HSI Lawsuit: $350M Cut, DOJ Withdrawal, HACU Intervention

The HSI lawsuit is a federal case filed in June 2025 by the State of Tennessee and Students for Fair Admissions asking a court to declare the Hispanic-Serving Institutions grant program unconstitutional. The suit argues that conditioning hundreds of millions of dollars in federal higher-education grants on a college’s Hispanic enrollment reaching 25 percent is a racial classification barred by the Equal Protection Clause. It is pending in the U.S. District Court for the Eastern District of Tennessee, and it has already changed federal policy: the Justice Department refused to defend the program, and the Department of Education cut roughly $350 million in related grants months before any ruling on the merits.¹²

Who Sued and What They Want

The complaint was filed on June 11, 2025, in the Eastern District of Tennessee (Case No. 3:25-cv-270) and assigned to U.S. District Judge Katherine A. Crytzer. The defendants are the U.S. Department of Education and Secretary Linda McMahon.¹³

Students for Fair Admissions is the organization founded by Edward Blum that won the 2023 Supreme Court decision striking down race-conscious admissions at Harvard and the University of North Carolina.⁴ Tennessee Attorney General Jonathan Skrmetti filed on behalf of the state, arguing that no Tennessee public institution qualifies for HSI grants and calling the program “manifestly unfair” because “a needy student in Tennessee does not have access to this pool of funds because they go to a school that doesn’t have the right ethnic makeup.”⁵

The plaintiffs ask the court for a declaratory judgment that the ethnicity-based eligibility rules are unconstitutional and for a permanent injunction blocking the Secretary of Education from enforcing them when awarding grants to Tennessee institutions.⁶

The Legal Theory

The central claim is that the 25 percent Hispanic enrollment threshold that defines an HSI is a racial quota subject to strict scrutiny under the equal protection component of the Fifth Amendment’s Due Process Clause. The plaintiffs describe the threshold as an “arbitrary ethnic” benchmark that the government cannot justify with any compelling interest.¹

The complaint also invokes the Spending Clause, arguing Congress cannot condition federal money on criteria that conflict with the Constitution, and the Fourteenth Amendment’s Citizenship Clause. Tennessee adds a state-law wrinkle: Tennessee Code § 49-7-190 bars its public colleges from using race or ethnicity in admissions and financial aid, so the state’s institutions cannot lawfully use affirmative action to reach the 25 percent threshold.¹

The theory leans heavily on Students for Fair Admissions v. Harvard, the 6-3 decision in June 2023 in which Chief Justice Roberts wrote that “outright racial balancing” is “patently unconstitutional.”⁷ Blum has framed the HSI challenge as a direct extension of that ruling, arguing that gating federal grants on whether “a specified number of seats” are held by students of a preferred ethnicity is the same kind of racial balancing the Court rejected.⁶

What the HSI Designation Actually Does

Congress created the Hispanic-Serving Institutions designation in 1992, with targeted appropriations beginning in 1995. To qualify, a college must have undergraduate full-time equivalent enrollment that is at least 25 percent Hispanic, and at least half of its Hispanic students must be low-income.⁸⁹¹⁰¹¹

The Justice Department Refused to Defend the Program

On July 25, 2025, U.S. Solicitor General D. John Sauer sent a letter to House Speaker Mike Johnson stating that the statutory provisions defining HSIs “violate the equal-protection component of the Fifth Amendment’s Due Process Clause” and that the Department of Justice would not defend the program in court.³ Sauer cited SFFA v. Harvard, writing that the government lacks a “legitimate interest in differentiating among universities based on whether ‘a specified number of seats in each class’ are occupied by ‘individuals from the preferred ethnic groups.'”¹²

That decision left the named defendants without government counsel willing to argue the program’s constitutionality. A December 2025 memorandum from the DOJ’s Office of Legal Counsel reinforced the position, stating that strict scrutiny applies to “all racial distinctions in education, however benign they may appear,” and suggesting that racial classifications used to distribute “zero-sum” competitive grants may never be narrowly tailored enough to survive.¹³

Who Is Defending the Program

Because the federal government stepped aside, other parties moved in. On July 24, 2025, the Hispanic Association of Colleges and Universities (HACU) and LatinoJustice PRLDEF filed to intervene as defendants, arguing that their member institutions’ interests would not be adequately represented by the Department of Education.¹⁴ On August 11, 2025, the American Civil Rights Project filed to intervene on the plaintiff side, representing the National Association of Scholars and the Faculty Organization for Students’ Rights and Principles.¹⁵ Judge Crytzer granted all the intervention motions on October 10, 2025.¹⁶

