After the implementation of the "two exemptions and one subsidy" (TEOS) policy and between the spring of 2006 and 2007, China's western, central, and eastern regions introduced a new mechanism for guaranteeing rural compulsory education. This mechanism resulted in great changes in the environment for implementing TEOS and, in addition, increased the need for research on problems TEOS faced as it was implemented. Currently, the primary focus and difficulties of the development of China's rural compulsory education program are in the ethnic minority rural area. This article examines TEOS in these areas and presents related policy measures that may be considered for resolving the impoverished student problem. (Contains 3 notes.)