Note: Our biweekly E-Updates provide briefings on action across the Administration, Congress, and U.S. Courts. EducationCounsel’s resources specifically related to the Administration’s executive actions are available by clicking here.

The information included in this publication occurred primarily during the time period of September 18, 2026, through October 2, 2026. 

Highlights:

• On October 1, Treasury released both proposed regulations and temporary regulations to begin implementing the Federal Scholarship Tax Credit (FSTC), which allows taxpayers to receive a dollar-for-dollar federal tax credit up to $1,700 each year for contributions to Scholarship Granting Organizations (SGOs) that fund scholarships for eligible students to support qualified education expenses, beginning in 2027.
• On September 25, OMB announced the use of a so-called “pocket rescission” to cancel $810 million in previously appropriated funding before the end of fiscal year (FY) 2026 on September 30, 2026. The cancellations include approximately $95 million in U.S. Department of Education (USED) programs, including $70 million for International and Foreign Language Education and $25 million from the Special Programs for Migrant Students programs.
• On September 28, USED announced that it formally rescinded a Title IX rule promulgated in 2024 by the Biden Administration and restored the rule promulgated by the first Trump Administration in 2020.

 
Administration

U.S. Department of the Treasury:

Treasury Issues Regulations Governing the Federal Scholarship Tax Credit: On October 1, Treasury released both proposed regulations and temporary regulations to begin implementing the Federal Scholarship Tax Credit (FSTC). The One Big Beautiful Bill Act (OBBBA) established the FSTC, which allows taxpayers, beginning in 2027, to receive a dollar-for-dollar federal tax credit up to $1,700 each year for contributions to Scholarship Granting Organizations (SGOs) in participating states. The scholarships can be used for eligible students to support qualified education expenses related to enrollment in a public (including charter), private, or religious school. (See this overview for background information on the FSTC.) The public can submit comments on the proposed regulations for the next 60 days, after which Treasury will respond to those comments and issue final regulations that will then govern the program moving forward.
 
Treasury also stated that it expects to issue separate guidance “as soon as possible” interpreting the statutory language that lists what qualifies as an eligible expense that FSTC scholarships can support. EducationCounsel is reviewing the regulations and will provide a more detailed analysis soon. 

• For state-level leaders (in and out of government) in participating states, EducationCounsel recently published Implementing the Federal Scholarship Tax Credit to Maximize Supports for Public School Students: Considerations for State-Level Leaders, which discusses practical considerations, decision points, and strategies to consider. The resource is designed to help states that opt into the FTSC implement the tax credit in ways that align with state goals, maximize supports for public school students, and minimize some of the risks the FSTC poses to public education. It will be updated shortly to reflect the new regulations that will govern implementation in the program’s first year.

 
 
White House:

OMB Issues “Pocket Rescission” to Avoid Spending $810 Million in FY2026 Funds: On September 25, OMB announced the use of a so-called “pocket rescission” to cancel $810 million in previously appropriated funding before the end of FY2026 on September 30, 2026. The affected funds primarily include HHS funding for programs serving undocumented immigrants and unaccompanied children, as well as those under the Office of Minority Health. Approximately $95 million in USED programs would also be canceled, including $70 million for International and Foreign Language Education (of the $85 million appropriated by Congress) and $25 million (of the $52 million appropriated by Congress) from the Special Programs for Migrant Students programs, which include the High School Equivalency (HEP) and College Assistance Migrant (CAMP) programs. 
 
Following this announcement, the Government Accountability Office (GAO) issued a letter to congressional leaders reviewing OMB’s actions. GAO reiterated its prior finding that the Impoundment Control Act (ICA) “does not permit the withholding of funds past their expiration date,” and noting further the ICA “permits only the temporary withholding of budget authority and provides that unless Congress rescinds the amounts at issue, they must be made available for obligation.”
 
In response to the pocket rescission package, Republican Senate Appropriations Committee Chair Susan Collins (R-ME) called OMB’s actions an “usurpation of Congress’s appropriations powers,” before emphasizing, “Any effort to rescind appropriated funds without congressional approval is a clear violation of the law.” Chair Collins then said, “I will work with my colleagues to address these illegal actions.” House Appropriations Committee Ranking Member Rosa DeLauro (D-CT) and Senate Appropriations Committee Ranking Member Patty Murray (D-WA) echoed these sentiments saying President Trump’s actions were an “illegal attempt to do an end run around Congress,” and appealed to their Republican colleagues to “remind [the Trump] administration this is not how this works.”
 
The issue of the Administration’s use of pocket rescissions moving forward is likely to be revisited as part of negotiations on FY2027 appropriations bills after the midterm elections, with Republican Senate Appropriations Committee Chair Susan Collins (R-ME) saying that lawmakers were “already looking at language” targeting pocket rescissions. However, Ranking Member Murray – who was not able to get unanimous consent on a bill to prohibit the pocket rescissions before the Senate adjourned in advance of the midterm elections on September 30 – expressed a more skeptical outlook saying, “We tried to get [rescissions] language in past appropriations bills, and the Republicans blocked it.”

