Federal Education Spending

Federal programs administered by the U.S. Department of Education appear in two separate parts of the federal budget, and other agencies administer large programs as well. Furthermore, measuring spending on the federal student loan program is not straightforward, and the government provides significant subsidies for higher education in the form of tax benefits.

The annual education budget includes the annual appropriation for the U.S. Department of Education, spending for the U.S. Department of Education not subject to annual appropriations (i.e. mandatory spending), school meal programs administered by the U.S. Department of Agriculture, the Head Start program in the Departments of Health and Human Services, the forgone revenue and spending on education tax benefits for individuals, and military and veterans education benefits.

Most federal education programs are funded through the annual appropriations process, but a few, such as student loans, are funded on an ongoing basis through mandatory spending. The majority of funding goes to just three programs: 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. 

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. The main programs other than student loans that regularly receive mandatory funding include a part of the Pell Grant program and Vocational Rehabilitation state grants.

Advanced Appropriations for Education

Congress regularly provides partial funding for four PreK-12 education programs through a little-understood budgeting technique called "advance appropriations."

Competitive Grants, Formula Funding, and Entitlements

Annual appropriations for the Department of Education, which in fiscal year 2015 amounted to $67.1 billion, are distributed through three different types of grant programs: formula grants, student loans or grants, and discretionary grants.