The Department of Education (DOE) is a relatively new federal agency – it was founded on May 4, 1980 when legislation split the old Department of Health, Education, and Welfare into two new departments: Education, and Health and Human Services.
The DOE is has received 4.0% of all federal funding in 2024, totaling $268.35 billion. That makes it the sixth highest-funded federal agency.
It’s also the smallest of any cabinet-level department, employing about 4,100 full-time employees in 2023. The next closest was Housing and Urban Development with around 8,100 full-time employees in 2023.
According to the Department of Education, education is primarily a local and state responsibility rather than a federal one. Elementary and secondary education are mostly funded by local governments, while state governments support higher education, per the Census Bureau’s Annual Survey of State and Local Government Finances. The Department of Education's budget makes up 21% of total education spending in the country.
How do elementary and secondary schools use Department of Education funding?
DOE funding for grades K-12 is primarily through programs supporting economically disadvantaged school systems:
- Title I provides funding for children from low-income families. This funding is allocated to state and local education agencies based on Census poverty estimates. In 2023, that amounted to over $18 billion.
- Annual funding to state and local governments supports special education programs to meet the needs of children with disabilities at no cost to parents. In 2023, it was nearly $15 billion.
- School improvement programs, which amount to nearly $6 billion each year, award grants to schools for initiatives to improve educational outcomes.
In addition to funding, the National Center for Education Statistics, a department within the DOE, gathers and reports data on K-12 educational institutions so schools and researchers can better analyze enrollment, finances, and performance metrics between schools and districts.
What is the role of Department of Education funding in higher education?
The DOE administers two programs to support college students: Pell Grants and the federal student loan program.
Pell Grants provide assistance to college students based on their family’s ability to pay. The maximum amount for a student in the 2024-25 school year is $7,395. In a typical year, Pell Grant funding totals around $30 billion.
The federal student loan program subsidizes students by offering more generous loan terms than they would receive in the private loan market, including income-driven repayment plans, scheduled debt forgiveness, lower interest rates, and deferred payments.
Federal higher education spending increased in FY 2022 due to debt forgiveness efforts but fell after the Supreme Court overturned the Biden administration’s loan forgiveness plan.
What else does the Department of Education do?
The DOE’s Office of Special Education and Rehabilitative Services provides support for disabled adults via vocational rehabilitation grants to states. These grants match the funds of state vocational rehabilitation agencies that help people with disabilities find jobs. Typically, these grants total around $4 billion a year.
The Department of Education’s Office of Career, Technical, and Adult Education (CTAE) also spends around $2 billion per year on career and technical education offered in high schools, community and technical colleges, and on adult education programs like GED and adult literacy programs.
These funds are distributed through grants to state and local governments.
What federal education programs exist outside of the Department of Education?
Several federal education programs are operated by agencies other than the Department of Education:
- The Bureau of Indian Affairs, part of the Department of the Interior, operates the Bureau of Indian Education to improve tribal education programs. Its budget is generally $1-2 billion.
- The Department of Veterans Affairs provides educational benefits to people who served in the armed forces through programs like the GI Bill that support the readjustment of veterans with education and job training. VA programs usually total around $13 billion per year.
- The National School Lunch Program (NSLP) administered by the Department of Agriculture, provides free or reduced-cost meals for eligible students. The NSLP spent $17 billion on school lunches in FY 2023. The Department of Agriculture’s School Breakfast Program costs around $5 billion per year.
- The nationwide Head Start program to prepare preschool-aged children for elementary school is largely funded by grants from the Administration for Children and Families part of the Department of Health and Human Services. Annual outlays typically total around $12 billion.
- Individual income tax rules provide tax credits for higher education expenses that can be claimed either by the student or by taxpayers claiming the student as a dependent. These tax credits amount to around $10 billion annually.
Additional federal support for higher education
Public colleges and universities receive additional federal funding for various purposes. For example, the National Science Foundation is a large provider of grant funding to higher education institutions.
Also, because many state universities run hospital systems, these institutions receive large payments from federal healthcare programs.
The Library of Congress, funded by Legislative Branch Appropriations, is part of the nation’s library system, providing resources and information for researchers and the general public on a wide range of topics.
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