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'Off-Budget' Federal Education Aid Grew Sharply During 1980's, Department Reports

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Washington--Both direct federal funding of education and support through tax breaks declined in real dollars between 1980 and 1988, but "off-budget" education funding grew by 68 percent, according to a report from the National Center for Education Statistics.

"Off-budget" support--revolving-fund loans and student-aid funds provided by lenders, states, and employers because of federal subsidies--accounted for $13.1 billion in fiscal year 1988. Comparable spending in 1980, adjusted for inflation, was $7.8 billion.

Because of the growth of these higher-education expenditures, school districts and state education agencies received a smaller percentage of total federal support in 1988 than in 1980, while higher-education institutions and individual students received more, the nces found.

Total federal support for educa4tion rose from $53.4 billion in outlays to $72.2 billion during that period. But it dropped $4.7 billion--6 percent--in constant dollars, the agency found.

Only $18.9 billion of the 1988 total, and half of the $18.6 billion devoted to precollegiate programs, was provided through the Education Department, the study found. In 1980, ed outlays totaled only $13.1 billion.

Other large education programs include Head Start; Defense Department schools for military dependents; the military-service academies and tuition aid provided by the dod; research programs of the Departments of Energy and Health and Human Services; veterans' programs; job-training programs; Indian-education programs; and Social Security aid for dependent students.

Expenditures by the Defense Department and the National Aero8nautics and Space Administration rose more than 100 percent between 1980 and 1988, while the Veterans Administration showed the sharpest decline, 57.2 percent.

The report estimated total "tax expenditures" on education at $15.8 billion, $2.1 billion more than was spent in 1980, but $3.4 billion less than its 1987 estimate.

The 1986 tax-reform law killed or limited several tax breaks that the report's authors include as education expenditures, such as deductibility of state and local taxes, charitable contributions, and tuition aid. Such breaks encourage education spending and help make local taxes, which are a major source of education funding, more palatable.

Other tax breaks included are exemptions for interest on school and student-loan bonds and exemptions for adult students still dependent on their parents.--jm

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