Latest Update: As of July 10, 2026, State of Tennessee v. U.S. Department of Education remains pending in the Eastern District of Tennessee, with no ruling yet reported. The most recent confirmed filing is HACU’s January 8, 2026 motion for judgment on the pleadings, arguing the case should be dismissed for lack of standing and because the discretionary-funding cuts already make the claims moot. As of this check, the court has not ruled on that motion, and no new developments beyond it have been confirmed.
Last updated: July 2026
A federal lawsuit filed in June 2025 is threatening to permanently end a program that funnels hundreds of millions of dollars to colleges with large Hispanic student populations. The hispanic serving colleges grant lawsuit, formally known as State of Tennessee v. U.S. Department of Education, has already triggered a $350 million funding cut and reshaped how the federal government treats race-based grant programs.
Over 600 colleges and 5.6 million students are caught in the middle of this fight.
The Trump administration sided with the plaintiffs in August 2025, refusing to defend the program in court. That move opened the door to one of the most significant shifts in higher education funding in decades.
This article breaks down who filed the lawsuit, what legal arguments are being made, how much money is at stake, which schools are affected, and where the case stands as of 2026.
Hispanic Serving Colleges Grant Lawsuit: What You Need to Know
The Hispanic serving colleges grant lawsuit is a federal legal challenge that seeks to dismantle a grant program reserved for colleges where at least 25% of undergraduates are Hispanic.
The lawsuit was filed on June 12, 2025, by Tennessee Attorney General Jonathan Skrmetti and Students for Fair Admissions, the conservative organization led by activist Edward Blum, against the U.S. Department of Education.
The plaintiffs argue the program discriminates against schools that do not meet the ethnic enrollment threshold. They want federal courts to declare the eligibility criteria unconstitutional.
The complaint seeks a declaratory judgment that the HSI program’s racial criteria are unconstitutional and a permanent injunction barring the Department of Education from using racial or ethnic thresholds when determining grant eligibility.
This case matters right now because the federal government has already taken action. The Department of Education announced it would cut discretionary funding tied to the program. Colleges that have relied on HSI grants for years are now watching a long-standing source of support come under direct legal attack.
| Key Detail | Information |
|---|---|
| Case Name | State of Tennessee v. U.S. Dept. of Education |
| Case Number | No. 3:25-cv-270 |
| Court | U.S. District Court, Eastern District of Tennessee |
| Filed | June 12, 2025 |
| Plaintiffs | State of Tennessee, Students for Fair Admissions |
| Defendant | U.S. Department of Education |
What Is the HSI Grant Program?
The HSI grant program is a federal funding initiative that awards money to colleges and universities where Hispanic students make up at least 25% of the undergraduate enrollment.
The HSI program was rolled out in 1995, three years after it was incorporated into the Higher Education Act. The program provides grants to qualifying colleges and universities that have at least 25% Hispanic undergraduate full-time equivalent enrollment.
Congress created the program in 1998 after finding Latino students were attending college and graduating at far lower rates than white students. The grants were designed to close that gap by funding student services, academic programs, lab upgrades, tutoring, and STEM support.
To earn the HSI designation, a school must meet two conditions. Enrollment must be at least 25% Hispanic. At least half of students must be low-income.
- Schools use HSI grants for tutoring programs and academic support
- Funding goes toward STEM laboratories and equipment upgrades
- Career counseling, transfer support, and dual enrollment programs benefit all students
- Faculty training and culturally responsive teaching methods are also funded
The money is meant to be spent on programs that could benefit all students, not just Latino students, proponents note. That detail is central to the legal defense of the program.
Why Is the HSI Program Being Challenged?
The HSI program is being challenged because the plaintiffs argue that tying federal grants to a specific ethnic enrollment percentage violates the Constitution’s equal protection guarantee.
Skrmetti and SFFA claim the program’s eligibility requirements are discriminatory and constitute an unconstitutional use of federal power. Their argument is straightforward: public universities in Tennessee serve Hispanic and low-income students, but receive no HSI funding because their Hispanic enrollment falls below 25%.
The complaint claims the program’s “arbitrary ethnic threshold” unfairly excludes Tennessee institutions from accessing millions in federal grants. They point to the University of Memphis, where 47% of students are low-income Pell Grant recipients and 62% are racial or ethnic minorities, as a school that gets shut out despite serving the same type of students HSI grants are meant to help.
