Student body diversity is a key goal of Israeli higher education policy. While this goal aims to reduce inequality, a group-based national plan with differential guidelines for Arabs, ultra-Orthodox Jews, and Jews of Ethiopian descent uncovers systemic stratifying mechanisms. This article examines why a policy intent on promoting equality does so through different paths for different groups. It employs discourse analysis of policy narratives arising from 75 policy documents and 54 interviews with national and institutional policymakers. The findings reveal that simultaneous equalizing and stratifying mechanisms are explained by an intersection of socioeconomic and ethnonational guiding logics. This is conceptualized through a threefold diversity policy model: (1) "Universal," encouraging higher education participation as an inclusive civic and social right; (2) "Socioeconomic," providing enhanced support based on needs and on perceived economic benefit; and (3) "Ethnonational," with stratified recognition, allocation, and implementation mechanisms. This model clarifies how the policy is designed to reduce socioeconomic inequality while still allowing for ethnonational stratification. It contributes to the higher education policy literature by adding citizenship as an important construct of policy processes in diverse societies, to be considered in the pursuit of equity and equality.