President Trump Announces Voluntary, Self-Regulation Pact with Leading AI Executives and Signs Executive Order (EO) on “Super Intelligence”: On September 29, President Trump hosted leaders from leading AI companies at the White House with the primary goal being to discuss a path forward for AI developers to self-regulate themselves amid growing safety concerns. Meeting attendees included executives from some of the nation’s largest AI and technology companies, including but not limited to: Anthropic CEO Dario Amodei, OpenAI president Greg Brockman, Google CEO Sundar Pichai, Meta CEO Mark Zuckerberg, venture capitalist and former White House AI and Crypto Czar David Sacks, Nvidia CEO Jensen Huang, and SpaceXAI CEO Elon Musk, among others. Speaker of the House Mike Johnson (R-LA) was also in attendance. 
 
In advance of the meeting, President Trump continued to express support for self-regulation of AI technologies as opposed to federal limits on the development of AI, even as several technology leaders have called for guardrails of varying degrees. Additionally, Speaker Johnson had advised restraint in recent days saying that, “If Congress just races in and does some sort of emergency session to try to regulate AI, we will lose the race to China, and that is a threat to every single American. So, we’ve got to have balance. We’ve got to have steady hands at the wheel.” Separately, Senate Majority Leader John Thune (R-SD) – who did not attend the White House meeting – has been working with Senator Amy Klobuchar (D-MN) on bipartisan safety legislation aimed at addressing potential catastrophic harms, but has also said, “I think you want to do it in a light-touch way that doesn’t squash innovation.”
 
Following the meeting, President Trump along with leading AI executives announced they had signed, “The White House Accord on Superintelligence: A Joint Commitment on Frontier SI Responsibilities,” encouraging companies to voluntarily implement internal controls and audits. These include implementing robust internal controls, empowering an internal team to periodically verify the effectiveness of such controls, partnering with an external auditor, and designating an independent committee of the company’s board of directors to oversee auditors and ensure that any identified issues are remediated. President Trump who called the agreement “morally binding,” also went on to sign an EO that same day titled, “Inaugurating the Era of Superintelligence,” which renames “artificial intelligence” to “superintelligence” and gives 60 days to White House officials to draft legislative language to establish a Federal definition of “Super Intelligence” and “SI”. President Trump has also indicated that he is considering establishing a ten-person panel to oversee the AI industry, with no clear details yet on who would be the panel or how it would conduct oversight. 
 
House Minority Leader Hakeem Jeffries (D-NY) responded to the announcement by saying, “The notion of entering into a voluntary agreement that is entirely unenforceable, and that allows the industry writ large to police itself, is not the right response at this moment given the potentially grave harm and danger that industry leaders themselves are now flagging for the American people.”

U.S. Department of Education (USED):

USED Rescinds Biden-Era Title IX Rule, Will Continue Enforcing Under Rule from Trump’s First Term: On September 28, USED announced that it formally rescinded the Title IX rule promulgated in 2024 by the Biden Administration and restored the rule promulgated by the first Trump Administration in 2020 with some changes to account for developments that postdate the rule’s 2020 release. USED took this action via a final rule without first engaging in notice-and-comment rulemaking. In an accompanying fact sheet, USED characterized the rescission as clerical in nature and stated that “[n]othing changes in practice for individual students, parents, and teachers.” This is because the Office for Civil Rights (OCR) has already been enforcing Title IX under the 2020 rule instead of the 2024 rule, which was blocked by multiple lawsuits and ultimately vacated by two federal courts in early 2025. OCR announced its reliance on the 2020 rule following those court orders, as well as a January 20, 2025 executive order about Title IX and a January 31, 2025 Dear Colleague Letter from OCR regarding this topic. 
 
The Biden-era rule, issued on April 29, 2024, and made effective on September 1, 2024, defined prohibited discrimination based on “sex” to include discrimination based on “sex stereotypes, sex characteristics, pregnancy or related conditions, sexual orientation, or gender identity.” Among other provisions, the 2024 rule: (1) required schools to respond to sex-based harassment (and other sex discrimination) by taking “prompt and effective action,” providing supportive measures for survivors, and addressing sex-based harassment or assault occurring “under a recipient’s education program or activity in the United States,” including even if the conduct takes place in off-campus settings subject to the school’s disciplinary authority (such as in online forums, on field trips, or at a fraternity house); and (2) prohibited schools from requiring students who are pregnant or have a related condition to provide documentation from a healthcare provider to participate in school and, for the first time, established an affirmative right to “reasonable modifications.” 
 
The 2024 rule did not address athletics, including the question of transgender athletes’ access to sports teams aligned with their gender identity. USED published a proposed rule on this topic on April 13, 2023, but the agency withdrew it before the end of President Biden’s term. 
 
The rule from the first Trump Administration, issued on May 19, 2020, made effective on August 14, 2020, and officially re-codified via this new action on September 28, 2026, does not define “sex,” noting that “the word ‘sex’ is undefined in the Title IX statute” and “the Department did not propose a definition of ‘sex’ in the [Notice of Proposed Rulemaking] and declines to do so in these final regulations.” In its new announcement rescinding the 2024 rule, however, USED outlined many of the steps that OCR has taken in the second Trump Administration to require that schools adopt policies related to sex-separate spaces, facilities, and athletics teams that treat students based on their sex assigned at birth rather than their gender identity. 
 
