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 competitive grants.

A large portion of the Department of Education’s annual appropriations are distributed using formula grants, also commonly referred to as block grants, which are made directly to the states. Often, the state agencies are then able to distribute these funds to local agencies or programs. The two largest formula grants are the Elementary and Secondary Education Act (ESEA) Title I Grants to Local Education Agencies (LEAs) and the Individuals with Disabilities Education Act (IDEA) State Grants. Together, these two programs received $25.9 billion in fiscal year 2015, accounting more than one third of the Department’s annual appropriations.

The Department of Education also supports students attending four-year colleges or universities, community colleges, and career schools through several direct grant programs. Federal Pell Grants, which are awarded to students with demonstrated financial need, accounted for $22.5 billion of the Department’s fiscal year 2015 appropriations (not including mandatory spending). Other direct federal programs include Federal Supplemental Educational Opportunity Grants (FSEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grants, and Iraq and Afghanistan Service Grants.

A variety of smaller programs are funded through discretionary competitive grants, which are awarded to state education agencies, local education agencies, institutions of higher education, nonprofits, and other organizations and agencies based on a competitive process. The Department funds several dozen discretionary programs spanning early childhood education through graduate school, totalling $2.8 billion in fiscal year 2015.