No, a public university may not expel students for racist speech

"Some Oklahoma University students in the Sigma Alpha Epsilon fraternity were videorecorded singing (as best I and others can tell),

There will never be a nigger at SAE

There will never be a nigger at SAE

You can hang him from a tree

But he’ll never sign with me

There will never be a nigger at SAE

Oklahoma University president David Boren said, “If I’m allowed to, these students will face suspension or expulsion.” But he is not, I think, allowed to do that."

[Volokh Conspiracy]

UPDATE:  The University President has expelled the leaders of the chants aboard the school bus. Eugene Volokh has more commentary below......   [clipper]

What speech is going to justify expulsion next?

UPDATE #2: 

OU Could Be Making A Huge Mistake With Its Expulsions