Chicago Public Schools (CPS) has reached a settlement to reclaim millions of federal grant dollars that were withheld by the U.S. Department of Education under the Trump administration. The funds, totaling approximately $5.8 million, had been rescinded due to disputes over the district’s Black Student Success Plan and its transgender student policies. CPS initiated legal action against the Education Department in March after the abrupt withdrawal of these grants, which were part of the Magnet Schools Assistance Program aimed at promoting desegregation and expanding school choice.

The district has not specified the exact amount that will be returned or confirmed receipt of the funds, but a CPS spokesperson indicated Friday that the district aims to work with the Education Department to expedite the distribution of resources to schools and students. The department has not provided comment on the settlement.

CPS developed its Black Student Success Plan in February 2025, designed to address systemic disparities affecting Black students, who comprise about one-third of the district’s enrollment. The plan sets goals to close academic achievement gaps, increase the number of Black male educators, reduce suspensions and expulsions among Black students, and enhance culturally relevant curriculum with expanded Black history content.

Shortly after its introduction, the plan drew criticism from Defending Education, a conservative advocacy group that challenged the focus on Black students, arguing the district’s overall student body—including nearly half Latino students and 12% white students—faces widespread academic challenges. The complaint prompted a federal investigation into CPS’s policies.

In a letter issued last fall, Assistant Secretary for Civil Rights Craig Trainor criticized the plan as “textbook racial discrimination” and “racially restrictive programming.” He further contended that CPS violated federal law by permitting transgender students to use facilities aligned with their gender identity. When CPS declined to alter its policies, the Education Department withdrew the grants, citing these concerns.

CPS countered through its lawsuit that the department failed to adhere to required procedures before revoking the funds and noted that no formal findings had yet been released from the civil rights inquiry. The lawsuit also emphasized that the plan was still in early stages and had not been fully implemented.

The dispute reflects broader tensions under the Trump administration over diversity, equity, and inclusion initiatives. Federal officials have argued that directing resources toward specific racial groups constitutes reverse discrimination. CPS, meanwhile, has maintained its policies without directly confronting the administration. During a June hearing before the Republican-led House Committee on Education and the Workforce, CPS CEO Macquline King stated the district’s adherence to state law when questioned about transgender student policies.

The ongoing federal investigation and related challenges have slowed progress on the Black Student Success Plan. The Chicago Board of Education only appointed members to the plan’s oversight committee in July, months behind schedule.

Despite overall gains in graduation rates in recent years, with the district reaching 84% in 2024, Black male students continue to graduate at a lower rate—77% last year—reflecting long-standing disparities. College completion among Black graduates has also lagged behind, with fewer students completing degrees within six years compared to a decade earlier. Additionally, Black students face disproportionate rates of suspension, although CPS has taken steps to reform disciplinary policies including the removal of school resource officers starting in 2024.

CPS has secured a $250,000 philanthropic grant to support related initiatives, including hosting a districtwide Black Student Union conference and launching a Black male educator pipeline program focused on mentoring and wellness support for teachers.