The 1987 McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.) is the federal law that entitles children who are homeless to a free, appropriate public education, for which federal funding is provided to the states under Subtitle VII-B, the Education for Homeless Children and Youth Program. At the time the legislation was passed, only an estimated 57% of homeless children were enrolled in school. By 2000 the percentage had increased to 88%.

However, in implementing the legislation, school districts found that barriers arose in such areas as residency, guardian requirements, incomplete or missing documentation (including immunization records and birth certificates), and transportation. Consequently, some school districts established separate schools for homeless children. As of 2002 there were an estimated forty separate schools for the homeless nationwide, according to the National Coalition for the Homeless.

The National Law Center on Homelessness and Poverty (Separate and Unequal: A Report on Education Barriers for Homeless Children and Youth, Washington, DC, January 2000) complains that such programs violate the McKinney-Vento Act and are "vastly inferior" to regular public schools in terms of resources and curricula. For example, some of the schools were located in shelters or churches that violated health and safety codes, and some were not staffed by certified teachers. Most schools were one-room classrooms with students of different ages and grades together under one teacher. Most do not offer a full range of educational programs, such as special education, gifted and talented programs, or bilingual education (National Coalition for the Homeless, "School Segregation and Homeless Children and Youth: Questions and Answers," http://www.nationalhomeless.org/unequal.html).

Walter Varner, President of the National Association for the Education of Homeless Children and Youth, testified before Congress on September 5, 2000, that in his opinion, "separate [education] is never equal." (The landmark Supreme Court decision in Brown v. Board of Education [347 U.S. 483 (1954)] found that "the 'separate but equal' doctrine … has no place in the field of public education.") Varner pointed out that thousands of schools across the country had successfully eliminated barriers to the education of homeless children. Furthermore, he stated that it is "unacceptable to accommodate the prejudices of housed children against their homeless peers.… As the Supreme Court has said, 'private biases may be outside the reach of the law, but the law cannot, directly or indirectly, give them effect."'

Proponents of separate schools argue they provide badly needed supportive services such as showers, clothing, hygiene items, dental and medical care, psychological counseling, and birthday parties and gifts. The schools also shield children from the embarrassment and ridicule they might expect to encounter in regular public schools.

When Congress reauthorized the Homeless Children and Youth Program in January 2002 (through the enactment of the No Child Left Behind Act [PL 107-110]), it asserted that "Homelessness alone is not sufficient reason to separate students from the mainstream school environment." The new law required that homeless children be placed in mainstream schools, and it cut off federal aid to separate schools for the homeless. However, just before the bill was signed, six schools were exempted from the new law.

Transportation became an issue for school districts providing education to homeless students. Homes for the Homeless and the Institute for Children and Poverty found that 34% of 226 students in one New York homeless shelter faced commutes of longer than an hour because their parents had opted to keep their children in the same schools they had attended before they became homeless, a right guaranteed by the new law (Nicole Brode, "New York's School Choice Leaves More Homeless Children with Hour-Plus Commutes," Knight-Ridder/Tribune Business News, February 10, 2003). In 2005 the Thomas J. Pappas schools for the homeless in Phoenix and Tempe, Arizona, reported that twelve buses traveled more than 1,000 miles each morning to transport children to school.