If University of Michigan which is private is so committed to Affirmative Actions that they are willing to give up federal funds then let them keep their racist Affirmative Action. Then the States will have to place bans on AA such as California, and then let the schools give up and state and local funds too. If they are so committed to AA that they want to give up public funds then fine it is their choice.
"Positive steps to enhance the diversity of some group, often to remedy the cumulative effect of subtle as well as gross expressions of prejudice. When numerical goals are set, they are set according to the group's representation in the applicant pool rather than the group's representation in the general population. For example, a medical school with an affirmative action program would seek to admit members of an underrepresented group in proportion to their representation in the population of those who had completed pre-medical requirements and wished to attend medical school. Affirmative action should be distinguished from reparations."
The reason that U of M won the case is because it wasn't affirmative action at all. There were no numerical quotas, and their purpose of the diversity being sought was not "to remedy the cumulative effect of subtle as well as gross expressions of prejudice", but rather to enhance the collegiate ambiance.
It simply was not what you wanted it to be.