In 1976 the U.S. Congress passed the Education of the Handicapped Act (PL 94–142, superseded by PL 98–199), which required schools to develop programs for disabled children. Formerly, parents of many disabled students had few options other than institutionalization or nursing care. The Education of the Handicapped Act required that disabled children be put in the "least restrictive environment," which led to increased efforts to educate them in regular classrooms (known as mainstreaming).

The law defined "handicapped" children as those who are mentally retarded, hard of hearing or deaf, orthopedically impaired, speech- and language-impaired, visually impaired, seriously emotionally disturbed or otherwise health-impaired. It also includes children with specific learning disabilities who require special education and related services.

In 1990 the Individuals with Disabilities Education Act (PL 101–476) (IDEA) was passed. This was a reauthorization and expansion of the earlier Education of the Handicapped Act. It added autism and traumatic brain injury to the list of disabilities covered by the law, and amendments added in 1992 and 1997 increased coverage for infants and toddlers and for children with attention deficit disorder (ADD) and attention deficit hyperactivity disorder (ADHD). The law required public school systems to develop an Individualized Education Program (IEP) for each disabled child, reflecting the needs of individual students.

In February 2001 President Bush announced the New Freedom Initiative, designed to give people with disabilities more opportunities in various arenas, including education. In the overview report describing the initiative, President Bush noted he would seek to increase funding for IDEA and place stress on both the "Reading First" and "Early Reading First" programs. He proposed an $11 billion budget for IDEA in fiscal year 2005.

As a result of legislation that enforces their rights, increased numbers of disabled children have been served in public schools. Between 1976 and 2001 the proportion of students who participated in federal education programs for children with disabilities increased from 8.3% to 13.3%. (See Table 6.8.) In 2001 the highest proportion of students needed services for specific learning disabilities (6%), followed by students who needed help with speech or language impairments (2.3%) and students who were mentally retarded (1.3%). According to the Office of Special Education Programs 2002 Annual Report, six hundred thousand preschoolers received early intervention services annually, and 5.8 million children six to twelve years old with disabilities received special education services in 2001.