The U.S. Department of Education has dismissed a complaint filed by a transgender student at George Fox University in Newberg who said the school discriminated against him when it refused to allow him to live with his male friends on campus.

The decision, first reported by PQ Monthly, comes two weeks after the U.S. Supreme Court ruled that Hobby Lobby, a national chain of craft stores, can refuse to finance birth control for its employees based on its religious beliefs.

"To my knowledge, this is the first Christian college to ask the federal government for a permission slip to discriminate against transgender students,” Portland attorney Paul Southwick told PQ Monthly. Southwick filed a complaint with the Department in April.   

He told PQ Monthly: "This is worse than Hobby Lobby because George Fox is largely funded by taxpayer money. While the government may have granted George Fox an exemption for the time being, private companies do not need to tolerate this discriminatory behavior. Nike, whose logo is on George Fox's athletic gear, and Intel and Starbucks, who are major employers of George Fox graduates, can let the university know how they feel about the university's discriminatory actions."

The move by George Fox raises the question whether Christian colleges—even those funded with taxpayer dollars, can discriminate against transgender and possibly other students, the industry magazine Inside Higher Ed wrote in an analysis today.

Also on Friday, a judge in California sided with a Christian college that had expelled a transgender student on the basis of her gender. When in 2011 California Baptist University discovered that the female student was born with male genitals, they expelled her as a fraud, Higher Ed reported.

Here's more on the religious exemption debate from Higher Ed:

The disputes at California

Baptist and George Fox come at a time of intensifying debate about exemptions

for religious colleges. Just days after the Hobby Lobby decision, the U.S. Supreme Court barred the

government from

requiring Wheaton College of Illinois to fill out a form to be exempt from the

new federal requirement that employers provide health insurance coverage that

includes contraceptive coverage. Also a subject of debate is

President Obama's planned executive order barring discrimination based on

sexual orientation or gender identity by federal contractors. A group of

leaders of evangelical organizations -- including Michael Lindsay, president of

Gordon College -- wrote Obama

asking that religious entities be

exempt from the order. The letter said that such an executive order would

prevent some religious organizations from working with the government. But the

letter said that the issues were more than financial. "While the nation has

undergone incredible social and legal change over the last decade, we still

live in a nation with different beliefs about sexuality," the letter says.

"We must find a way to respect diversity of opinion on this issue in a way

that respects the dignity of all parties to the best of our ability. There is

no perfect solution that will make all parties completely happy."

UPDATE: George Fox University responded Monday afternoon, emphasizing that the student was offered on-campus housing. He just wasn't allowed to live with other male students.

"This is about a female-to-male transexual student who wanted to move from female-only housing to male-only housing and the university offered him a single apartment or off-campus housing instead," said spokesman Rob Felton. "We sought the exemption to protect us from being forced to act in a manner inconsistent with our convictions."  

Felton linked to this statement on the university's website