The core legal theory is that the 2023 Supreme Court ruling banning race-conscious admissions should also apply to race-conscious grant eligibility. Both the plaintiffs and the Trump DOJ have leaned on that interpretation heavily.
Key Takeaway: The lawsuit argues the 25% Hispanic enrollment threshold is an unconstitutional ethnic quota that harms schools and students excluded by it.
Who Filed the HSI Lawsuit?
Two parties filed this lawsuit: the State of Tennessee and Students for Fair Admissions.
The U.S. Department of Education’s longtime HSI grant program undercuts equal opportunity and is discriminatory, the state and advocacy group argued.
Tennessee’s case rests on the argument that every public university in the state serves Hispanic students, yet none qualifies for HSI grants. That creates an unfair funding gap, the state says.
Students for Fair Admissions is not a new player in this space. SFFA was the organization that successfully sued Harvard to end affirmative action in admissions. Its president, Edward Blum, has led multiple legal campaigns against race-conscious policies in education.
Edward Blum said: “This lawsuit challenges a federal policy that conditions the receipt of taxpayer-funded grants on the racial composition of a student body. No student or institution should be denied opportunity because they fall on the wrong side of an ethnic quota.”
| Plaintiff | Role |
|---|---|
| State of Tennessee | Argues TN schools are denied funding due to ethnic quota |
| Students for Fair Admissions (SFFA) | Anti-affirmative action group; led by Edward Blum |
| Tennessee AG Jonathan Skrmetti | Filed the lawsuit on behalf of the state |
Tennessee v. Department of Education: Case Details
State of Tennessee v. U.S. Department of Education, case number 3:25-cv-270, is the formal legal action at the center of this fight.
In the HSI program, Congress directed the Department of Education to award funds to colleges whose undergraduate student body is comprised of at least 25 percent Hispanic students under 20 U.S.C. § 1101a(a)(5). Plaintiffs argue the statutory quota is unconstitutional under SFFA.
The case is before the U.S. District Court for the Eastern District of Tennessee. The plaintiffs asked for two things: a declaratory judgment calling the HSI program’s ethnic criteria unconstitutional, and a permanent injunction blocking the Department of Education from enforcing those criteria.
Although the DOJ announced it would not defend the lawsuit, the Hispanic Association of Colleges and Universities intervened as a defendant and has moved for judgment on the pleadings on several grounds, including lack of standing and mootness.
The case is active and being litigated. The intervention by HACU means there is still an organized defense in the courtroom, even though the federal government walked away from defending it.
What the DOJ Decision Means for HSI Funding
The DOJ’s refusal to defend the HSI program was a turning point that signaled the federal government agreed with the lawsuit’s core argument.
On August 22, 2025, the Justice Department released a letter in which Solicitor General D. John Sauer notified House Speaker Mike Johnson that the department “has decided not to defend” the program, saying certain aspects of it are unconstitutional.
Sauer stated that “The Department of Justice has determined that those provisions violate the equal protection component of the Fifth Amendment’s Due Process Clause. The Supreme Court has explained that outright racial balancing is patently unconstitutional.”
That letter triggered a formal funding termination announcement from the Department of Education. The department moved to stop discretionary grant awards for HSIs and repurpose the money.
The Department agreed that the racial quotas in the HSI programs are unconstitutional. Grant recipients were notified that existing discretionary awards would be non-continued, and applicants for new grants were notified that competitions would not make any new awards.
Key Takeaway: The DOJ’s August 2025 refusal to defend the program directly triggered the Education Department’s decision to terminate discretionary HSI grant funding.
How Much HSI Grant Funding Is at Risk?
Approximately $350 million in discretionary funds were expected to be allocated to support HSI and other minority-serving institution programs in fiscal year 2025.
That number does not include everything. There is a split between discretionary funding, which the administration can redirect, and mandatory funding, which Congress controls. The Department said it would disperse approximately $132 million in mandatory funds appropriated by Congress that cannot be reprogrammed on a statutory basis.
So roughly $350 million is at risk of redirection. Around $132 million in congressionally mandated funds must still be distributed.
| Funding Type | Amount | Status |
|---|---|---|
| Discretionary HSI grants (FY2025) | ~$350 million | Terminated/reprogrammed |
| Mandatory congressional funding | ~$132 million | Still being distributed |
| California HSI grants (total history) | $600 million+ | Future awards at risk |
| Texas annual HSI grants | ~$70 million | At risk going forward |
The leader of the 22-campus California State University system said the cuts would cause “irreparable harm” to campuses. CSU campuses have used grants to accelerate graduations, fund STEM access for low-income students, and train faculty.
