US Education Spending History from 1900

A Century of Education Spending

Education spending increased rapidly during most of the 20th century.

Education Spending started out at the beginning of the 20th century at one percent of Gross Domestic Product (GDP). It increased rapidly during the first three decades, reaching a peak of 4 percent of GDP in the depths of the Great Depression, but then steadying at 3 percent till the advent of World War II.

During World War II, education expenditures declined to 1.25 percent of GDP in 1944, and then recovered after the war to over 3 percent of GDP before declining in the early 1950s.

In the mid 1950s education spending began a rapid increase, from a low of 2.6 percent in 1953. Education spending peaked at 5.7 percent in 1976 before declining for the next decade to 4.7 percent of GDP in 1984.

In the mid 1980s education spending began to increase again. It flatlined at about 5.3 percent of GDP in the 1990s, but resumed its growth in the 2000s, reaching 6.1 percent in 2010 before declining to 5.6 percent GDP in 2015. In 2023 education spending was 4.0 percent GDP.

Education Spending by Government Level

The Feds do not spend much money on education. Most education is funded by local governments.

Local education spending: Education spending has always been dominated by local government. Local government spending started at about one percent of GDP at the start of the 20th century and then steadily expanded, with departures caused by the Great Depression and World War II, peaking at 3.8 percent of GDP in 1975.

Chart Key:
- Local direct spending
- State direct spending
- Federal direct spending
- Transfer to state and local

From the mid 1970s to the mid 1980s education spending at the local level declined to about 3.2 percent of GDP by the mid 1980s. Then local education began a steady rise, breaching 4 percent of GDP by 2002 and cresting at about 4.3 percent of GDP by 2009. In the first half of the 2010s, local education spending declined to an estimated 3.6 percent GDP in 2015. In 2021 local education spending was 3.4 percent GDP.

State education spending: Education spending at the state level was minimal at the start of the 20th century, but grew to 0.2 percent of GDP by the mid 1920s. In the 1930s state education spending increased to about 0.4 percent of GDP before shrinking during World War II.

After World War II state education increased and stabilized at about 0.4 percent of GDP in the 1950s. In the late 1950s state education began a surge that ended at 1.4 percent of GDP in 1976. State education spending declined to 1.2 percent of GDP in 1984 and then began a slow increase, reaching 1.5 percent of GDP in the late 2000s, and jumping to 1.7 percent GDP in the post-recession year of 2010.

In the first half of the 2010s state education spending declined, down to 1.6 percent GDP in 2015. In 2021 state education spending was 1.5 percent GDP.

Federal education spending: The federal government had little involvement in education in the early 20th century. This changed in the 1930s when federal education spending increased from less than 0.05 percent of GDP to over 0.3 percent of GDP. Federal education spending decreased during World War II but then increased to a peak of 1.03 percent of GDP in 1949 as it funded education for veterans in the GI Bill. Federal education spending declined in the 1950s to 0.3 percent of GDP, but began an increase in the mid 1960s reaching a peak of 1.2 percent of GDP in 1979. Thereafter federal education spending declined to about 0.6 to 0.7 percent of GDP in the 1980s and 1990s before increasing modestly to nearly 0.8 percent of GDP in the 2000s.

In the early 2010s federal education spending declined to 0.7 percent in 2015. In 2023 federal education spending was 0.1 percent GDP.

Education Spending by Education Type

At the start of the 20th Century, education spending was almost exclusively for K-12 education.

Government education spending in the first half of the 20th century was almost exclusively for childhood education, K thru 12. In 1950, spending was 2 percent on K-12 and 0.37 percent of GDP on higher education. But then the higher education share began to grow. At the peak of education spending in the 1970s, K-12 spending was 3.9 percent of GDP and higher education was 1.44 percent of GDP. Thus K-12 spending had doubled as a percent of GDP and higher education spending had just about quadrupled in 25 years.

Since the 1970s higher education has increased its share a little. K-12 education spending ended up at about 4 percent in the 2000s and higher education spending rose to 1.6 to 1.7 percent of GDP.

In the Great Recession K-12 education popped up to 4.4 percent GDP before declining below 3.6 percent GDP in 2015. In 2020 K-12 education was 3.7 percent GDP. Higher education spending increased to 1.8 percent GDP in 2015. In 2020 higher education spending was 2.3 percent GDP.

