How does race affect your chances of getting into college?

I've heard that colleges are more likely to accept somebody based on their race, and not so much their qualifications in efforts to "diversify" their school. (Mainly discriminating Asians because they make up a large percentage of the students at the schools.) For example, if an Asian-American and a Hispanic both applied to a top college, but the Hispanic had a slightly lower GPA and slightly less extracurricular activities, they would still pick the Hispanic, only based on the fact that they are Hispanic. I have nothing against any race, I was just wondering if colleges actually do this, and if it is legal.