This brief analyzes a recent shift in the U.S. Department of Education's policy on minority designated scholarships and explores the issues in the national debate on these scholarships. An overview of the controversy notes the Title VI section of the Civil Rights Act of 1964 that outlaws racial discrimination where federal funds are received. A following section reviews the history of the current situation, which began in December of 1990 when a Department of Education official announced that minority designated scholarships were in violation of civil rights laws. The brief goes on to outline the traditional policy position that minority scholarships offset the effects of historical societal discrimination and the new policy position that such scholarships discriminate unacceptably against non-minority students. A discussion of affirmative action looks at its purpose and arguments about its effects. An analysis of legal issues discusses legislation as well as recent court decisions. A final section argues that the root of the issue is an understanding of the effect and necessity of affirmative action. Side bars list arguments for and against minority designated scholarships and offer statistics on Hispanics in higher education. (JB)