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Purpose of the study: This study aimed to explore the benefits and threats of accepting diversity and examine the level of intercultural tolerance in higher educational institutions (HEIs). Methodology: This is an empirical study conducted through quantitative methods based on survey research. Document analysis technique was used to verify the diversity in the target population, i.e., higher educational institutions (HEIs). The researcher collected data from 191 students from 12 universities in non-contrived settings. Principal Findings: The results indicated that overall, students have a positive attitude towards diversity except for the job market and social environment for minority groups which scored very low. Similarly, intergroup anxiety and productivity loss were found to be threats caused by diversity in HEIs. Regarding tolerance, most respondents were optimistic about their positive behaviour towards other cultures and ethnicities. Application of this study: This study would benefit university presidents, chancellors, and other high-level administrators. This research will also help explain why people are prejudiced in today's multiethnic society. This study is conducted for higher educational institutes. The novelty of this study: The study recommends that while developing a curriculum, it is essential to incorporate learning materials related to accepting diversity and creating tolerant behaviours, which can lead to a healthy and inclusive learning environment.