Local Education Spending Breakdown

Almost all local education spending is for K-12 education.

In 1900 spending on education by local governments was about 1.0 percent of GDP and it all went for K-12 education. Spending steadily increased to over 2.3 percent GDP at the end of the 1930s before taking a hit back down to 1.0 percent of GDP at the height of World War II.

In the 1950s local education spending on K-12 rebounded to new heights, reaching 3.6 percent of GDP in 1971. After a decline in the 1970s bottoming out at 3.1 percent GDP in 1984 K-12 spending increased topping out at 3.9 percent GDP in 2009. In the 2010s K-12 education has declined, to 3.3 percent GDP in 2015. K-12 education was 3.32 percent GDP in 2019.

But local governments also spend money on higher education, beginning at 0.02 percent GDP in 1952. It steadily increased to 0.2 percent in 1971 and has fluctuated between 0.17 and 0.22 percent of GDP ever since.

State Education Spending Breakdown

Most state education spending is for higher education.

In 1900 spending on education by state governments was about 0.05 percent of GDP, almost all for higher education. State spending on higher education rose steadily year by year, hitting 0.3 percent GDP at the end of the 1930s. But spending dropped down to 0.17 percent GDP during and after World War II.

In the 1950s and 1960s states ramped up spending on higher education, reaching 1.0 percent GDP in 1970. Then, from 1970 to 2000 state spending on higher education held at about 1 to 1.2 percent GDP.

In the 2000s state spending on higher education stepped up to a little under 1.2 percent GDP, reaching up to 1.36 percent GDP in the early 2010s. Starting in 2013 state spending on higher education has started to decrease, down to 1.28 percent GDP in 2015 and 1.32 percent GDP in 2020.

States have spent very little money directly on K-12 education, but have allocated increasing amounts on education other than K-12 or higher education. This spending reached 0.05 percent of GDP by 1940, 0.1 percent GDP in 1965, 0.2 percent GDP in 1970, 0.4 percent GDP in the late 2010s, and 0.32 percent GDP in 2020.

Federal Education Spending Breakdown

Federal education spending has been about 0.7 percent GDP for decades.

Prior to 1962, federal education spending is not broken down, so it cannot be determined which monies go to which function.

In 1900 the federal government spent about 0.2 percent GDP on education. But during the 1930s education was increased to almost 0.4 percent GDP, before declining to 0.1 percent GDP in World War II.

After World War II federal education spiked, presumably for GI Bill education spending, reaching 1 percent GDP in 1948-50, and then declined to 0.30 by the late 1950s.

In 1962 federal education spending breaks down into 0.08 percent GDP for K-12 education, 0.05 percent GDP for higher education and 0.15 percent GDP other.

Federal spending on K-12 education rose from 0.08 percent GDP in 1962 to almost 0.3 percent GDP by 1971 but then declined to under 0.2 percent GDP until 2000. The 2000s saw an increase in federal spending on education up to 0.3 percent of GDP with a spike to almost 0.5 percent GDP with special aid to schools during the Great Recession before returning to 0.2 percent GDP in the mid 2010s. In 2021 federal spending on K-12 education was 0.39 percent GDP.

Federal spending on higher education rose from 0.05 percent GDP to over 0.1 percent GDP by 1970. In the 1980s through the 2000s federal spending ranged from 0.15 to 0.2 percent GDP, peaking at 0.36 percent GDP in 2006. In the Great Recession and after federal spending on higher education bounced around due to various manipulations of student loans and subsidies. In 2021 federal spending on higher education was 0.75 percent GDP.

Federal spending on “other” education includes science and basic research, training, and social services. Starting at 0.15 percent GDP in 1962 it reached almost 0.49 percent GDP by 1968 and 0.8 percent GDP by 1978. But since 1980 other education spending has declined steadily, below 0.4 percent GDP by 1984, below 0.3 percent GDP by 1999, and down to about 0.25 percent GDP in the mid 2010s before declining to 0.2 percent GDP by the end of the 2010s. In 2021 federal spending on other education was 0.21 percent GDP.