It appears likely that OCR will continue to enforce Title IX in line with this interpretation of “sex” until the meaning of “sex” for purposes of Title IX is decided by federal litigation, a new USED regulation, or congressional action. Additionally, as discussed in EducationCounsel’s July 9 Alert, USED’s most recent update to its regulatory agenda included an entry outlining the Department’s intent to issue a Title IX rule “clarifying that implementation of Title IX is to be based on sex, which shall refer exclusively to an individual's immutable biological classification as either male or female.” 

USED Awards Additional Funds to Historically Black Colleges and Universities (HBCUs) and Tribally Controlled Colleges and Universities (TCUs): On September 22, USED announced additional funding of $174 million for HBCUs and $61 million for TCUs. The announcement did not detail the source of the additional funds.
 
Last year, USED reprogrammed fiscal year (FY) 2025 funds from Minority-Serving Institutions (MSI) grant programs to HBCUs and TCUs. Those funds were taken from MSIs’ discretionary funding (or annual funding appropriated by Congress) because, according to USED, the MSI grant programs were unconstitutional. (See EducationCounsel’s January 8 Alert and May 29 Alert for more on this topic.) In response, Congress included in its FY2026 appropriations law a new provision that prevents USED from reprogramming discretionary funding from MSIs to HBCUs. According to Inside Higher Education, USED has instead provided the additional investments for HBCUs and TCUs by canceling mandatory funding for MSIs, which is provided outside of annual appropriations laws through a separate statute. As Title III-F of the Higher Education Act, which authorizes mandatory appropriations for HBCU and MSI programs, does not appear to allow this type of reprogramming of funds, it is possible the action may be challenged in court. 
 
In objecting to USED’s action, House Education and Workforce Committee Ranking Member Bobby Scott (D-VA) expressed, “In 2019, Congress passed the bipartisan FUTURE Act which authorized $255 million in mandatory funding to HBCU, TCUs, and MSIs…But now, the Trump Administration refuses to follow Congress’ directive and provide the funding owed to MSIs.”

Institute of Education Sciences (IES) Obligates Nearly All Remaining FY2025 Funding: On September 28, IES Acting Director Matt Soldner confirmed that 99.54% of remaining FY2025 funds for IES had been obligated before they were set to expire on September 30, 2026 (the funding had a two-year period of availability). The information was included in a Supplemental Declaration submitted by Acting Director Soldner as part of an ongoing lawsuit filed by the National Center for Learning Disabilities (NCLD), et al. v. the Office of Management and Budget (OMB), et al. In June 2026, NCLD, along with the Knowledge Alliance and other plaintiffs, filed the lawsuit challenging the withholding of previously appropriated funding for education research, data collection, and program evaluation. On September 17, a federal judge in the District of Massachusetts ruled that the Administration was required to release and obligate expiring IES funds before the September 30 deadline and prohibited OMB from using apportionment footnotes to override congressional intent.

USED Announces “Defend the Spend” Requirements for All Grantees: On September 28, USED sent guidance to all of its grant recipients outlining new requirements for submitting a written justification each time they request to access a portion of their federal grant funds. The requirements for written justifications, which the guidance refers to as “Defend the Spend,” will go into effect November 1, 2026, and are part of the agency’s implementation of the executive order focused on cost efficiency. A similar requirement is included in Office of Management and Budget (OMB)’s proposed regulations governing federal financial assistance  (see EducationCounsel’s OMB Overview & FAQ for more information), which OMB is currently prohibited from finalizing by the terms of the current Continuing Resolution (CR) that maintains federal funding through December 11. 
 
Although USED’s guidance claims the new requirements “should not change the timeline for processing a payment request,” it also encourages grantees to “plan accordingly and allow sufficient time for processing, in the instance where additional review or clarification may be required.” According to the guidance, grantees whose justifications “trigger procedural or internal control concerns” will be required to submit a clarification or may have their payment request rejected outright. It is unclear how this requirement complies with existing grant regulations, which set specific requirements and processes for when prior approvals may be required (generally when a grantee has a history of non-compliance with the terms and conditions of federal awards) and which specifies that such requirements must be “promptly removed once the conditions that prompted them have been satisfied.”
 
The guidance to grantees also highlights that these Defend the Spend requirements have already been in place for grants co-administered by USED and partner agencies through the interagency agreements (IAAs), which USED has been entering into as part of the Administration’s efforts to dismantle the agency. (For additional context about the Administration’s use of IAAs, see EducationCounsel’s legal analysis, Beyond “The Maximum Extent Permitted By Law”.) As an example, Defend the Spend protocols have been in effect at the U.S. Department of Health and Human Services (HHS), where USED’s Office of Special Education and Rehabilitative Services (OSERS) grants are expected to move via an IAA; however, a federal court has paused the justification requirements for some HHS grantees (see EducationCounsel’s February 19 Alert for more information).  

USED Approves Every Student Succeeds Act (ESSA) Waiver for Mississippi: On September 24, USED announced that it has granted Mississippi’s ESSA waiver request. Mississippi is the seventh state to receive a waiver, joining Iowa, Louisiana, Indiana, Vermont, Arkansas, and South Dakota. Mississippi’s waiver allows the state’s department of education to consolidate approximately $14 million in state-level activities funds through 2029, including funds from Title II, Part A (Supporting Effective Instruction); Title III, Part A (English Language Acquisition); Title IV, Part A (Student Support and Academic Enrichment); and Title IV, Part B (21st Century Community Learning Centers).
 
