The Every Student Succeeds Act replaces the oft-criticized Bush-era No Child Left Behind Act (NCLB). The NCLB programs expired in 2007, but for years Congress struggled to compromise on a replacement.
Obama hailed the new law as a true bipartisan effort, calling the bill signing a "Christmas miracle."
"I was telling Lamar we should do this more often," he said, referring to Sen. Lamar Alexander (R-Tenn.), who was one of the chief architects of the bill.
ESSA gives more power to states than its predecessor. NCLB emphasized standardized testing and a top-down approach to education. Under that law, the federal government designed an accountability system to evaluate states' schools. While ESSA maintains the standardized testing schedule created by NCLB, it allows states to design their own accountability systems to measure a school's success.
In lieu of a workable national education law, the Obama administration gave states waivers that allowed them to avoid NCLB's strictest consequences in exchange for agreeing to implement policies favored by the White House. ESSA does away with this system.
"My administration, when we came into office, we tried some different things, tried to lead a Race To The Top," said Obama, referring to an Education Department competition that gave states grants if they implemented certain plans for reforms. "The truth is that could only do so much."
Obama called the new law a "step in the right direction," but noted that "now the hard work begins."
"Laws are only as good as the implementation," Obama said.