A federal judge has vacated the Education Department directive behind more than $600 million in teacher-training grant cancellations, ruling that the agency acted unlawfully when it reversed course and terminated nearly all awards in two national programs. The court order, issued Thursday by U.S. District Judge Angel Kelley in Boston, invalidates the policy foundation for the cuts but does not itself restore the canceled money.

The court’s decision

Kelley granted summary judgment to California, Massachusetts, New Jersey, Colorado, Illinois, Maryland, New York and Wisconsin. She concluded that the February 2025 directive was arbitrary and capricious under the Administrative Procedure Act, conflicted with the laws governing the Teacher Quality Partnership and Supporting Effective Educator Development programs, and was adopted without the notice-and-comment process required by federal education law.

The court found that the directive offered no workable definition of diversity, equity and inclusion for agency staff or grant recipients. It also failed to explain a sharp break from prior Education Department rules that had encouraged projects serving underrepresented students and high-need communities. The judge said the administrative record did not show that officials weighed the effect on universities, school districts, teachers in training or students before ordering the cancellations.

How the grant cuts unfolded

The Education Department announced the cancellations in February 2025, saying it had ended more than $600 million in awards that funded what it called “divisive ideologies,” including DEI, critical race theory, social justice activism and related concepts. In its announcement, the department argued that those activities were not a proper use of taxpayer money and said the affected grants trained teachers and education agencies in practices inconsistent with the administration’s priorities.

The grants were part of two congressionally authorized programs designed to recruit, prepare and retain educators, especially for high-need schools and subjects. According to the court record, the directive led the department to terminate 104 of 109 active awards in less than two weeks. Forty of those grants, together worth more than $250 million, involved institutions in the eight plaintiff states.

The projects were broader than a single curriculum debate. The record describes programs to move Massachusetts paraeducators into licensed early-childhood teaching, prepare bilingual and special-education teachers in Boston, train educators for rural Appalachian districts in Maryland and build the teacher pipeline for high-need urban and rural schools in California. Several relied on multi-year awards and had already hired staff, enrolled candidates or built local partnerships.

Why the judge found the process unlawful

The ruling did not hold that every federal grant using DEI-related language must be funded. Instead, it focused on how the department made and implemented a sweeping policy change. Kelley found that the directive provided no consistent criteria, did not engage with the factual record supporting the earlier grant priorities, and did not consider narrower options such as notifying recipients and allowing them to revise questionable activities before termination.

The judge also found a statutory conflict. Congress directed the Teacher Quality Partnership program to recruit candidates from underrepresented groups and train educators to serve diverse populations, while the broader General Education Provisions Act requires grant applicants to address barriers to equitable participation. The court concluded that the department could not penalize applications for pursuing objectives that the governing statutes expressly require or encourage.

A Supreme Court ruling still limits the remedy

The case previously reached the Supreme Court at an emergency stage. In April 2025, the justices, by a 5-4 vote, stayed an order that had required the department to reinstate the grants while litigation continued. The majority said the dispute over payment belonged in the Court of Federal Claims and noted that states could temporarily replace the money themselves. The four dissenters warned that the immediate financial burden could disrupt teacher-training programs.

Kelley’s new decision works within that jurisdictional boundary. She ruled on the legality of the underlying directive, which a district court may review under the Administrative Procedure Act, while leaving claims for specific unpaid grant funds to the Court of Federal Claims. As Reuters reported, the Education Department did not immediately respond to a request for comment after the ruling.

What changes now

Vacating the directive removes the policy as a lawful basis for future decisions and gives the plaintiff states a declaratory judgment that the department violated federal law. It does not automatically reopen dissolved programs, rehire staff or send funds back to grant recipients. Institutions seeking payment on terminated awards may need separate claims, and the administration can appeal the district court’s judgment.

The practical stakes extend beyond the DEI dispute. The affected programs support teacher residencies, special-education preparation, bilingual instruction, rural recruitment and training in high-need subjects. AP reported that more than 100 programs were affected and that states argued the grants help address persistent staffing shortages and improve teacher retention.

The ruling therefore establishes a significant limit on rapid federal grant reversals: an administration may change policy, but it must explain the change, follow applicable procedures and account for statutory commands and reliance interests. The immediate financial dispute remains unresolved, yet the legal foundation used to cancel the awards has now been set aside.