USED Launches 2027-2028 Free Application for Federal Student Aid (FAFSA): On September 23, USED announced that the 2027–2028 FAFSA was now available, noting that this was the earliest launch in the program’s history. After previous delays of the new FAFSA form, in 2024, Congress passed the FAFSA Deadline Act, which required that the FAFSA form be fully operational by October 1 each year. The Department states the latest version of the FAFSA has been streamlined, with clearer questions and instructions and a new option to invite a parent or other contributor by text message. 
 
The release also highlights several other newer FAFSA provisions and features. For returning students, USED highlights information will be pre-populated from prior FAFSAs later this fall, reducing the amount that must be entered again. Families with multiple children seeking aid will be able to reuse parent information across applications, and applicants can receive real-time estimates of Pell Grant eligibility and federal aid. The FAFSA now also includes an earnings indicator showing when graduates of a selected college have lower earnings than a typical high-school graduate. In addition, changes under the One Big Beautiful Bill Act (OBBBA) exclude certain family-owned businesses, including those with fewer than 100 full-time employees and family farms, from the FAFSA asset calculation. 
 
USED continues approval of new Workforce Pell Grant programs in Texas, North Carolina, and Florida: Between September 22 to September 28, USED approved 16 additional, new Workforce Pell Grant programs across Texas, North Carolina, and Florida, bringing the number of states with federally approved Workforce Pell programs to six. These latest approvals by the Department include six programs at Kilgore College and Weatherford College in Texas, six programs at Forsyth Technical Community College in North Carolina, and four programs at Eastern Florida State College in Florida. The Workforce Pell Grant program, which took effect July 1, 2026, allows eligible students to use Pell Grants for approved short-term workforce training programs that meet federal standards for quality, completion, employment outcomes, and earnings. The approvals represent a continued expansion of the Administration's effort to support workforce-oriented postsecondary pathways in high-demand industries.
 
USED Extends Enrollment Period for Student Loan Interest Rate Reduction: On September 29, USED announced that it was extending by three months the enrollment deadline for a temporary one percentage-point interest-rate reduction on eligible Federal Direct student loans for borrowers who use auto pay. Borrowers who enroll by December 31, 2026, or were already enrolled, will receive the reduced rate through June 30, 2028. According to the Department, nearly 2 million borrowers have enrolled since the incentive was announced in June. The initiative is part of a broader overhaul of federal student-loan repayment under the One Big Beautiful Bill Act (OBBBA). Among the law's major changes are the new Repayment Assistance Plan (RAP), which bases payments on income and dependents and provides an interest benefit for borrowers making full, on-time payments; a new Tiered Standard repayment plan; and changes to federal borrowing limits, including the elimination of Grad PLUS for new borrowers. USED says the auto-pay incentive is intended to encourage timely payments and help borrowers maintain access to repayment benefits, such as RAP and Public Service Loan Forgiveness (PSLF).
 
USED and Treasury Launch New Defaulted Loans Support Center: On September 30, USED and Treasury announced a new “Defaulted Loans Support Center,” an online resource for borrowers with federal student loans in default to understand their options and “return to repayment.” Through the center, borrowers can find information on loan rehabilitation and consolidation, make payments, upload documents, electronically sign agreements, and track applications. USED and Treasury asserts that the new system is intended to replace paper-based processes and improve access to existing ways of getting out of default. The announcement follows the March interagency agreement (IAA) between USED and Treasury, where Treasury assumed operational responsibility for collecting defaulted federal student-loan debt. This IAA was one of 14 IAA’s transferring key functions and responsibilities from USED to other federal agencies. In the release, USED Secretary Linda McMahon, referencing the IAA, said, “The Department of Education was never intended to serve as the fifth largest bank in America, and that’s exactly why we partnered with the Treasury Department to improve the administration of federal student aid programs that millions of American students, families, and borrowers rely on. This is truly proof of concept…bridging technology and expertise to build a better borrowing experience.”  
 
National Advisory Committee on Institutional Quality and Integrity (NACIQI) Defers American Bar Association (ABA) Decision and Recommends Suspending American Psychological Association (APA) Accreditor: At its September meeting, NACIQI deadlocked on whether to continue or deny recognition of the American Bar Association’s (ABA) Council of the Section of Legal Education and Admissions to the Bar. As background, USED released a staff report on August 22, recommending that the agency deny the ABA’s application to renew the accreditation recognition for its Council of the Section of Legal Education and Admissions to the Bar. The report pointed to several areas of noncompliance, particularly those related to keeping the ABA’s accreditation function independent from its trade association function. The report also took issue with the ABA’s timeliness in suspending an accreditation standard related to diversity and inclusion in the wake of the U.S. Supreme Court’s 2023 decision in SFFA v. Harvard, noting that the ABA did not suspend the standard until February 2025. (See EducationCounsel’s September 3 Alert for more information about the ABA’s accreditation status.) Ultimately, USED will make a final determination on federal recognition, even if NACIQI does not make a recommendation.
 
At the same meeting, NACIQI voted 7-4 to recommend that USED suspend the federal accreditation status of the APA’s Commission on Accreditation. Concerns raised during the review process included allegations that APA failed to adequately address antisemitism within accredited programs. There were reviews of other accreditation agencies on the agenda, but the committee will take those up in a subsequent meeting. 
 