Which Colleges Lose HSI Funding?
Any college currently designated as an HSI and receiving discretionary grant funds is affected by the funding termination.
California has 167 Hispanic-Serving Institutions, which have received more than $600 million in HSI grants since federal funding for the program began in 1995. That includes five of the University of California’s nine undergraduate campuses, all but one of California State University’s 22 regular campuses, and the majority of the state’s community colleges.
California is the hardest-hit state in terms of sheer number of campuses. But other states with large Latino populations face serious exposure too.
Texas is expected to lose about $70 million annually in HSI grants. UTEP, EPCC, and Texas Tech Health El Paso are among hundreds of HSIs in the state that receive funding to support students’ academic and career development.
- California: 167 HSI campuses
- Texas: over 100 HSI campuses, ~$70M annual exposure
- Florida, New York, Arizona, New Mexico: all have significant HSI populations
- Puerto Rico: home to numerous HSI institutions
As of the 2023-24 academic year, 615 institutions in the U.S. held the HSI designation. Every one of them faces uncertainty about future grant cycles.
How Many Students Are Affected by HSI Cuts?
The scale of this lawsuit’s impact extends well beyond campus administrators. The students are the ones who feel it most.
HSIs enroll over 5.6 million students nationwide, including two-thirds of all Latino undergraduates in the country.
Think about that number for a second. Two-thirds of every Latino college student in America attends a school that could lose this funding source. That is not a niche policy dispute. That is a structural shift.
HSIs enroll about 65% of the nation’s Hispanic students, and they also register almost 33% of all U.S. undergraduates. That means the impact spreads beyond Latino students. One in three American college students attends an HSI.
The programs these grants fund include:
- STEM tutoring and laboratory access for low-income students
- Career counseling and job placement support
- Transfer support programs for community college students
- Dual enrollment programs connecting high schools to colleges
- Faculty development and culturally responsive instruction
CSU Chancellor Mildred García said ending the HSI grant program “will have an immediate impact and irreparable harm to our entire community. Without this funding, students will lose the critical support they need to succeed in the classroom, complete their degrees on time, and achieve social mobility.”
Key Takeaway: Over 5.6 million students at 615 institutions across the country are exposed to service cuts if HSI grant funding is permanently eliminated.
Discretionary vs. Mandatory HSI Funding Explained
Not all HSI funding works the same way, and understanding the difference matters for schools trying to figure out what they still have access to.
Discretionary funding is money that the executive branch controls year to year through the appropriations and budget process. The Department of Education has authority to allocate or redirect it. That is the money that was cut.
Mandatory funding is money Congress specifically earmarked by statute. The executive branch cannot simply reprogram it without an act of Congress.
While discretionary program funding for fiscal year 2025 will be reprogrammed to support other priorities, the Department will disperse approximately $132 million in mandatory funds appropriated by Congress that cannot be reprogrammed on a statutory basis.
| Funding Type | Who Controls It | What Happened |
|---|---|---|
| Discretionary (~$350M) | Executive branch / Dept. of Education | Terminated, reprogrammed |
| Mandatory (~$132M) | Congress via statute | Must still be paid out |
One college official said she expects the White House’s decision “won’t be the final word” on the grant program, questioning whether this is a presidential authority or if the authority rests with Congress. That legal question about who actually has the power to kill these programs may become a key issue in future litigation.
What the Fifth Amendment Has to Do With HSI Grants
The constitutional argument against the HSI program centers on the Fifth Amendment, not the Fourteenth.
The Fourteenth Amendment’s equal protection clause applies to states. The Fifth Amendment’s due process clause applies to the federal government. Courts have interpreted it to include an equal protection component that applies to federal action.
The U.S. Solicitor General determined that the Hispanic-Serving Institutions programs “violate the equal-protection component of the Fifth Amendment’s Due Process Clause.”
The argument is that the federal government cannot condition grant eligibility on ethnic enrollment percentages. Doing so, the plaintiffs say, is racial balancing by another name.
The DOJ cited the 2023 Supreme Court decision outlawing affirmative action, which said “outright racial balancing” is “patently unconstitutional.”
