Federal education programs account for a relatively small but significant share of the total federal budget. The fiscal year 2008 federal budget totaled $3.3 trillion. Of this amount, 35 percent was discretionary funding, which is subject to the annual appropriations process whereby Congress determines funding levels each year through legislation. The remaining 65 percent of funding was mandatory spending, which is not subject to the annual appropriations process and includes entitlement programs such as Social Security and Medicare.

Nearly all federal education programs are funded through the appropriations process, but a few, such as student loans, are funded through mandatory spending. Discretionary federal education funding totaled $59.2 billion in fiscal year 2008, accounting for 5 percent of the $1.2 trillion in total discretionary funding across all federal agencies that year. (Fiscal year 2008 education funding figures include a $2.0 billion increase from the prior year in advance appropriations.)

It is important to note that most education funding in the United States is provided by state and local governments. For elementary and secondary education, federal spending accounts for only about 9 percent of total funding. More information on education finance can be found here.

The U.S. Department of Education Budget

Numerous programs make up the $59.2 billion fiscal year 2008 discretionary budget of the U.S. Department of Education. The majority of funding goes to just three programs: The Elementary and Secondary Education Act Title I Grants to Local Education Agencies, the Individuals with Disabilities Education Act (IDEA) State Grants, and the Pell Grant program for college students. Collectively these three programs received $39.1 billion in fiscal year 2008.

A relatively small number of federal education programs are funded through mandatory spending. Budget figures for the largest of these, federally-subsidized student loans for postsecondary education, are difficult to compare to programs funded through the appropriations process. This is because the budget reflects student loan costs under a special set of accrual accounting rules that are meant to show the lifetime costs of loan cohorts in present value terms. Additionally, under certain conditions, student loan costs appear in the budget as negative numbers, reflecting projected earnings for the federal government and annual re-estimates that incorporate new information for previously issued loans. More information on federal student loan budget rules can be found here. The main programs other than student loans that regularly receive mandatory funding include a part of the Pell Grant program, the Academic Competitiveness and SMART Grant programs, and Vocational Rehabilitation state grants.

Department of Education Funding Levels Since 1999

After the passage of the No Child Left Behind Act in 2002, appropriations for some federal education programs grew rapidly from fiscal years 2001 through 2004. Specifically, Elementary and Secondary Education Act Title I Grants to Local Education Agencies and IDEA State Grants were allocated significant funding increases. Additional funding for the Pell Grant program also contributed to overall appropriations increases for federal education programs. The rate of growth slowed later in the decade, however, and funding actually declined in nominal terms from 2006 to 2008. In fiscal year 2009, significant funding increases for new and existing education programs were included in economic stimulus legislation, the American Recovery and Reinvestment Act of 2009, causing a rapid one-year increase in federal spending.