GAO Report Raises Concerns Regarding USED’s Suspension of Elementary and Secondary Education Act (ESEA) Monitoring: On September 23, the Government Accountability Office (GAO) released a report regarding USED’s discontinuation earlier this year of its comprehensive monitoring of states’ compliance with ESSA programmatic and fiscal requirements. The report focused on the implications for chronic absenteeism, but also noted the increased risk of undetected fraud, waste, or abuse. GAO’s recommendations include that Congress clarify ESSA oversight requirements and that USED resume its comprehensive monitoring, while also improving its methodology for calculating chronic absenteeism. 

U.S. Department of Labor (DOL):

U.S. Department of Labor (DOL) Secretary Confirmed by the Senate: On September 30, the U.S. Senate confirmed the nomination of Keith Sonderling to be the U.S. Labor Secretary by a party-line vote of 47 to 41. The nomination passed, despite 12 Senators not voting, as confirmation votes require a simple majority of Senators voting. Sonderling has been serving as Acting Secretary of Labor since Lori Chavez-DeRemer resigned in April. Prior to being named Acting Secretary, Sonderling was DOL’s Deputy Secretary and Chief Operating Officer (COO), overseeing the agency's budget and workforce employees. He was also previously a Commissioner of the U.S. Equal Employment Opportunity Commission (EEOC) from September 2020 until August 2024. Additionally, Sonderling served as Acting and Deputy Administrator of DOL’s Wage and Hour Division from 2017 to 2020. 

U.S. Department of Health and Human Services (HHS):

Preschool Development Grant Birth through Five (PDG B-5) SMART Grants Competition Announced: On September 21, the Administration for Children and Families (ACF), within HHS, announced a new competition for PDG B-5 SMART Grants: Strategic Measurement, Analytics, and Results using Technology. The program will provide $224 million for an estimated 25 one-year grants to states and territories, with individual awards ranging from $500,000 to $15 million. Grants will support targeted investments in early care and education technology, data infrastructure, and analytic capacity. Projects must build on existing state planning efforts and advance one defined state goal. Applications must be submitted by November 20, with projects expected to begin December 31.

U.S. Department of Justice (DOJ):

DOJ Takes Steps to End Longstanding Desegregation Cases: On September 24, DOJ announced “the dismissal of more than fifty desegregation cases” involving school districts that have remained under a federal court order to eliminate, to the extent practicable, any remaining vestiges or remnants of their prior segregated public school system and thus achieve “unitary status.” DOJ’s press release does not list the specific cases, so it is not clear what the agency means by “dismissal.” Some cases may have proceeded in the typical fashion for desegregation cases, with a judge determining – often in response to a joint motion brought by DOJ and the school district – that the district has achieved unitary status. In those cases, the court terminates the court order and dismisses the case. (For example, see this July 21, 2025 joint motion by DOJ and the Copiah County School District in Mississippi seeking a declaration of unitary status.)
 
However, DOJ may have also used a different approach to these cases, voluntarily dismissing cases without a judge first making the substantive unitary status finding. (For example, see this July 23, 2025 joint stipulation of a voluntary dismissal by DOJ and the Board of Education of Hendry County in Florida that asserts the district has achieved unitary status.) This is particularly likely for cases in the states within the U.S. Court of Appeals for the Fifth Circuit (i.e., Louisiana, Mississippi, and Texas), which recently held that federal courts no longer have any authority over a case when all parties agree to dismiss it. The DOJ may take this approach with other existing desegregation cases, especially those that do not involve private plaintiffs (whether existing or newly proposed). 

Congress:

Congressional Response to Proposed Education Department General Administrative Regulations (EDGAR) Changes: As background, USED issued a Notice of Proposed Rulemaking (NPRM) on August 24 that proposes several significant changes to the Education Department General Administrative Regulations (EDGAR), which govern USED’s competitive and formula grant programs. The NPRM proposes to revise those regulations in several ways that advance the Administration’s policies and preferences, including greater control over grants and opposition to efforts to advance diversity, equity, and inclusion in education. (See EducationCounsel’s EDGAR Overview & FAQ for more information). Public comments on the NPRM were due on September 23.
 
In response, House Education and the Workforce Committee Ranking Member Bobby Scott (D-VA), sent a letter to USED Secretary Linda McMahon urging her to withdraw the proposal in its entirety. Ranking Member Scott argued that expanding departmental discretion could make grantmaking less predictable and more susceptible to politicization, while creating uncertainty for schools, universities, researchers, states, local governments and other organizations that depend on federal education grants. He also objected to the proposal based on his assertion that it overlaps with OMB’s proposed regulations governing federal financial assistance, which OMB is currently prohibited from finalizing by the terms of the current Continuing Resolution (CR) that maintains federal funding through December 11.
 
Congressional Opposition to Head Start Proposed Regulations: Congressional opposition continues to build in response to the August 7 Notice of Proposed Rulemaking (NPRM) from HHS's Administration for Children and Families (ACF), Reducing Federal Burden for Head Start Programs, that would rescind the current Head Start Program Performance Standards in their entirety and replace them with a single, significantly shorter set of standards. Since the proposal was released, lawmakers from both parties have raised concerns that the rule would weaken program quality, limit access to comprehensive services, and place additional strain on local Head Start providers. (See EducationCounsel’s DEEP DIVE: Unpacking the Notice of Proposed Rulemaking to Overhaul the Head Start Program Performance Standards for more information.) Public comments can be submitted on the proposed regulations until October 6.
 
