• Introduction
• Highlights
• References

This report attempts to provide a comprehensive picture of total federal financial support for education since fiscal year (FY) 1980.* In addition to Department of Education programs, the many other federal programs that support education are included. The report also includes other types of federal support that are sometimes overlooked.

This report puts federal education funding into three categories: on-budget funds, off-budget support, and nonfederal funds generated by federal legislation.

On-budget funds are provided through programs funded by congressional appropriations. Although some consolidation of education programs in one federal agency was achieved with the establishment of the U.S. Department of Education in 1980, many large and significant federal education programs remain outside the Department. In addition, many federal programs involving education have other primary purposes. In order to account fully for all federal support for education, programs residing in other federal departments and agencies having significant educational components are included, even if they have additional purposes.

Off-budget support is federal money that has been excluded from the budget by law. Off-budget support in this report consists of the loan capital that is provided directly by the federal government under the William D. Ford Federal Direct Student Loan (FDSL) program.

Nonfederal funds generated by federal legislation result from federal loan guarantees and interest subsidies to support loan capital raised through various private and public sources. Nonfederal funds are also made available for education purposes when federal programs require matching funds or offer incentives and subsidies. Almost all such nonfederal education funds go to postsecondary education.

Education programs can be supported either by direct funding or by indirect funding mechanisms such as tax expenditures. In this report, federal tax expenditures include only reductions in tax revenue received by the federal government due to deductions, exemptions, and credits allowable in the tax code. Unless otherwise noted, tables and discussions of federal support in this report do not include federal tax expenditures.

To the extent possible, outlays were used in this report rather than appropriations or obligations, with the exception that obligations were used for academic research at postsecondary institutions. Outlays are the actual amount of dollars spent. Appropriations are the amount of funds made available in legislation providing funds for federal programs. Obligations are spending commitments by the federal government that will require outlays either immediately or in the future.

The federal government provides support for education well beyond programs funded through the Department of Education. Federal support for education, excluding estimated federal tax expenditures, was an estimated $147.9 billion in FY 2002 (table A). In current dollars (i.e., before adjusting for inflation), this represents an increase of $85.1 billion, or 136 percent, since FY 1990. In constant dollars (i.e., after adjusting for inflation), federal support for education increased 77 percent between FY 1990 and FY 2002.

For FY 2002, on-budget federal funds for education programs were estimated to be $109.5 billion, an increase of 112 percent since FY 1990 in current dollars or an increase of 59 percent after being adjusted for inflation. Off-budget support and nonfederal funds generated by federal legislation (predominantly postsecondary education loans) were estimated at $38.5 billion, a rise of 244 percent in current dollars between FY 1990 and FY 2002 and 158 percent in constant dollars.

Table A. Federal support for education, by category, level, and other educational purpose: Selected fiscal years,1980–2002

In FY 2002, Department of Education outlays totaled an estimated $47.8 billion (table B), reflecting an increase of 55 percent between FY 1990 and FY 2002, after being adjusted for inflation. The Department of Education's share of total federal on-budget education funds rose from 38 percent in FY 1980 to 45 percent in FY 1990 and then decreased to 44 percent in FY 2002 (figure A).

Table B. Federal agencies providing the largest amounts of on-budget funds for education: Selected fiscal years, 1980–2002

Almost 60 percent of federal education support, excluding estimated federal tax expenditures, went to educational institutions in FY 2002. Nineteen percent was used for student support. The remaining 21 percent went to banks and other lending agencies, libraries, museums, and federal institutions.

Twelve percent of school and college revenues in FY 2002 were from the federal government, with the remaining revenues coming from state and local governments, individuals, and private organizations and endowments. Of the estimated $731.7 billion in direct income by schools and colleges in FY 2002, revenues from federal sources amounted to $88.6 billion and revenues from other sources amounted to $643.1 billion.

The estimated federal share of expenditures of educational institutions declined from 14 percent in FY 1980 to 10 percent in FY 1990 and then increased to 12 percent in FY 2002. Among elementary and secondary educational institutions, the federal share declined from 12 percent in FY 1980 to 7 percent in FY 1990 and then increased to 9 percent in FY 2002. Among postsecondary institutions, the federal share declined from 18 percent in FY 1980 to 14 percent in FY 1990 and then rose to 17 percent in FY 2002.

Between FY 1980 and FY 1990, after being adjusted for inflation, federal on-budget funds for elementary and secondary education decreased 12 percent; postsecondary education funds declined 21 percent (derived from table A). Other education funds (which include funds for libraries, museums, cultural activities, and miscellaneous research) increased 40 percent; and funds for research at universities and university-administered research and development centers increased 39 percent.

In the more recent period, between FY 1990 and FY 2002, federal on-budget funds for elementary and secondary education increased 87 percent in constant dollars, postsecondary education funds increased 24 percent, other education funds increased 42 percent, and research funds at colleges and universities increased 54 percent.

Between FY 1980 and FY 1990, estimated federal tax expenditures, after being adjusted for inflation, decreased 8 percent. Between FY 1990 and FY 2001, expenditures went up 67 percent. Estimated federal tax expenditures' share of total federal support in education was 24 percent in FY 2001.