Feb 1 (Reuters) - McDonald's said it will revise

a program that awards scholarships to Latino and Hispanic

students to eliminate any eligibility criteria based on

applicants' race or ethnicity, to settle a lawsuit by a group

opposed to affirmative action.

American Alliance for Equal Rights, founded by affirmative

action foe Edward Blum, filed in federal court in Nashville on

Friday to say it had agreed to withdraw a Jan. 12 lawsuit after

the fast-food chain said it would alter its program.

Since its launch in 1985, McDonald's says the HACER National

Scholarships Program has awarded more than $33 million in

college scholarships to more than 17,000 students. Up to 30

students annually receive up to $100,000 each.

Republican President Donald Trump has made clear that he

strongly opposes workforce diversity, equity and inclusion

measures and has issued executive orders seeking to dismantle

them in the federal government and the private sector.

Blum's group had accused McDonald's of not going far enough

when it rolled back other diversity initiatives in January but

retained the scholarship program.

Blum's group alleged that, by restricting eligibility to

students with at least one parent of Hispanic or Latino

heritage, the program unlawfully discriminated against other

ethnic groups.

McDonald's in a statement said it disagreed but "reached the

conclusion that settling this lawsuit and evolving the program

is the right thing to do for its recipients".

McDonald's said it will remove the parent-related criteria

and instead require applicants to demonstrate their impact and

contribution to the Hispanic and Latino community through their

activities and leadership.

Blum said in a statement: "It is a shame that over many

years thousands of students were shut out of this program

because they were not the preferred ethnicity."

The Chicago-based company on Jan. 6 retired its goal for

diversity in corporate leadership and shifted away from some

diversity practices, citing a "shifting legal landscape".

It referred to a 2023 ruling by the conservative-majority

U.S. Supreme Court that barred the consideration of race as a

factor in college admissions, a result of lawsuits successfully

pursued by another group founded by Blum.

Other companies have similarly backed away from diversity

practises following pressure from conservative activists.