On September 15, leaders of the Democratic Women's Caucus sent a letter to HHS Secretary Robert F. Kennedy Jr. urging the Department to withdraw the proposal, arguing that it would eliminate important protections and services for children and families, including requirements related to staffing, health screenings, and comprehensive supports. Additionally, Senate Democratic Leader Chuck Schumer (D-NY) joined New York Head Start providers on September 21, in opposing the rule, warning that it could undermine services relied upon by roughly 40,000 children across the state and lead to reduced quality, staffing, and access to health and developmental services.
 
Previously, Representative Rosa DeLauro (D-CT), Ranking Member of the House Appropriations Committee, criticized the proposal as a "mandate to do more with less" and argued that providers would face increased demands while operating with fewer federal resources. Senate Appropriations Committee Ranking Member Patty Murray (D-WA) and Senator Ben Ray Luján (D-NM) also previously joined Head Start advocates in warning that the proposal represents a significant threat to Head Start services and pledged to defend the program. When the proposal was released, House Education and Workforce Committee Ranking Member Bobby Scott (D-VA) additionally argued the rule would weaken longstanding standards that help ensure program quality and accountability.
 
Separately, Republican Representative Mike Lawler (R-NY) encouraged in public comments submitted on September 28, that the Administration strengthen, rather than weaken, Head Start through the rulemaking process and raised concerns about the potential consequences of the proposed changes for children and families served by the program. Representative Kevin Kiley (I-CA), who currently caucuses with House Republicans, also previously sent a letter to HHS Secretary Kennedy urging the Department to protect Head Start programs and reconsider provisions that could negatively affect providers and families.

House:

Representative Bonamici Introduces Bill to Address AI Opportunities and Risks in Education and Workforce Development: On September 22, Representative Suzanne Bonamici (D-OR), ), who is reportedly (Note: Subscription required) exploring a challenge to Ranking Member Bobby Scott (D-VA) to be the lead Democrat on the House Education and Workforce Committee in the 120th Congress, introduced legislation that aims to address the risks and opportunities related to the use of AI in education and the impacts AI will have on the workforce. H.R. 10515, the Artificial Intelligence Education and Workforce Development Act, includes provisions that establish guardrails on how AI is deployed in education settings, as well as proposed investments in education, training, and professional development to promote AI literacy, skill development, research and development, and federal interagency coordination efforts. The bill also proposes resources for teacher professional development on responsible AI use and support for in-service training for school leaders.
 
The legislation currently has eight Democratic cosponsors, including Representative Ted Lieu (D-CA), Co-Chair of the Bipartisan House Task Force on AI. Representative Bonamici’s office has indicated that they are introducing the legislation as a marker bill this Congress, with goals to reintroduce the bill and advance it next Congress. Given Representative Bonamici’s role on both the House Education and Workforce Committee and Science, Space, and Technology Committees, she is likely to seek inclusion, either in its entirety or as separate provisions, in any AI legislation developed next Congress.

Senate:

Senate Health, Education, Labor, and Pensions (HELP) Committee Delays Further Consideration of No Aid for Ghost Students Act: During a committee markup on September 24, Senate HELP Committee Chair Bill Cassidy (R-LA) postponed further consideration of S. 4428, the No Aid for Ghost Students Act of 2026, which would require USED to use an identity fraud detection system to review each submitted FAFSA application to determine whether the applicant presents a reasonable suspicion of identity fraud. The action followed a 12–11 vote to adopt an amendment offered by Committee Ranking Member Bernie Sanders (I-VT) that would prohibit the federal government from garnishing Social Security benefits to collect defaulted student loans. Chair Cassidy noted that the amendment lacked a Congressional Budget Office (CBO) score, causing him to request that the amendment be withdrawn. When the amendment was not withdrawn, Senator Susan Collins (R-ME), joined Democratic Committee members, in supporting the amendment. Chair Cassidy then pulled the bill from further consideration pending additional budget analysis. No subsequent vote has been scheduled by the Senate HELP Committee on S. 4428 at this time. The House passed its version of the bill, H.R. 7892, on June 10, by a vote of 249 to 172.
 
IRS Chief Counsel Nominee Advanced by the Senate Finance Committee Amid Democratic Questions on Proposed Regulations Related to Stripping Tax-Exempt Status from Private Schools on the Basis of Engaging in Racial Discrimination: On September 15, the Senate Finance Committee held a hearing on four nominations, including for James Gadwood to be Chief Counsel at the Internal Revenue Service. Democratic senators, in questions submitted for the record after the hearing, asked extensively about proposed new rules from Treasury and the Internal Revenue Service (IRS) that would end federal tax-exempt status for any private schools that engage in racial discrimination. The proposed rules, which were announced on September 3, would apply to private primary and secondary schools and institutions of higher education (IHE) and would take effect “with respect to the taxable year of any private school beginning after May 31, 2027.”
 
