HSI Grant Lawsuit: What It Means for 600 Colleges and 5.6M Students

Tennessee Attorney General Jonathan Skrmetti and Students for Fair Admissions filed a federal lawsuit on June 11, 2025, targeting the Hispanic-Serving Institutions program, which provides federal grants to colleges where at least 25 percent of undergraduates identify as Hispanic. The plaintiffs argue the program violates the Equal Protection Clause of the Fifth Amendment, discriminates based on ethnicity, and exceeds Congress’s constitutional authority under the Spending Clause.

The case, Tennessee and Students for Fair Admissions v. U.S. Department of Education (No. 3:25-cv-270), was filed in the U.S. District Court for the Eastern District of Tennessee in Knoxville. The lawsuit is ongoing. The Justice Department declined to defend the program in August 2025, and the Education Department cut $350 million in discretionary HSI funding in September 2025. The Hispanic Association of Colleges and Universities, represented by LatinoJustice PRLDEF, was granted intervenor status on October 10, 2025, and is now actively defending the program in court.

HSI Grant Lawsuit Timeline and Updates

1992 — Congress Formally Recognizes Hispanic-Serving Institutions

Congress first included language recognizing Hispanic-Serving Institutions in the Higher Education Act of 1992. The designation acknowledged that colleges with large Hispanic student populations were serving a rapidly growing and historically underresourced population.

The formal grant program followed in 1995. Congress codified it under Titles III and V of the Higher Education Act. The 25 percent Hispanic undergraduate enrollment threshold became the defining eligibility benchmark.

1998 — Grant Program Expanded and Codified

Congress expanded the HSI program in 1998 following data showing Hispanic students were attending college and earning bachelor’s degrees at significantly lower rates than white students. The program was designed to strengthen institutions already serving large Hispanic populations, not to alter admissions practices.

Grants funded a wide range of uses: laboratory upgrades, tutoring centers, STEM programs, student services, fellowships, and remote learning infrastructure. The program grew steadily for more than two decades.

2023 — SFFA Wins Affirmative Action Ruling at the Supreme Court

Students for Fair Admissions successfully challenged race-conscious admissions policies at Harvard University and the University of North Carolina at Chapel Hill. The Supreme Court ruled in June 2023 that those admissions programs violated the Equal Protection Clause.

Edward Blum, SFFA’s founder and president, signaled at the time that the ruling would become the basis for future challenges to other race-adjacent federal programs. The HSI grant program became the next target.

January 2025 — Trump Revokes Biden’s HSI Executive Order

President Biden had signed an executive order in 2024 pledging increased funding and a new presidential advisory board for Hispanic-serving institutions. President Trump revoked that order on his first day in office, January 20, 2025.

The reversal signaled a shift in federal posture toward HSIs. Doubts about the administration’s commitment to HSI funding began circulating among university administrators even before any litigation began.

June 11, 2025 — Tennessee and SFFA File the Lawsuit

Tennessee Attorney General Jonathan Skrmetti and Students for Fair Admissions jointly filed the complaint in the Eastern District of Tennessee in Knoxville. The case number is 3:25-cv-270.

The complaint named U.S. Department of Education Secretary Linda McMahon as a defendant. It alleged the HSI program’s ethnicity-based eligibility criteria violate the Fifth Amendment’s Due Process Clause and constitute an unconstitutional exercise of Congress’s Spending Clause authority. The plaintiffs asked for a declaratory judgment that the program’s ethnic thresholds are unconstitutional and a permanent injunction barring the Department of Education from applying those thresholds when awarding grants to Tennessee institutions.

Tennessee’s argument rested on a specific injury: all of the state’s public universities serve Hispanic students, but none qualify for HSI grants because none meet the 25 percent enrollment threshold. The University of Tennessee, Knoxville, has approximately 7 percent Hispanic undergraduate enrollment. East Tennessee State University has about 4 percent. Tennessee’s only HSI is Southern Adventist University, a private nonprofit. No public college in Tennessee qualifies.

July 24, 2025 — HACU and LatinoJustice File to Intervene

The Hispanic Association of Colleges and Universities, represented by LatinoJustice PRLDEF, filed a motion to intervene as a defendant. HACU represents more than 600 Hispanic-Serving Institutions. LatinoJustice PRLDEF argued that HACU’s member institutions had a direct legal interest in the outcome that the Department of Education, which had not yet signaled it would refuse to defend the program, could not adequately represent.

The motion argued that the HSI program does not discriminate against individual students, does not alter admissions practices, and applies a neutral institutional benchmark. HACU also cited a 2023 Urban Institute study finding that HSI-designated institutions increased degree completion rates across all racial and ethnic groups, not just Hispanic students.

July 25, 2025 — DOJ Declines to Defend the Program

The very next day, the Department of Justice made its position clear. Solicitor General D. John Sauer sent a letter to House Speaker Mike Johnson stating that the department had decided not to defend the constitutionality of the HSI program. Sauer wrote that the program “violates the equal-protection component of the Fifth Amendment’s Due Process Clause.”

