• Introduction
• Highlights
• References

This report attempts to provide a comprehensive picture of total federal financial support for education since fiscal year (FY) 1980.¹ 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 programs.

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 programs 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 institutions of higher education. 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 $128.1 billion in FY 2001 (table A). In current dollars,² this represents an increase of $65.3 billion, or 104 percent, since FY 90. In constant dollars, federal support for education increased 56 percent between FY 90 and FY 2001.

For FY 2001, on-budget federal funds for education programs were estimated to be $92.8 billion—an increase of 80 percent since FY 90 in current dollars or an increase of 37 percent in constant dollars. Off-budget support and nonfederal funds generated by federal legislation (predominantly postsecondary education loans) were estimated at $35.4 billion, a rise of 216 percent in current dollars between FY 90 and FY 2001 and 141 percent in constant dollars.

In FY 2001, Department of Education outlays totaled an estimated $36.8 billion (table B), reflecting an increase of 37 percent in constant dollars since FY 80 and an increase of 21 percent between FY 90 and FY 2001. The Department of Education’s share of total federal on-budget education funds rose from 38 percent in FY 80 to 45 percent in FY 90 and then decreased to 40 percent in FY 2001 (figure A).

A little over 60 percent of federal education support, excluding estimated federal tax expenditures, went to educational institutions in FY 2001. Almost 20 percent was used for student support. The remaining 20 percent went to banks and other lending agencies, libraries, museums, and federal institutions.

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Schools and colleges derived 11 percent of their FY 2001 revenues from the federal government, with the remaining revenues coming from state and local governments, individuals, and private organizations. Of the estimated $678.2 billion in direct expenditures by schools and colleges in FY 2001, revenues from federal sources amounted to $77.4 billion and revenues from other sources amounted to $600.8 billion.

The estimated federal share of expenditures of educational institutions declined from 14 percent in FY 80 to 10 percent in FY 90 and then increased to 11 percent in FY 2001. Among elementary and secondary educational institutions, the federal share declined from 12 percent in FY 80 to 7 percent in FY 90 and then increased to almost 9 percent in FY 2001. Among postsecondary institutions, the federal share declined from 18 percent in FY 80 to 14 percent in FY 90 and then rose to 15 percent in FY 2001.

Between FY 80 and FY 2001, federal on-budget funds for elementary and secondary education³ increased 49 percent in constant dollars, while postsecondary education funds declined 33 percent (derived from table A). Other education funds (which include funds for libraries, museums, cultural activities, and miscellaneous research) increased 89 percent in constant dollars over the same period, and funds for research at universities and university-administered research and development centers increased 92 percent.

Over the shorter term, between FY 90 and FY 2001, federal on-budget funds for elementary and secondary education increased 69 percent in constant dollars, postsecondary education funds declined 14 percent, other education funds increased 35 percent, and research funds at colleges and universities increased 38 percent.

Between FY 80 and FY 2001, estimated federal tax expenditures increased 52 percent in constant dollars. Between FY 90 and FY 2001, they went up 66 percent. Estimated federal tax expenditures’ share of total federal support in education was 24 percent in FY 2001.

Figure A.—Percentage distribution of federal on-budget funds for education, by agency: Fiscal year 2001

Hoffman, C.M. (2000). Federal Support for Education: Fiscal Years 1980 to 2000 (NCES 2000–068). U.S. Department of Education. Washington, DC: National Center for Education Statistics.

Snyder, T.D., and Hoffman, C.M. (2001). Digest of Education Statistics: 2000 (NCES 2001–034). U.S. Department of Education, National Center for Education Statistics. Washington, DC: U.S. Government Printing Office.

U.S. Office of Management and Budget. (2001). Budget of the United States Government, Fiscal Year 2002. Washington, DC: U.S. Government Printing Office.