Senate Finance Committee Ranking Member Ron Wyden (R-OR) asked why the new rule was necessary given existing IRS guidance, whether the rule had sufficient statutory authority, how it would be enforced when the IRS does not collect race and ethnicity information, and whether it could improperly penalize lawful efforts to advance racial equity. Senator Sheldon Whitehouse (D-RI) asked how schools would know what conduct could jeopardize their exemption – for example, support for student affinity groups or Black History Month events – and whether a single noncompliant program could threaten an institution’s entire tax-exempt status. Senator Raphael Warnock (D-GA) raised a related issue involving an IRS-FBI task force investigating tax-exempt entities for alleged links to political violence and domestic terrorism, asking for information about its targets, safeguards, and whether political viewpoint or proximity to an election could influence IRS enforcement. In response, Mr. Gadwood generally declined to take positions on the proposed regulations as he asserted that he was not involved in drafting them, saying that, if confirmed, he would review matters before the Chief Counsel’s office and advise the IRS consistent with the law. 
 
Following the hearing, the committee advanced all four nominations, including Mr. Gadwood, on September 24 by a 14-13 party-line vote. The full Senate has yet to take action on this and the other three nominations advanced by the Finance Committee. 

U.S. Courts:

Court Rules that USED Illegally Terminated Teacher Preparation Grants: On September 17, a federal district court judge in Massachusetts granted summary judgment to a group of eight states in their lawsuit against USED challenging the termination of Teacher Quality Partnership (TQP) and Supporting Effective Educator Development (SEED) grants in those states. These terminations were part of the initial wave of sudden grant terminations at the beginning of President Trump’s second term that were carried out by agencies such as USED in partnership with the Department of Government Efficiency (DOGE) and in furtherance of President Trump’s January 21, 2025 and February 3, 2025 anti-DEI executive orders.
 
The court ruled that USED violated the Administrative Procedure Act (APA) in multiple ways by issuing an internal directive on February 5, 2025, titled “Eliminating Discrimination and Fraud in Department Grant Awards” (“February 2025 Directive”), which mandated the termination of any grants advancing diversity, equity, or inclusion. Concluding that USED had both acted arbitrarily and capriciously and contrary to federal laws and regulations, the court vacated the February 2025 Directive and declared it to be unlawful, “ensuring that [USED] can no longer terminate TQP and SEED grants under its anti-DEI policies.” Note that, because of the U.S. Supreme Court’s ruling in a different case, the court in this case could not review the legality of the individual grant terminations nor could it reinstate the states’ TQP or SEED grants after finding that the underlying policy was unlawful. 
 
Notably, the court’s opinion includes the following account (in footnote 4) of the Administration’s legal arguments regarding “DEI”: “In their briefing, Defendants argue that the Directive applies only to discriminatory DEI activities, not all DEI activities. During oral argument, however, Defendants retreated from that view and clarified that their position is that the Directive applies to all DEI activities, but that is because all DEI activities are discriminatory.” Multiple federal courts have affirmed that executive orders and Administration policies cannot simply declare that all DEI activities are illegal. Indeed, there are many lawful ways to advance diversity, equity, and inclusion. 
 
Court Rules that USED and Other Agencies Unlawfully Changed Immigrants’ Eligibility for Federal Public Benefits: On September 21, a federal district court judge in Rhode Island granted summary judgment to a group of 20 states and the District of Columbia in their lawsuit challenging five federal agencies’ reinterpretation of what counts as “federal public benefits” under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA, sometimes referred to as “the 1996 welfare law”). The court ruled that the defendant agencies—USED, HHS, Labor, DOJ, and the U.S. Department of Housing and Urban Development (HUD) —violated the Administrative Procedure Act (APA) by issuing their new policies without going through the appropriate rulemaking process. 
 
The court had previously issued a preliminary injunction in the case, but that ruling halted enforcement of the agencies’ reinterpretations only in the plaintiff states. The new summary judgment ruling, by contrast, vacates the reinterpretations entirely – meaning the agencies cannot enforce them anywhere. If the Administration wants to pursue this new approach to PRWORA, the court concluded, each agency must first engage in notice-and-comment rulemaking. (See EducationCounsel’s Deep Dive, Who Benefits?, for more information on the Administration’s PRWORA actions, and see our September 3 Alert for an example of a federal agency (Treasury) initiating a formal rulemaking process to reinterpret PRWORA.) 
 
Court Rules that Oklahoma Cannot Prohibit Religious Charter Schools: On September 24, a federal district court judge in Oklahoma issued a preliminary injunction that prevents the Oklahoma Statewide Charter School Board from enforcing a state law that requires charter schools to be “nonsectarian.” The plaintiff in the lawsuit, the National Ben Gamla Jewish Charter School Foundation, will now likely be able to establish the nation’s first religious public school. If the decision is appealed, it may provide the U.S. Supreme Court with a second chance to decide if the First Amendment’s Free Exercise Clause requires that charter authorizers such as the one in Oklahoma must allow sectarian schools to apply for a charter on equal terms as nonsectarian schools. As discussed in EducationCounsel’s June 2, 2025 Alert, the Supreme Court deadlocked 4-4 on this question in a prior case from Oklahoma involving a proposed Catholic charter school because Justice Amy Coney Barrett had to recuse herself from that particular case. 

