A new lawsuit filed in Washington, D.C., is testing the boundaries of what race-targeted scholarship programs can legally offer. On Wednesday, two students—one white and one Asian—brought a complaint against the Hispanic Scholarship Fund (HSF), claiming that its flagship scholarship program unlawfully excludes applicants who are not Hispanic.

The suit was filed by the American Alliance for Equal Rights (AAER), a nonprofit organization that has made its mission to eliminate race-based considerations across public and private institutions in the United States. Acting on behalf of the two unnamed students, AAER argues that HSF’s eligibility rule—requiring applicants to identify as Hispanic—violates federal civil rights protections.

The dispute lands at a moment when conservative activists nationwide are intensifying efforts to challenge diversity initiatives, particularly those that use race as a direct or indirect criterion. This movement gained momentum after the U.S. Supreme Court’s 2023 decision that struck down affirmative action in college admissions, ruling that race could no longer be used as a standalone factor in evaluating applicants.

That landmark case was brought by Students for Fair Admissions, founded by Edward Blum—who also founded AAER and now leads the organization. Blum has become a central figure in the legal landscape surrounding affirmative action, spearheading nearly twenty lawsuits over the past several years aimed at colleges, corporations, and government programs.

Legal Theories at the Center of the Case

In its complaint, AAER asserts that the Hispanic Scholarship Fund’s Scholars Program establishes what amounts to a contractual agreement between the organization and the students who participate. Because participation requires students to accept certain terms—such as allowing the fund to use their name, image, and likeness—the plaintiffs argue that the program triggers protections under the Civil Rights Act of 1866. That law guarantees all individuals the right to make and enforce contracts regardless of race.

According to the plaintiffs, offering financial and professional support exclusively to students who identify as Hispanic violates that guarantee. The scholarship awards range from $500 to $5,000 and may include mentorship and career development opportunities. The two students behind the lawsuit argue that they met every one of the program’s requirements except for the racial criterion.

Blum emphasized this point in an interview, saying that while many targeted scholarships are lawful, those that function as contracts must comply with federal anti-discrimination laws.

“There are many scholarship programs designed for specific communities,” he said. “But once a program becomes contractual in nature, it must be open to everyone regardless of race.”

The Hispanic Scholarship Fund has not publicly commented on the lawsuit, and it remains unclear whether the organization will revise its criteria or choose to defend the current program in court.

A Broader Debate Over the Future of Diversity Initiatives

The lawsuit against HSF is not an isolated incident. In recent years, efforts to dismantle race-related programs have expanded beyond college admissions. Activists and some policymakers have increasingly argued that scholarships, internships, corporate fellowships, and other programs that use race-associated criteria also violate the law.

The debate intensified under the Trump administration, which took a forceful stance against diversity, equity, and inclusion (DEI) initiatives. Officials at the time argued that many programs designed to advance racial diversity—even those that relied on indirect proxies related to race—were unlawful. This position led to federal investigations into race-conscious scholarships and training opportunities.

Although the Supreme Court’s affirmative action ruling prohibited explicit racial preferences in admissions decisions, it did leave some room for context. Admissions officers can still consider a student’s race if it is tied to specific experiences or personal qualities discussed in essays. However, the decision did not address the legality of independent scholarships that restrict eligibility based on race, leaving a gray area that lawsuits like this one are now attempting to define.

Concerns About Rolling Back Social Progress

Legal scholars and civil rights experts are divided in their interpretations of the latest wave of challenges. Some see them as necessary steps toward ensuring equal treatment under the law, while others warn that dismantling race-conscious programs will further disadvantage historically marginalized communities.

Justin Driver, a Yale Law School professor and author of The Fall of Affirmative Action, described the lawsuit as part of a larger political and cultural moment that seeks to reverse gains made in racial equality over the past several decades.

He characterized the case as “the latest salvo in a larger era of racial revanchism” and questioned the notion that Hispanic students are receiving disproportionate financial support. “The idea that there are too many Latino students winning scholarships is not something that ranks high on the list of America’s urgent concerns,” he said.

Supporters of diversity programs argue that targeted scholarships are one of the few mechanisms available to address inequities in college access, especially as broader affirmative action policies are dismantled. Removing eligibility criteria tied to race, they say, would weaken efforts to widen educational opportunities for underrepresented groups.

Who the Plaintiffs Are

According to court filings, the lawsuit was initiated after an Asian American high school student contacted AAER to report that he was ineligible for the Scholars Program solely because he did not have Hispanic heritage. The second plaintiff, identified as a white law student, also met all qualifications except the racial one. Both plaintiffs have chosen to remain anonymous out of fear of retaliation and have been seeking alternative scholarship funding.

Blum emphasized that the students were motivated not only by principle but also by financial need. He stated that AAER’s goal is not to eliminate the scholarship program but to open it to all applicants, regardless of race.

“I’m hopeful that the Hispanic Scholarship Fund will acknowledge the legal concerns we’ve raised and revise the program so that any student—of any race or ethnicity—can apply,” he said.

What Comes Next

The case, now filed in the U.S. District Court for the District of Columbia, could have far-reaching implications. If the court rules that HSF’s program violates federal civil rights law, scholarship funds and foundations nationwide may need to reexamine their eligibility requirements.

Conversely, if the program is upheld, it could reinforce the legal standing of race-targeted scholarships even as other affirmative action measures fall away.

Either outcome will shape the evolving national conversation about fairness, opportunity, and the role of race in American education.

As challenges to diversity programs continue to emerge, the lawsuit against the Hispanic Scholarship Fund represents another pivotal moment in the ongoing legal and cultural debate over how best to support students across different communities—while navigating the complex boundaries of civil rights law in a post-affirmative-action era.