It's finally raining, but the drought's not over

Billy Odell Tucker-Robinson Founder & Host — Banking With Billy Network • Financial Intelligence • Markets • World News • Independent Analysis
Published: 2026-09-04 • Permanent link

Fears are spreading among investors as the Trump administration's proposed rule threatens to strip private colleges of their tax-exempt status. The proposed rule, announced earlier this month, would remove the tax-exempt status of institutions that provide targeted help to students based on their race. The Dow Jones Industrial Average plummeted by 1.4% in response to the news, wiping out billions of dollars in market value. Shares of private college stocks, including Harvard and Stanford, took a hit, with some stocks falling as much as 10% in a single day.

Racial disparities in education have long been a contentious issue, with many arguing that targeted support is essential for underrepresented groups. The proposed rule would effectively dismantle these initiatives, forcing private colleges to find alternative funding sources. This could lead to increased tuition costs for students, particularly those from low-income backgrounds, and exacerbate existing inequalities in the education system. As a result, investors are worried about the long-term implications for the sector.

Experts point to the 1960s and 1970s, when the US government began to provide funding for historically black colleges and universities. This investment helped to level the playing field, increasing access to higher education for marginalized communities. By removing tax-exempt status, the proposed rule would essentially reverse this progress, forcing private colleges to rely on private funding to support diversity initiatives. This could have far-reaching consequences for the education sector as a whole.

As the proposal moves forward, investors will be watching closely for signs of support or opposition from lawmakers. The Congressional Budget Office is expected to release a report on the rule's impact in the coming weeks, which could influence the debate. Meanwhile, private colleges are scrambling to find alternative funding sources, including private donations and government grants. With the fate of targeted support initiatives hanging in the balance, the outcome is far from certain.