The defense counters that the program does not evaluate individual students by race. It applies an institutional demographic benchmark. That distinction, defenders argue, is legally meaningful. Whether a court will agree is the question now before the Eastern District of Tennessee.
Key Takeaway: The constitutional fight over HSI grants turns on whether a federal program that uses ethnic enrollment percentages to determine school eligibility counts as the kind of racial balancing the Supreme Court has prohibited.
SFFA v. Harvard and the HSI Connection
The 2023 Supreme Court ruling that ended race-conscious college admissions is the legal foundation the plaintiffs are building on.
Tennessee Attorney General Skrmetti said: “In SFFA v. Harvard, the Supreme Court ruled that racially discriminatory admissions standards violate the law, and the HSI program’s discriminatory grant standards are just as illegal. Treating people differently because of their skin color and ancestry drags our country backwards.”
SFFA was the organization behind both the admissions case and the HSI lawsuit. Edward Blum and his team won the admissions fight. Now they are trying to extend that victory into federal grant programs.
Both Skrmetti and Blum invoked the 2023 Supreme Court ruling. Blum argued the court “made clear” that federal funding practices like the HSI grant program are “patently unconstitutional.” That interpretation of diversity-focused federal funding has yet to be tested judicially.
The last sentence is the critical caveat. No court has yet ruled that the admissions case directly applies to federal grant programs for institutions. The HSI case could be the first to test it.
HACU argued in its motion to intervene that unlike admissions policies that evaluate individual applicants, the HSI Program applies a neutral benchmark to institutions and helps expand access to higher education through federal support.
HACU and LatinoJustice PRLDEF: The Defense Response
Two organizations stepped in to defend the HSI program in court after the federal government refused to do so.
The Hispanic Association of Colleges and Universities and LatinoJustice PRLDEF filed a motion to intervene in the case. HACU represents more than 600 HSIs around the country.
LatinoJustice PRLDEF filed the motion to intervene in July 2025. Francisca Fajana, Director of Racial Justice Strategy at LatinoJustice PRLDEF, said: “The Trump administration’s decision to eliminate funding for Hispanic-Serving Institutions is a devastating blow that will harm millions of students. We can’t allow decades of progress to be erased.”
David Mendez, HACU’s interim CEO, was direct about the stakes. He said: “This is not just a budget cut. It is an attack on equity in higher education. The funds granted to HSIs have never supported only Latino students. These funds strengthen entire campuses, creating opportunities and resources that benefit all students.”
HACU argued in its legal filings that the HSI Program was created by Congress to provide targeted support to institutions that already serve a high percentage of Latino students. It does not exclude or prefer individuals based on race, but instead funds schools working to close educational gaps. Legal precedent, including Parents Involved v. Seattle School District, affirms that the government can be aware of racial and ethnic disparities and take action to address persistent inequities.
Key Takeaway: HACU and LatinoJustice PRLDEF are now the primary defenders of the HSI program in court, arguing the program is legally sound and does not constitute racial balancing under existing precedent.
What Happens to Current HSI Grant Recipients?
Schools that already had active HSI grants when the funding cut was announced are in a complicated position.
Grant recipients were notified that existing discretionary awards will be non-continued, and applicants for new grants were notified that the competitions will not make any new awards.
That means both ongoing multi-year grants and new applications were affected. A school mid-way through a three-year award lost the remaining disbursements.
In California’s Central Valley, Reedley College had earned nearly $2 million in HSI grants that funded career counseling, transfer support, and dual enrollment programs. Schools like that are now scrambling to fill the gap with local or state dollars.
Because officials anticipated federal funding cuts, the State Center Community College District set aside $4 million in its 2025-26 budget to support programs that could be impacted and another $12 million to support staffing.
Not every school had that buffer. Smaller community colleges with limited reserves are the most exposed. The practical question for students is whether tutoring programs, STEM labs, and counseling services will still be there when classes resume.
| Scenario | Impact |
|---|---|
| Mid-award discretionary grants | Non-continued, funding stopped |
| New competitive grant applications | Competitions cancelled |
| Mandatory congressional funding | Still being disbursed (~$132M) |
| Schools with reserve budgets | Short-term cushion available |
| Small community colleges | High risk of service disruption |
HSI Lawsuit Timeline: 2025 to 2026
The case has moved fast. Here is the full sequence of events from filing to the current moment.
