... which ...

The phrase "in which" refers to the review of each applicant's file. A phrase consisting of preposition followed by "which", "where", "whom" etc refers to (not modifies) a preceding or following noun, verb or phrase.

Consider the following:

A table on which stands a bottle.

A car in which rides my sister.

The house in which I grew up.

A story in which a dragon is killed.

A situation over which I have no control.

A gate through which I must pass.

A dish in which are included chicken, shellfish and pak choi.

A place in which you may relax.

The city to which I must travel.

I think I was a bit careless there, I think it would be better to say that in such a phrase, "which" refers to the preceding noun.

each applicant’s file in which race could be properly considered."

"file" is being explained.

It could also have been written:
each applicant's file, where race could be considered.

No, Punkey, not the file. A review.

information is placed in a file.

prepostional phrases used as adjectives to modify review and file

It found that there had been a “highly individualized, holistic

review
of / file
in / which race could be properly considered.

Punkey, note the quote marks.

there had been a “highly individualized, holistic review of each applicant’s file” in which race could be properly considered.

Punkey's posts are often mistaken.

then according to you - it means:

there had been a “highly individualized, holistic review in which race could be properly considered, placed in each applicant's file.

But it was not written that way.

As written, the disputed phrase is close to the word "file" and I believe it tells where the race would be indicated.

PS Stop with the personal attacks. Can't you just have a discussion without becoming bitchy?

No. According to me, it means there had a been a review of each applicants file. In this review, race could properly be considered.

Read here for some background

http://www.vpcomm.umich.edu/admissions/overview/cases-summary.html

and here

http://en.wikipedia.org/wiki/Grutter_v._Bollinger

Take the sentence and pare it down to its basics:

... there had been a “highly individualized, holistic review [of each applicant’s file]” in which race could be properly considered.

There had been a review. In the review race could be properly considered.

==========================

... there had been a "of each applicant’s file” in which race could be properly considered.

?? There had been a "of each applicant’s file” in which race could be properly considered. ??

The witness spoke of a "a dog with a spotted coat" which had barked loudly.

Which barked, the dog or the coat?

Excellent example, C!

The coat of course.