The intervenor-defendants argue that the HSI program is “race-conscious but not race-exclusive.” Their position is that the 25 percent enrollment benchmark is a demographic fact about an institution rather than a preference applied to individual students. The program does not require schools to consider race in admissions, does not treat applicants differently by ethnicity, and does not push institutions to recruit Hispanic students; it directs resources to schools that already enroll them in large numbers. Grant money then benefits every student at the qualifying institution. HACU and LatinoJustice cite Parents Involved v. Seattle School District No. 1 (2007) for the proposition that government may acknowledge racial disparities and allocate resources to address them without violating equal protection.¹⁷

The $350 Million Funding Cut

The most immediate practical consequence of the lawsuit came before any ruling. On September 10, 2025, Secretary McMahon announced that the Department of Education would stop discretionary funding for the HSI program and six other minority-serving institution programs, reprogramming roughly $350 million in fiscal year 2025 funds.² McMahon called the programs “inherently racist,” saying that “stereotyping an individual based on immutable characteristics diminishes the full picture of that person’s life.”¹⁸

The cuts reached beyond HSIs. The Department also halted discretionary grants for programs serving Alaska Native and Native Hawaiian institutions, Predominantly Black Institutions, Asian American and Native American Pacific Islander-Serving Institutions, Native American-Serving Nontribal Institutions, and the Minority Science and Engineering Improvement program. Existing awards were non-continued, and pending competitions were canceled. The Department said it would continue distributing about $132 million in mandatory Title III Part F funds that Congress had already appropriated and that could not be reprogrammed by statute, though it was reviewing the “underlying legal issues” with those as well.²

What Is at Stake Beyond HSIs

A ruling against the HSI designation would put other minority-serving institution categories on unstable ground. The September 2025 funding cut already treated all MSI programs that rely on racial or ethnic enrollment thresholds as constitutionally suspect.² The December 2025 OLC memorandum noted that preferences for federally recognized Indian tribes receive more deferential rational-basis review as political rather than racial classifications, but concluded that no comparable exception currently applies to Native Hawaiian-serving institutions.¹³ Historically Black Colleges and Universities, which are funded through a separate statutory structure, were not directly named in the lawsuit or the DOJ’s letter, though the same reasoning raises questions for any program tying eligibility to the racial composition of a student body.

Where the Case Stands

Judge Crytzer has approved interventions on both sides, setting the full lineup: Tennessee, Students for Fair Admissions, the National Association of Scholars, and FASORP as plaintiffs; HACU and LatinoJustice defending the program alongside the federal defendants who have declined to defend it.¹⁶ No ruling on the merits, no trial date, and no preliminary injunction order have been reported. The case remains pending in the Eastern District of Tennessee.¹⁹

1
State of Tennessee. Complaint, Tennessee v. U.S. Department of Education
2
U.S. Department of Education. U.S. Department of Education Ends Funding for Racially Discriminatory Discretionary Grant Programs for Minority-Serving Institutions
3
Inside Higher Ed. DOJ Deems Definition of HSIs Unconstitutional
4
SCOTUSblog. Supreme Court Strikes Down Affirmative Action Programs in College Admissions
5
Inside Higher Ed. Tennessee Lawsuit Puts Hispanic-Serving Institutions’ Fate on the Line
6
Students for Fair Admissions. Students for Fair Admissions and the State of Tennessee File Federal Lawsuit Challenging Racial Discrimination in Hispanic-Serving Institutions Program
7
U.S. Supreme Court. Students for Fair Admissions v. President and Fellows of Harvard College
8
Postsecondary National Policy Institute. Hispanic-Serving Institutions Primer
9
U.S. Department of Education. Developing Hispanic-Serving Institutions Program
10
HACU. HSI Funding
11
LatinoJustice PRLDEF. LatinoJustice and HACU Will Defend Hispanic-Serving Institutions in Nationwide Federal Lawsuit
12
Chronicle of Higher Education. Hispanic-Serving Institutions May Lose Federal Funds After Justice Dept. Refuses to Defend Grant Program
13
U.S. Department of Justice, Office of Legal Counsel. OLC Memorandum on Racial Classifications in Federal Programs
14
LatinoJustice PRLDEF. LatinoJustice and HACU Seek to Defend Hispanic-Serving Institutions Under Threat
15
American Civil Rights Project. For NAS and FASORP, the ACR Project Moves to Intervene in Tennessee’s HSI Litigation
16
American Civil Rights Project. Update: Court Approves Interventions in HSI Litigation
17
HACU. Defending the Hispanic-Serving Institutions Program
18
New York Times. Linda McMahon Cuts Federal Grants to Minority-Serving Colleges and Universities
19
Journalist’s Resource. Federal Funding for Hispanic-Serving Institutions