IOWA — The Iowa Supreme Court ruled that the University of Iowa cannot repurpose a private scholarship intended for Black students to instead serve first-generation students. The court concluded that Black students and first-generation students are not interchangeable.

The court returned the case to district court and recommended including an advocate for the donor's intent in future proceedings. The University of Iowa argued that providing funds to Black students majoring in chemistry became a legal liability after the U.S. Supreme Court ruling in Students for Fair Admissions v. Harvard.

The Iowa Supreme Court agreed with the university that the scholarship is now impractical as structured. The court stated the university would face litigation risk with the federal government if it maintained the original scholarship structure. This situation occurs as the Trump administration has issued guidance and memos categorizing race-based scholarships and programs as unlawful.

Other institutions have also adjusted their scholarship criteria. The University of Missouri system removed racial criteria from endowed scholarships after the Students for Fair Admissions decision, at the behest of the state's attorney general. The University of Alabama discontinued its National Recognition Scholarship for minority students in 2024 and replaced it with the race-neutral UA Competitive Achievement Scholarship. The university stated the change was informed by a review of all scholarships to ensure it could continue offering financial support to as many students as possible.

Scholarships with diversity-related criteria comprised 12 percent of the National Scholarship Providers Association's database of over 33,000 scholarships in 2023. This share has since decreased to approximately 8 percent. The American Alliance for Equal Rights, run by Edward Blum, has sued the Hispanic Scholarship Fund and the Congressional Black Caucus Foundation over scholarships designated for minority students. The group Do No Harm has also filed lawsuits and federal civil rights complaints concerning health-care student scholarships for underrepresented groups.

An appeals court in Wisconsin ruled against the state's Minority Undergraduate Retention Grant Program last year after parents initiated a lawsuit, claiming their son was ineligible for a grant due to his race. This case is currently before the Wisconsin Supreme Court. Conversely, the American Indian College Fund has not altered its scholarship criteria; it provides scholarships to tribal descendants and non-Native students at tribal colleges.