a

college. In addition, commenters expressed concern that revising the

policies and procedures used in recruiting minority students and in

providing student financial assistance would require time to develop

and implement. The revisions that have been made to the final policy

guidance should result in far fewer instances in which colleges will be

required to change their financial aid programs. However, the

Department recognizes that colleges may need to conduct extensive

reviews of their current programs and that in some cases adjustments to

those programs may be necessary. As a result, the Department is

expanding the proposed transition period.

The Department is providing colleges a reasonable period of time to

review and, if necessary, adjust their financial aid programs in an

orderly manner that causes the least possible disruption to their

students. Colleges must adjust their financial aid programs to be

consistent with the principles previously set out no later than two

years after the effective date of the Department's policy guidance.

However, colleges may continue to provide financial aid awarded on the

basis of race or national origin to students who had either applied for

or received that assistance prior to the effective date of this

guidance during the full course of those students' academic program at

the college, even though, in many cases, this will extend beyond the

two-year period and, in some cases, the four-year period identified in

the proposed policy.

Although some commenters questioned the Department's authority to

create a transition period, such a period for adjustments is consistent

with the Department's approach in the past under other civil rights

statutes it enforces. See 34 CFR 106.41(d) (transition period to permit

recipients to bring their athletic programs into compliance with Title

IX of the Education Amendments of 1972); 34 CFR 104.22(e) (transition

period to permit recipients to make facilities accessible to

individuals with disabilities, as required by Section 504 of the

Rehabilitation Act of 1973). It is based on the Department's

recognition of the practical difficulties that some colleges may face

in making changes to their recruitment and financial aid award

processes.

The transition period also is consistent with the Department's

policy, in approving plans for the desegregation of State systems of

higher education, that students who have been the beneficiaries of past

discriminatory conduct not be required to bear the burden of corrective

action. For example, while the Department requires State higher

education systems to take remedial action to increase the enrollment of

previously excluded students, it does not require the expulsion of any

student in order to permit admission of those previously excluded. See

Wygant v. Jackson Board of Education, 476 U.S. at 282-85.

Finally, the transition period is consistent with the Department's

obligations under Title VI to seek voluntary compliance by recipients

that have been found in violation of the statute. 42 U.S.C. 2000d-1.

During the transition period, the Department will provide colleges with

technical assistance to help them make any necessary changes to their

financial aid programs in order to achieve compliance with Title VI.

Program Authority: 42 U.S.C. 2000d.

Dated: February 17, 1994.

Richard W. Riley,

Secretary of Education.

[FR Doc. 94-4010 Filed 2-22-94; 8:45 am]

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