A federal judge has vacated the Education Department directive used to cancel 104 of 109 teacher-training grants worth more than $600 million, finding that the agency rewrote funding policy without a reasoned explanation or required public process.

U.S. District Judge Angel Kelley’s 70-page ruling, issued Thursday in Boston, is a significant defeat for the Trump administration’s effort to eliminate diversity, equity and inclusion priorities from federal grants. But the order does not restore the money. Kelley drew a line between reviewing the government-wide policy under the Administrative Procedure Act and deciding contract-like claims over individual awards, which she said belong in the U.S. Court of Federal Claims.

That distinction makes the ruling consequential but incomplete. It removes the February 2025 directive as a lawful basis for future decisions, including the Education Department’s forthcoming grant awards, while leaving universities, school districts and states to pursue separate cases if they want compensation for projects already terminated.

A directive with immediate consequences

The dispute concerns two congressionally created programs. The Teacher Quality Partnership program supports university-school district partnerships that prepare educators for high-need schools, while Supporting Effective Educator Development grants fund evidence-based training for teachers and school leaders. Federal law directs the department to use the programs to improve teacher preparation, recruit educators for hard-to-staff subjects and communities, and expand access to effective instruction.

On Feb. 5, 2025, the department issued an internal “Directive on Department Grant Priorities” after President Donald Trump ordered agencies to remove DEI principles from federal contracting and financial assistance. The underlying executive order instructed agencies to end programs the administration considered discriminatory and to require grant recipients to certify compliance with federal anti-discrimination law.

The department then reviewed existing awards and terminated nearly all grants in the two programs within 14 days. According to the court record, institutions in the eight plaintiff states held more than 40 active awards valued above $250 million. California universities lost eight awards worth about $56 million; programs in Massachusetts and Maryland included residencies for bilingual, special-education and rural teachers.

The administration said the grants supported “divisive ideologies” such as DEI, social-emotional learning and social-justice activism. The central legal problem, Kelley found, was that the directive did not define DEI or provide workable examples of what was prohibited. That left agency staff and grant recipients without a limiting standard for separating unlawful discrimination from activities Congress had expressly permitted or encouraged.

Why the court found the policy unlawful

Kelley granted summary judgment to California, Massachusetts, New Jersey, Colorado, Illinois, Maryland, New York and Wisconsin on their administrative-law claims. She concluded that the directive was arbitrary and capricious for four related reasons: it lacked a reasoned explanation, departed from prior practice without acknowledging that change, ignored substantial reliance interests and failed to consider narrower alternatives.

The department had previously awarded multi-year grants under published priorities that encouraged programs serving diverse populations and high-need communities. Universities hired staff, enrolled teacher candidates, built curricula and entered agreements with school districts in reliance on those awards. The administrative record did not show that officials weighed those commitments before ordering the broad review and cancellations.

The judge also found a procedural violation. The General Education Provisions Act requires notice and public comment when the department imposes a generally applicable, legally binding rule affecting education funding. Although the government described the directive as internal guidance, Kelley said its effect was binding: recipients had to change their programs or risk termination, and 104 awards were canceled almost immediately. The department therefore could not use an unpublished directive to reverse priorities established through formal rulemaking.

That conclusion rested on the design Congress placed in the grant laws. The TQP statute calls for recruiting and training high-quality teachers, including educators from underrepresented populations and those serving rural or geographically isolated communities. It also requires preparation for instruction to diverse populations. The court said the directive treated some of those statutory features as disfavored without reconciling the conflict.

The Supreme Court did not decide the merits

The administration previously won an important procedural victory in the same litigation. In April 2025, the Supreme Court stayed a lower-court order requiring the government to continue paying the grants while the case proceeded. The unsigned order focused on jurisdiction and the practical difficulty of recovering federal money after it had been disbursed.

That emergency decision allowed the cancellations to remain in effect, but it did not resolve whether the February directive itself complied with the Administrative Procedure Act. Kelley’s ruling addressed that separate question after reviewing the administrative record and later jurisdictional guidance. As Reuters reported, the district court retained authority to review the policy even though claims seeking payment on individual grants must be heard elsewhere.

The distinction also explains why Thursday’s decision is not a direct reversal of the Supreme Court. The high court considered whether money should flow during litigation; Kelley considered whether the agency’s governing directive was lawfully adopted. Those issues overlap in their consequences but arise under different legal theories and remedies.

Vacatur does not restore the grants

The most important practical limitation is financial. Kelley vacated the directive and declared it unlawful, but she did not reinstate any grant or order the department to reimburse recipients. The Associated Press emphasized that institutions seeking lost funding must pursue their claims in the Court of Federal Claims, which has jurisdiction over many monetary disputes with the federal government.

For terminated programs, that route may involve separate questions about award terms, available balances, mitigation and whether a project can still be performed after a long interruption. Some residencies and training cohorts were designed around school-year calendars and multi-year staffing commitments. A later monetary judgment cannot necessarily recreate a canceled cohort, rehire departed staff or restore partnerships that dissolved after funding stopped.

The ruling nevertheless changes the forward-looking policy landscape. Vacatur removes the directive nationwide rather than merely shielding the eight states. Kelley said leaving it in place would preserve a legal defect and allow the department to continue applying criteria that were never defined through the process Congress required.

What changes for federal education policy

The decision does not prevent the administration from enforcing civil-rights laws or adopting new grant priorities. Agencies generally have discretion to change policy when a new president takes office. The Administrative Procedure Act, however, requires them to explain the change, consider reliance interests and follow statutes governing how binding rules are issued. The department could seek an appeal, begin a formal rulemaking process or make individualized grant decisions under existing law.

The ruling arrives as schools continue to report staffing pressure. Kelley cited evidence that completion of traditional teacher-preparation programs fell 35% over a decade, nearly 300,000 teachers leave the profession annually and almost three-quarters of public schools reported difficulty filling vacancies in 2024. The department’s current program description still identifies high-need schools and shortage subjects as central TQP objectives.

For states and universities, the immediate result is a policy victory without an automatic financial recovery. For the administration, it is a warning that even a broadly stated presidential objective must be translated into grant rules with defined standards, statutory fit and a public record. The next phase will determine whether the government appeals and whether affected recipients can recover money in the specialized court, but the directive that drove the mass cancellations can no longer stand as issued.