That decision was extraordinary. The government was effectively conceding the plaintiffs’ constitutional argument before a judge had ruled on it. It also meant the only party left to mount a substantive defense of the HSI program in court would be HACU and LatinoJustice PRLDEF, if the court granted their intervention motion.

August 22, 2025 — DOJ Sends Formal Memo to Congress

The Justice Department formalized its position in a memo to Congress. The memo stated the department would not defend the program, confirmed its view that the HSI grant criteria are unconstitutional, and called on Congress to redesign the program without ethnicity-based thresholds.

That memo triggered immediate reaction from HSI advocates, Democratic legislators, and college administrators across the country. The letter from members of Congress to Education Secretary McMahon, demanding she reverse course, followed within days.

September 10, 2025 — Education Department Cuts $350 Million in HSI Funding

The U.S. Department of Education announced it would hold back $350 million in discretionary grant funding that had been budgeted for fiscal year 2025 for HSIs and other minority-serving institutions. Secretary Linda McMahon said the grants “discriminate by restricting eligibility to institutions that meet government-mandated racial quotas.”

The cut affected two of the three challenged Title V programs: the Developing Hispanic-Serving Institutions program and the Promoting Postbaccalaureate Opportunities for Hispanic Americans program. A third program, the HSI STEM and Articulation program, continued receiving mandatory funding that Congress had directly appropriated by statute. The executive branch cannot reprogram that funding without congressional action.

California took the hardest hit. The state has 167 Hispanic-Serving Institutions and had received more than $600 million in HSI grants since the program launched. CSU Chancellor Mildred García called the cuts a measure that “will have an immediate impact and irreparable harm to our entire community.” The 22-campus California State University system alone stood to lose tens of millions of dollars used to expand STEM access, accelerate graduation rates, and train faculty.

October 10, 2025 — Court Grants HACU Intervention

The U.S. District Court for the Eastern District of Tennessee granted HACU’s motion to intervene as a defendant. This was a significant procedural win. It meant the HSI program would have an active, invested legal advocate in the courtroom, not just a nominal government defendant that had already conceded the constitutional argument.

HACU Interim CEO John Moder said: “This decision ensures that Hispanic-Serving Institutions and the students they serve have a voice in defending the constitutionality of programs that expand educational opportunity.”

December 2, 2025 — HACU Files Motion to Dismiss for Lack of Jurisdiction

HACU’s legal team filed a motion to dismiss the case, arguing the court lacked subject matter jurisdiction. The argument centered on the September funding cuts: if the administration had already defunded the discretionary portions of the HSI program, HACU argued the plaintiffs’ claims were partly or fully moot. There was no longer an active grant program for the court to enjoin in the same way the complaint originally framed it.

HACU also argued the plaintiffs lacked standing to challenge mandatory HSI STEM funding, which continued because Congress had directly appropriated it by statute.

January 8, 2026 — HACU Files Motion for Judgment on the Pleadings

HACU followed the dismissal motion with a motion for judgment on the pleadings. This is an argument that, even accepting everything the plaintiffs allege as true, they still cannot win as a matter of law. The motion is pending as of mid-2026.

What the Lawsuit Alleges and Why the Legal Theory Matters

The core legal argument is simple on its surface but complex in its implications. Tennessee and SFFA contend that any federal program conditioning grant eligibility on the ethnic composition of an institution’s student body constitutes racial or ethnic discrimination under the Fifth Amendment’s Equal Protection guarantee.

They draw a direct line from the 2023 Supreme Court ruling in Students for Fair Admissions v. Harvard. That case held that race-conscious admissions programs at Harvard and UNC violated the Equal Protection Clause. SFFA and Tennessee argue the same principle applies to institutional grant criteria.

The theory has a surface appeal. But critics point out a fundamental distinction: the HSI program does not evaluate individual students by race. It uses a demographic benchmark to identify institutions that already serve high concentrations of Hispanic students. The program funds those institutions, and the grants benefit all students enrolled, regardless of ethnicity.

That distinction, HACU argues, is the difference between an admissions policy that sorts individuals by race and a funding formula that recognizes demographic reality at an institutional level. Courts have long permitted the latter under the principle established in Parents Involved v. Seattle School District No. 1 (2007), where Justice Kennedy’s concurrence affirmed that government can acknowledge racial disparities and take steps to address them without assigning individual benefits or burdens on the basis of race.

What SFFA’s Broader Strategy Looks Like

The HSI lawsuit is not an isolated case. It is the latest in a deliberate legal strategy by Edward Blum and SFFA to dismantle race-conscious or race-adjacent federal programs one at a time.

SFFA began with admissions. It won. The Supreme Court’s 2023 ruling effectively ended affirmative action in college admissions across the country. Blum has made no secret of his next targets: federal diversity programs, race-based grant criteria, and government contracting preferences.

