BOSTON (AP) — A federal appeals court on Thursday upheld a ruling clearing Harvard University of discrimination against Asian American applicants.

Two judges on the 1st U.S. Circuit Court of Appeals in Boston rejected claims from an anti-affirmative action group that accuses the Ivy League University of imposing a “racial penalty” on Asian Americans.

The decision delivers a blow to the group, Students for Fair Admissions, and moves the case a step closer to a possible review by the U.S. Supreme Court. Some legal scholars believe the court will take up the case, and both sides have been preparing for that outcome.

Edward Blum, president of Students for Fair Admissions, said he was disappointed but that “our hope is not lost.”

“This lawsuit is now on track to go up to the U.S. Supreme Court where we will ask the justices to end these unfair and unconstitutional race-based admissions policies at Harvard and all colleges and universities,” Blum said in a written statement.

The case revived a national debate about race’s role in college admissions. In multiple decisions spanning decades, the U.S. Supreme Court has ruled that colleges can consider race as a limited factor in order to promote campus diversity. But the practice faces mounting challenges in the courts, including three suits from Students from Fair Admissions.

In the latest decision, the judges concluded that Harvard’s admissions process passes legal muster and meets requirements previously created by the Supreme Court.

“The issue before us is whether Harvard’s limited use of race in its admissions process in order to achieve diversity in the period in question is consistent with the requirements of Supreme Court precedent. There was no error,” the judges wrote.

The group’s 2014 lawsuit alleges that Harvard’s admissions officers use a subjective “personal rating” to discriminate against Asian Americans who apply to the school. Using six years of admissions data, the group found that Asian American applicants had the best academic records but received the lowest scores on the personal rating.

The group’s analysis found that Harvard accepted Asian Americans at lower rates than any other racial group, while giving preference to Black and Hispanic students with lower grades. The lawsuit also alleged that Harvard works to keep a consistent racial breakdown among new students, which the organization says amounts to illegal “racial balancing.”

Harvard denies any discrimination and says it considers applicants’ race only in the narrow way approved by the U.S. Supreme Court. In close calls between students, some underrepresented students may get a “tip” in their favor, school officials say, but students’ race is never counted against them.

After a three-week trial that cast new light on Harvard’s secretive selection process, a federal judge ruled that other factors could explain why Asian Americans are admitted at lower rates than other students. In her 2019 ruling, District Judge Allison D. Burroughs said Harvard’s admissions process is “not perfect” but concluded that there was “no evidence of any racial animus whatsoever.”

A three-judge panel of the appeals court heard arguments in September, but one of the judges, Juan Torruella, died in October before the case was decided. The ruling notes that Torruella heard oral arguments but did not participate in issuing the decision.

The U.S. Justice Department lawsuit filed briefs supporting the lawsuit, arguing that Harvard goes too far in using race to select students. The Trump administration has also challenged the use of race at other elite schools including Yale University.

Along with the Harvard case, the Virginia-based Students for Fair Admissions is also suing to rid racial considerations at the University of North Carolina in Chapel Hill and at the University of Texas at Austin.

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