Upcoming Events (Outside Organizations):

• On October 5 at 1:00 p.m. ET, AASA, The School Superintendents Association, will host a webinar titled "Unpacking the New Federal Tax Credit Scholarship Regulations." The webinar will provide a breakdown of the key provisions of the regulations, highlight what they mean for public education stakeholders, and examine how the new rules may affect the ability of public-school-focused Scholarship Granting Organizations (SGOs) to participate in the tax credit marketplace. Speakers include Dan Gordon, Principal at EducationCounsel, and Sasha Pudelski, Director of Advocacy at AASA. More information and registration are available here.
   
• On October 5 at 4:30 p.m. ET, the American Enterprise Institute (AEI) will host a discussion titled, "Florida's Lessons for Higher Education Reform." The event will feature Ray Rodrigues, Chancellor of the State University System of Florida, in conversation with Frederick Hess, AEI's Director of Education Policy Studies. The discussion will reflect on Florida’s higher education reforms, the political challenges of implementation, and what lessons other states can draw from Florida’s experience. The event will be held at AEI's Washington, D.C. headquarters and will be available for both in-person and virtual attendance. More information and registration are available here.
   
• On October 6, the Partnership for Student Success will host its 2026 Partnership for Student Success Summit at the Johns Hopkins University Bloomberg Center in Washington, D.C. The summit will bring together education leaders and practitioners to explore evidence-based strategies for scaling tutoring, mentoring, student success coaching, and other supports that improve student outcomes. Sessions include "Ethically and Effectively Leveraging AI in Relationship-Driven Student Supports," moderated by Erin Mote, CEO of InnovateEDU, with panelists from LEAP Innovations, The Urban Assembly, and Saga Education discussing practical and responsible uses of artificial intelligence in student support services. Another session, "Building Career-Ready Durable Skills Through Service: What Student Success Coaches Learn in Schools," will feature leaders from City Year examining how service-based student success coaching helps develop workforce-ready skills. Attendees can also participate in "Funding What Works: Using OBC to Improve Student Outcomes through Evidence-Based Practices," where experts from the Center for Outcomes-Based Contracting at the Southern Education Foundation will discuss outcomes-based contracting as a strategy for scaling proven student interventions. More information is available here. 

• On October 7 at 11:00 a.m. ET, APCO Worldwide will host a briefing titled “Higher Ed on the Ballot.” The event will explore the role of higher education in the 2026 midterm elections. The panel will feature former Members of Congress Susan Wild (D-Pa.) and Dennis Ross (R-Fla.), both former members of the House Education and Workforce Committee, who will provide a bipartisan perspective on the issues and offer insights into the political and policy landscape that may emerge in Washington following the election. More information and registration are available here.
   
• On October 8 at 12:00 p.m. ET, the Program on Education Policy and Governance (PEPG) at Harvard Kennedy School will host a discussion titled "Federal Scholarship Tax Credit." The event will feature Jim Blew, co-founder of the Defense of Freedom Institute and former Assistant Secretary for Policy and Budget at the U.S. Department of Education, who will discuss the forthcoming Federal Scholarship Tax Credit, the status of the Treasury Department's rulemaking for it, and how states that have opted in are preparing for this new school choice provision. Blew's presentation will be followed by a moderated discussion and Q&A with James Peyser, former Massachusetts Secretary of Education. The event will take place at Harvard Kennedy School's WAPPP Cason Conference Room and is open to attendees who RSVP. More information and registration are available here.
   
• On October 15 at 3:00 p.m. ET, the American Enterprise Institute (AEI) will host a discussion titled "The Big, Beautiful Federal Scholarship Tax Credit: Countdown to Launch." The event will examine implementation of the new federal scholarship tax credit as stakeholders prepare for the program's launch. Participants will include Jim Blew, adviser to the Federal Scholarship Tax Credit Coalition; John Schilling, president of 2020 Strategies; Robert Enlow, CEO of EdChoice; Tommy Schultz, CEO of the American Federation for Children; Jodi Grant, executive director of the Afterschool Alliance; and Frederick Hess, AEI's director of education policy studies. The event will be held at AEI's Washington, D.C. headquarters and will be available for both in-person and virtual attendance. More information and registration are available here.
   
• On October 16 at 4:00 p.m. ET, FutureEd will host a webinar titled “The Latest on the Federal Scholarship Tax Credit: Opportunities and Challenges for Public Schools.” The webinar will provide an overview of the recently released federal scholarship tax credit regulations and explore the opportunities and challenges associated with using the program to support high-quality public school programs. The discussion will be moderated by Maureen Tracey-Mooney, Associate Director at FutureEd, and will feature Narric Rome, Managing Director of Government Relations at Accelerate; Kathy Bendheim, Strategic Advising Director at the National Student Support Accelerator at Stanford University; and Deborah Gist, former state superintendent and founder of the Future School Fund. More information and registration are available here.

 
Publications (Outside Organizations):

• On September 23, Brookings released a report titled, “Who is likely to benefit from the Federal Scholarship Tax Credit?” Among its findings include that the nation’s wealthiest counties will generate several times as much FSTC money per child as the nation’s poorest counties. Additionally, it found that unless FSTC funds are targeted towards low-income areas outside the communities where the money is donated, the FSTC is expected to become a regressive funding source, even where those funds go to public school students.