The pattern is recognizable: identify a program with an ethnic or racial eligibility requirement, find a plaintiff who can demonstrate exclusion from a benefit, and argue the program violates equal protection. The HSI program fits that template almost exactly. Tennessee’s public universities are excluded from HSI grants because none meet the 25 percent Hispanic enrollment threshold. That exclusion is the hook.

What makes this case different from the admissions cases is scale. The HSI program serves 615 colleges and universities, enrolling over 5.6 million students. Two-thirds of all Hispanic undergraduates in the United States attend an HSI. If the program falls, the downstream effects spread across 29 states.

Who the Funding Cut Hurts and How

The $350 million cut that followed the lawsuit was not theoretical. It happened in September 2025. Real programs lost real funding.

At institutions across California’s Central Valley, HSI grants had funded career counseling, transfer support, dual enrollment pipelines, and tutoring services. Reedley College had received nearly $2 million in HSI grants. The State Center Community College District set aside $4 million in reserve funds and another $12 million in staffing reserves specifically because administrators had anticipated the cuts were coming.

The student population most affected is low-income, first-generation college students. The Urban Institute’s 2023 study found that HSI investments increased bachelor’s degree completion rates across all student demographics at those institutions. Cutting the funding does not just harm Hispanic students. It harms every student at an underfunded institution who depended on the services those grants made possible.

The mandatory HSI STEM program, approximately $132 million appropriated directly by Congress, continues because the executive branch cannot redirect it without a new act of Congress. That is a critical distinction. The roughly $350 million in discretionary funding is gone. The statutory funding remains, at least for now.

What the DOJ’s Refusal to Defend Actually Signals

When a federal agency declines to defend its own program in court, that is unusual. When the Justice Department sends a formal memo to Congress explaining why the program is unconstitutional, that is a policy statement as much as a legal one.

The DOJ’s position is that the HSI program provides an unconstitutional advantage based on race or ethnicity. That framing is important. The administration is not saying the program’s goals are illegitimate. It is saying the method, an enrollment-based ethnic threshold, is what fails constitutional scrutiny.

What does that leave open? Theoretically, a redesigned program that funds institutions serving high concentrations of low-income, underprepared, or first-generation students without any explicit ethnicity requirement. Secretary McMahon said the department looks forward to working with Congress on exactly that redesign. Whether Congress moves in that direction, and whether such a redesign would reach the same institutions HSIs currently do, is an open question.

The immediate effect of the DOJ’s refusal is that HACU and LatinoJustice PRLDEF are the only parties actively defending the program’s constitutionality. That is an unusual position for a multi-billion-dollar federal grant program to be in.

The 2023 Urban Institute Study: What the Research Actually Shows

HACU’s legal defense relies in part on empirical research. A 2023 study published by the Urban Institute examined outcomes at HSI-designated institutions and found that the investments made by those colleges increased the number of students of all races and ethnicities who completed college and earned bachelor’s degrees.

The finding matters legally because it undermines the argument that HSI grants are a zero-sum transfer of benefits to Hispanic students at the expense of others. The research shows the opposite: the institutional investment has a broad effect. It does not sort students by ethnicity. It strengthens the campus infrastructure that all students use.

Plaintiffs would argue the research is irrelevant to the constitutional question. Whether a program produces good outcomes does not determine whether the eligibility criteria violate equal protection. That is a fair point. But the research does matter politically and practically. It frames what is at stake if the program is dismantled.

What This Lawsuit Teaches Consumers

The HSI grant lawsuit is not a consumer protection case. No individual plaintiff has been physically harmed by a corporation concealing a dangerous product. But it carries the same essential lesson: the legal system is a tool that can expand access or restrict it, depending on who wields it.

SFFA has now demonstrated twice that a well-funded legal campaign, built on a coherent constitutional theory and run with patience through the courts, can dismantle programs that took decades to build. First affirmative action in admissions. Now federal grant criteria for minority-serving institutions.

What this case teaches students, administrators, and policymakers is that federal programs are not permanent. Congressional statutes can be challenged. Executive branch programs can be defunded before a court ever rules. And when the government’s own lawyers decline to defend a program, the burden of defending it falls entirely on advocates and intervenors who stepped forward to fight.

The outcome in the Eastern District of Tennessee will shape whether race-neutral institutional benchmarks remain a permissible tool for directing federal education resources. That question affects not just HSIs, but every Minority-Serving Institution designation in federal law, including HBCUs, Tribal Colleges, and Asian American and Native American Pacific Islander institutions. The precedent set here extends far beyond the 25 percent enrollment threshold at issue in this case.

Readers following federal education funding challenges may also want to track the military families’ lawsuit over book bans in base schools, where government authority over federally funded educational institutions is similarly contested. The Joyce Beatty lawsuit over the Kennedy Center raised parallel questions about executive overreach into congressionally mandated funding structures. For a broader view of how courts handle government discrimination claims, the Caitlin Clark stalking case illustrates how civil rights protections function in practice when institutions fail to act.