The U.S. Department of Education is seeking to give itself more leeway in how and why it cancels federal grant funding, according to a proposed rule scheduled to be published in the federal register Monday.
The rule would codify controversial approaches to cancelling funding that have landed the agency in hot water in the last year, during which a slew of grant funds were abruptly ended because the Education Department said they don't align with the Trump administration's priorities.
The changes would include allowing the department to cancel discretionary funds "for convenience" — a term that grantmaking and education experts say is broad, vague and atypical for discretionary grants to be subject to.
"The proposed changes would ensure that the Department retain ongoing programmatic discretion after an award is made, consistent with law, to terminate a discretionary award for convenience," the proposed changes state.
They would also require grant program recipients to comply with executive orders, would give the department authority to review "information from the grant application and previous grantee activity," and would allow the department to "issue a partial award, provide funding in installments, or delay the release of funds."
However, grantmaking experts say these changes would give the department the authority to abruptly terminate, discontinue or withhold discretionary funding based on a retroactive review of applications — and whether those applications align with an administration’s changing policies.
"So this basically means they could terminate it, because they decided after a couple years they didn't like the policies promoted by [a] grant program," said Josie Eskow Skinner, founding partner at Sligo Law Group, a federal education law firm advising school districts and other educational institutions. "So it would just be a termination for essentially any reason."
Eskow Skinner was previously an attorney in the U.S. Department of Education’s Office of General Counsel in the Division of Elementary, Secondary, Adult, and Vocational Education, where she worked on the previous revisions to Education Department General Administrative Regulations in 2024 that the department is proposing to now amend once more.
‘Getting around the legal issues’
The department is proposing to codify these methods of administering grants after more than a year of having already taken that approach — and after being embroiled in lawsuits as a result.
Prior to the second Trump administration, the department typically rarely terminated discretionary grant funding unless for reasons related to compliance, like whether the recipient was meeting all of the financial requirements or meeting performance targets, grantmaking experts said.
However, the Education Department under the second Trump administration has withheld and in some cases terminated or discontinued a slew of grants for their association with diversity, equity and inclusion, or for other reasons that the agency said didn't align with the administration's priorities.
In 2025, for example, the department withheld up to $1 billion in mental health grant discretionary funding, throwing school programs in at least 16 states that rely on that funding into uncertainty and reportedly affecting the stability of school staff hired as part of the programs.
The grants were dispersed under the School-Based Mental Health and Mental Health Service Professional Demonstration Grant programs, which were established by Congress to improve student mental health following major school mass shootings.
In awarding the multi-year grants, the Biden administration looked partly at whether recipients would increase “the diversity, and cultural and linguistic competency, of school-based mental health services providers, including competency in providing identity-safe services" for students.
However, in sending termination letters to grant recipients that were awarded funding under the Biden administration, the Trump administration said the grants “reflect the prior Administration’s priorities and policy preferences and conflict with those of the current Administration.”
Such abrupt changes to discretionary funding grants have also impacted teacher training programs, services to deafblind students and full service community school grants.
In the case of the cancelled mental health grants, states successfully sued. The U.S. District Court for the Western District of Washington ruled the terminations unlawful last year and required the department to make new continuation decisions.
“Nothing in the existing regulatory scheme comports with the Department’s view that multi-year grants may be discontinued whenever the political will to do so arises,” U.S. District Judge Kymberly Evanson, who issued a temporary and then permanent injunction against the department, said in the case.
In response, the department issued new continuation decisions. But the department awarded funding only until the end of July, after which it said it would review grants once more and make additional funding determinations, said Maryland Attorney General Anthony Brown. Maryland is one of 15 states to again file suit earlier in the summer.
Instead of making all the awarded funding available to recipients, the department in June told states and the court it planned to terminate “some or all” of the grants, per court documents.
The states once again took the department to court, saying that "though the precise mechanism by which the Department plans to end the protected grants may have changed, its illegality has not." That case is still pending, but has seen early success.
In lawsuits challenging the department's cancellations, plaintiffs have sued under the Administrative Procedures Act, claiming that the agency ended funding in a manner that was inconsistent with its own regulations — such as before grantees' performance reviews were even conducted, in the case of some mental health grants.
On Friday, the department proposed changing those regulations to better align with the approach being litigated in court.
"So, now the regulations would explicitly say that a grant can be terminated for a change in priorities, essentially a policy change," said Eskow Skinner. "They're really getting around the legal issues raised in the lawsuit."
If the proposed rule takes effect, it could make funding uncertain for years to come, grantmaking experts warn.
"If they receive that first year funding, what do we have to do to make sure that we're eligible to receive that continuation grant year two or year three?" said Kelly Christiansen, legislative director for The Bruman Group, an education law firm specializing in federal grants. "And this just kind of adds in language that allows the department to have a lot of discretion in terminating those grants."
In response to a request for comment from K-12 Dive over whether the new approach would cause instability for grant recipients, the U.S. Department of Education said it was prioritizing merit, incentivizing higher-quality outcomes for students and families, and better protecting taxpayer dollars. The proposal estimates the revisions would cut spending $186,363 annually over the next 10 years.
The proposal will be open for a 30-day comment period following its publication in the federal register on Aug. 24.
