University of Texas System to End Race-Based Scholarships Under Pressure From Title VI Settlement

The Settlement Terms

The University of Texas System will eliminate all race-exclusive scholarships and redirect roughly $47 million in annual award money toward need-based financial aid under a settlement expected to be filed in federal court in Austin on Feb. 19, 2026, according to two university officials familiar with the agreement and a plaintiff's attorney involved in the case. The deal resolves a Title VI complaint filed in December 2025 by a group of current and former students who argued that the system's scholarship programs discriminated against white and Asian applicants.

The settlement applies to all 13 UT System institutions, including the flagship Austin campus, UT Dallas, UT Arlington, UT San Antonio, and the University of Texas at El Paso. The agreement requires the system to stop considering race or ethnicity as a standalone qualification for any scholarship, fellowship, or tuition waiver by Aug. 1, 2026, the officials said. Students currently receiving the awards will keep their funding through the 2026-2027 academic year, but no new race-restricted awards will be granted after the fall 2026 semester begins.

A draft consent decree reviewed by The Alamo Post includes a $3.2 million payment to a settlement fund for affected students and attorneys, with individual awards capped at $22,000. The document also requires the system to publish a public notice of the policy change in the Austin American-Statesman and on each campus financial aid website by March 3, 2026. The plaintiff's attorney, who spoke on condition of anonymity because the filing was not yet public, said the agreement was signed by UT System Chancellor James Milliken on Feb. 14 and by lead plaintiff attorneys on Feb. 16.

How the Complaint Began

The lawsuit, filed Dec. 8, 2025, in the Western District of Texas, targeted more than 30 UT System scholarship programs that reserved funding exclusively for Black, Hispanic, or Native American students. The complaint cited programs such as the UT Austin Terry Foundation Diversity Scholarship, the UT Dallas Black Alumni Network Scholarship, and the UT San Antonio Hispanic Alumni Association Scholarship, which together distributed approximately $31 million in the 2024-2025 academic year, according to system budget documents attached to the filing.

A student involved in the case, who spoke on condition of anonymity because of fear of campus retaliation, said the lead plaintiff applied for the Terry Foundation scholarship in fall 2024 and was told the program was not open to white applicants. The student said the group grew to 17 plaintiffs by January after attorneys from a national public interest law firm began advertising the case through student newspapers and conservative campus groups.

Two university officials said the system's legal team initially planned to defend the programs under the Supreme Court's existing framework for race-conscious remedies, but that internal polling of regents and a review of legal costs led to a settlement recommendation. One official, who has seen the closed-session regents materials, said outside counsel warned that a trial could cost the system more than $14 million in legal fees and expose individual campuses to separate litigation.

Internal Rollout and Reaction

The UT System's Office of General Counsel circulated a 12-page implementation memo to campus presidents on Feb. 17, according to one of the university officials. The memo instructs financial aid offices to begin redesigning application portals by March 1 and to remove any essay prompts or eligibility screens that ask about race or ethnicity in scholarship contexts by April 15. The memo also orders campus diversity offices to stop administering funds that restrict eligibility by race, even if the money comes from private donors, the official said.

A second university official said the system plans to announce the settlement through a press release on Feb. 19, timed to coincide with the court filing. The official said the release will describe the changes as part of a "broader commitment to access and affordability" and will not mention the racial eligibility restrictions directly. Several student groups have already learned of the pending change through social media and campus list-servs, the student involved in the case said.

The plaintiff's attorney said the firm expects to file similar complaints against at least two other large public university systems before the end of March, but declined to name them. The attorney said the UT settlement will serve as a template for attorneys pursuing challenges to race-based financial aid in California, Florida, and North Carolina.

What Happens Next

The settlement must receive preliminary approval from U.S. District Judge Lee Yeakel, who is assigned to the case, before notice can be sent to class members. A scheduling notice filed Feb. 10 shows a status conference set for March 5 at 10:00 a.m. Central in the federal courthouse on West Fifth Street in Austin. Attorneys on both sides expect Judge Yeakel to grant preliminary approval at that hearing, the plaintiff's attorney said.

The agreement does not affect admissions decisions directly, but one of the university officials said the system's general counsel's office is reviewing whether race-exclusive recruitment programs, pipeline initiatives, and retention grants could face similar challenges. That review is expected to conclude by April 30, the official said.

Watch for three developments in the next 48 to 72 hours. First, the court filing on Feb. 19 will reveal the full class definition and the precise list of scholarship programs being modified. Second, the U.S. Department of Education's Office for Civil Rights, which opened a parallel administrative review in January, is expected to issue a short statement indicating it will close the review. Third, the Texas Senate Higher Education Committee has scheduled a hearing for Feb. 24 at which system officials are expected to testify about compliance costs.