Neal McCluskey
The Trump administration is looking for federal spending to cut, which seems pretty urgent given the nation’s nearly $37 trillion debt. The US Department of Education (US ED), which is neither constitutional, competent, nor effective, is home to numerous prime targets, including the Department itself.
US ED in Context
US ED spending constitutes a relatively small part of all education funding. In the 2021–22 school year (the latest with available data) all educational institutions in the United States spent $1.64 trillion, or $1.84 trillion in 2024 dollars. Appropriations for the US Department of Education in fiscal year 2024 were about $188.6 billion, or 10.3 percent of the total. Remove new Direct Loans for college students, which are supposed to be repaid, and the US ED budget was $97.0 billion, or just 5.3 percent of the total. Looking at the latest available (2020–21 school year) public elementary and secondary school revenues by source of funds, federal dollars account for slightly over 10.6 percent of the total.
US ED Spending by Type
Department funding, excluding student loans, comes in roughly four types:
- Formula grants
- Discretionary grants
- Direct funding
- Administrative funding
The table below shows the number of programs, the mean appropriation per program, and the total amount appropriated under each type. Note that “administrative” counts the number of administrative functions, not programs.
Formula grant programs are less numerous than discretionary but involve more money, largely because they include the primary funding under major laws, such as the Elementary and Secondary Education Act (ESEA) and the Individuals with Disabilities Education Act (IDEA). This includes $18.4 billion in grants to states through Title 1 of the ESEA and $14.2 billion in IDEA state grants. The biggest formula grant program is Pell Grants for college students, at $35.5 billion in FY 2024. The highly dubious 21st Century Community Learning Centers program, which garnered $1.3 billion, is also a formula program.
Discretionary grant programs are typically much smaller than formula grants, have specific focuses, and would-be recipients apply for funding. These include Aid for Institutional Development programs geared to various minority-serving institutions of higher education, programs such as Upward Bound intended to help lower-income students get an academic leg up, several teacher-related programs, and the Javits Gifted and Talented program.
Direct funding goes to several recipients, including Howard and Gallaudet universities and the Institute for Education Sciences, which, among other things, oversees the National Assessment of Educational Progress.
Administrative costs cover the running of US ED, especially salaries for its roughly 4,200 employees.
What Should We Cut?
What should we be looking to cut? What follows are three possibilities, from ideal to better than nothing.
Everything
If all Department of Education functions ended, it would save taxpayers $97.0 billion. That’s about seven times the budget of the US Coast Guard.
All But What’s Constitutional
Constitutionally, the federal government has no authority to govern in education, and it certainly has none for a cabinet-level department. US ED must be eliminated, but a handful of functions it oversees have some constitutional warrant:
- Impact Aid: These programs compensate districts housing federal reservations, including military bases, for lost revenue resulting from Washington not paying property taxes. This can be justified under defense powers.
- Tribal education: The federal government has a long and fraught history with Native Americans, and through treaty power has a constitutionally legitimate role in assisting with education on reservations.
- Office for Civil Rights: The federal government has a constitutional responsibility to stop discrimination by state and local governments, though this should be moved to the Department of Justice.
- Gallaudet and Howard Universities: These are in the District of Columbia, over which the federal government has exclusive jurisdiction.
- Military: The Department administers an Outward Bound program intended to help veterans prepare for higher education.
In FY 2024, the federal government appropriated a combined $2.4 billion for these programs. Eliminating everything else would yield savings of around $94.6 billion, which is more than the fiscal year 2025 budget of the State of Michigan.
All But What’s Formula Driven
Presumably, programs that fund recipients by formula are more important than discretionary. Everyone is supposed to benefit from the former but not the latter. That means discretionary programs should be eliminated before the formula if one is prioritizing cuts.
As noted above, eliminating all discretionary programs would yield a savings of $5.3 billion. Add directly funded entities—essentially single-recipient discretionary programs—and the savings rise to $6.7 billion. Finally, assuming that the share of employees working on those programs is proportionate to the programs’ share of total funding, cuts would achieve an additional $204.8 million in administrative savings, bringing the total to around $6.9 billion. That is roughly the cost of a new Seawolf-class nuclear submarine.
Conclusion
Eliminating the US Department of Education and all that it does would produce major savings. But so would eliminating much of what it does short of full termination, especially if we keep only what is constitutional.