| Date | Event |
|---|---|
| January 2025 | Trump revokes Biden executive order supporting HSIs; DOE removes HSI program web pages |
| June 12, 2025 | Tennessee AG and SFFA file lawsuit in Eastern District of Tennessee |
| July 2025 | LatinoJustice PRLDEF files motion to intervene on behalf of HACU |
| August 22, 2025 | DOJ Solicitor General notifies Congress the department will not defend the program |
| September 2025 | Department of Education announces termination of discretionary HSI grants |
| September 11, 2025 | EdSource reports $350M cut confirmed; California schools react |
| October 2025 | HACU formally intervenes as defendant; files motion for judgment on the pleadings |
| February 2026 | Case active in Eastern District of Tennessee; HACU challenging standing and mootness |
The Hispanic Association of Colleges and Universities said Trump’s agenda is “entirely adverse” to the group’s interests, citing the president’s aim to close the Education Department entirely.
The case is moving into briefing and motions practice as of early 2026.
What Could Happen Next in the HSI Case?
The case has several possible outcomes, and each one carries real consequences for hundreds of schools.
Without intervention from the Justice Department, the case could potentially be dismissed if the court finds no adequate defendant. This would leave the grant program’s statutory structure in place, since the Department of Education cannot end the program without a decision from the court or Congress.
That is the scenario HACU is trying to engineer with its mootness and standing arguments. If the government defunded the program and no longer enforces the ethnic threshold, the court might find there is nothing left to enjoin.
A second scenario: the district court rules on the merits. If the court sides with Tennessee and SFFA, it could issue the permanent injunction they asked for and declare the 25% threshold unconstitutional.
A third scenario: Congress acts. Lawmakers could rewrite the Higher Education Act to modify the HSI eligibility criteria, effectively mooting the lawsuit by changing the law.
Trump’s 2026 budget request preserved grants for Hispanic-serving colleges and even asked Congress for a slight increase. That contradiction between the budget request and the DOJ’s legal position adds real uncertainty to where this ultimately lands.
- Court dismisses for lack of standing or mootness (HACU’s preferred outcome)
- Court rules on the merits and strikes down the 25% threshold
- Congress rewrites the HSI eligibility criteria in the Higher Education Act
- Higher court reverses any district court ruling on appeal
The case is far from over. What is already over is the immediate funding that hundreds of schools and millions of students were counting on.
Frequently Asked Questions
Is the HSI grant program still active in 2026?
The discretionary portion of the HSI grant program has been defunded as of late 2025. Approximately $132 million in mandatory congressional funding is still being distributed. New competitive grant awards are not being made, and existing multi-year awards have been discontinued.
Which states have the most colleges affected by the HSI lawsuit?
California has the most affected schools, with 167 HSI campuses that have received over $600 million in total HSI grants. Texas follows, with an estimated $70 million in annual HSI grants at risk. Florida, New York, Arizona, and New Mexico also have significant numbers of HSI campuses.
What does the DOJ refusing to defend the HSI program actually mean?
When the DOJ refuses to defend a law, the federal government effectively abandons its own legal position in court. It signals that the administration agrees with the challengers’ constitutional argument. It does not automatically end the program; Congress still controls mandatory appropriations, and intervening parties like HACU can continue the defense.
Can students at non-HSI schools benefit from HSI grants if the lawsuit succeeds?
If the court strikes down the 25% threshold, it would not immediately redirect HSI money to other schools. The plaintiffs asked for an injunction blocking the ethnic requirement, which could open up grant eligibility to more institutions. Congress would likely need to act to actually redesign who qualifies and how money gets distributed.
What is the difference between mandatory and discretionary HSI funding?
Discretionary HSI funding is money the executive branch controls and can redirect; that is the roughly $350 million that was cut in 2025. Mandatory HSI funding is money Congress directly appropriated by statute, approximately $132 million, and the executive branch cannot reprogram it without congressional action. This split is why some HSI-related payments are still going out even after the administration announced cuts.
Where Things Stand Right Now
The Hispanic serving colleges grant lawsuit has already changed the funding landscape for hundreds of schools. The $350 million in discretionary cuts is not a theoretical threat. It happened.
The legal fight is still active. HACU and LatinoJustice PRLDEF are in court defending the program. The outcome in the Eastern District of Tennessee will shape whether race-neutral institutional benchmarks survive as a tool for directing federal education funding.
If you work at or attend an HSI, check with your institution’s financial aid and grant administration office to understand which specific programs are affected and whether any replacement funding has been secured.
