How much does the U.S. spend on education? A data-driven look at America’s investment in learning

From elementary schools to research laboratories of major universities, education represents one of the largest commitments in the United States budget. This is a commitment that totals well over $1 trillion annually when you add up every level of government spending. 

Yet for all the dollars invested, fundamental questions persist: Is America spending enough on education? Is the money being spent wisely? And perhaps most importantly, where exactly does all that money go? This article takes a data-driven approach to answer these questions, examining the scale of U.S. education spending, its sources, the variations across states, and what these numbers reveal about America's educational priorities. 

Key statistics (Top picks)

• Total K-12 spending amounts to $767.8 billion in fiscal year 2022, serving 49.6 million public school students
• Average per-pupil spending (K-12) amounts to $15.591 nationally, though this masks a dramatic range from $9,496 in Utah to $29,284 in New York, nearly a threefold difference 
• State and local governments contributed $139.1 billion in fiscal year 2024, supporting approximately 10.4 million full-time equivalent students 
• Education as a share of GDP shows 5.44% in 2022, exceeding the OECD average of 5.0%
• Federal sources contributed 13.6% ($119.1 billion), state governments provided 43.7% ($383.9 billion), and local sources accounted for 42.7% ($375.2 billion)
• After 12 straight years of decline, higher education enrollment increased by 294,833 FTE (Full-Time Equivalents) students in 2024, increasing demand on state budgets and institutional resources
• The data shows that it’s not the size of education budgets but the strategic use of those dollars that most strongly influences student achievement.

Sources: NCES, SHEEO, World Bank Development Indicators

Table of contents

How much does the U.S. spend on education?

1. Aggregation of national educational spending

The total annual education expenditure across all levels in the United States exceeds $1 trillion when combining K-12 and higher education spending from every government source. This makes education one of the largest line items in combined federal, state, and local budgets, competing with healthcare, Social Security, and defense spending for fiscal priority. 

For elementary and secondary education specifically, fiscal year 2022 spending totaled $767.8 billion, serving nearly 50 million public school students. This figure includes everything from teacher salaries and classroom supplies to school buses, building maintenance, and new construction. The numbers tell a story of sustained growth: per-pupil expenditures increased from $16,600 in 2003 to close to $20,000 in 2022. 

Key funding breakdown for K-12 (2022):

• Federal contribution: $119.1 billion (13.6%), elevated due to COVID-19 relief funding
• State contribution: $383.9 billion (43.7%)
• Local contribution: $375.2 billion (42.7%), primarily from property taxes

Higher education presents a more complex financial picture due to multiple revenue streams and institutional types. State and local government support reached $139.1 billion in fiscal 2024, with states contributing $124.3 billion (a 7.7% increase from the prior year) and local governments in 32 states adding $14.8 billion. The federal government layers on tens of billions more through financial aid programs, research grants, and targeted funding.

The Department of Education's fiscal 2024 spending illustrates federal priorities:

• $55 billion in COVID-19 grants to schools
• $18.8 billion for schools serving disadvantaged students (Title I)
• $15.5 billion for special education programs

2. Educational spending as a percentage of GDP (Gross Domestic Product)

When you express education spending as a share of GDP, you get crucial context for understanding national priorities and can make meaningful international comparisons. 

In 2022, the United States devoted 5.44% of its GDP to education. This figure places America above most peer nations. For comparison, the OECD average stands at 5.0%, while Germany, Japan, and France spent 4.5%, 3.5%, and 5.2% of their respective GDPs on education.

What this percentage reveals:

• The U.S. has maintained education spending at roughly 5.4-5.6% of gross domestic product consistently over the past five years
• This percentage has remained stable even as the economy expanded
• At 5.44%, education commands substantial but not dominant economic resources
• The figure includes both government spending and private expenditures, like tuition payments.

While the percentage remains relatively constant, actual dollar amounts have grown substantially with economic expansion. Meanwhile, student enrollment patterns have shifted significantly. K-12 enrollment has declined slightly in recent years, while higher education experienced its first enrollment increase in 2024, following 12 consecutive years of decline since the Great Recession. 

• Public FTE enrollment reached 10.4 million students in 2024, up 2.9% from 2023 but still down 10.8% from the enrollment peak in 2011. 
• These demographic shifts mean that per-student spending can increase even when total spending as a GDP share remains flat.

Sources: NCES, U.S. Department of Education Budget, SHEEO, World Bank Development Indicators

Where does the money come from? Federal, state, and local funding 

The American education system operates on a three-tiered funding model that distributes responsibility and financial burden across federal funding, state funding, and local funding. This structure creates both opportunities and challenges, as each funding source brings different priorities, stability levels, and capacity to support schools. 

School funding source breakdown 

The fiscal year 2022 breakdown reveals how this partnership operates in practice. Federal sources contributed 13.6% ($119.1 billion) to K-12 education, a figure increased beyond its typical 8-10% share due to COVID-19 emergency relief funding. The federal government concentrates its resources on targeted programs designed to serve specific populations and purposes:

• Title I School Funding: $18.8 billion supporting schools serving disadvantaged students
• Special Education (IDEA): $15.5 billion, ensuring services for students with disabilities
• Pell Grants: Nearly $33 billion in fiscal 2024, helping low-income students afford college
• Federal Student Loans: Billions more in loans and loan guarantees for higher education

State governments shoulder the largest share at 43.7% ($383.9 billion), distributing funds through formulas that typically account for enrollment, student needs, and district wealth. State funding mechanisms vary, some states use foundation formulas that guarantee a base amount per student, while others employ weighted formulas that provide additional resources for students with greater needs, such as English learners or those from low-income families.

Local sources, primarily property taxes, account for 42.7% ($375.2 billion) of K-12 funding. This local contribution represents both a strength and a fundamental equity challenge. Property tax-based funding provides stability and community investment in schools, but it also means that a child's zip code can determine the resources available for their education.

How local funding creates disparities 

The reliance on local property taxes creates a system where school district wealth has an outsized impact on educational resources. The math is straightforward but consequential: consider two districts, each with 100 students. If one district has $30 million in property wealth while another has $60 million, the wealthier district can either tax residents at half the rate to generate equivalent per-pupil funding, or maintain the same tax rate and spend twice as much per student.

Key spending gaps by district wealth:

• Per-pupil spending differences of $10,000+ between adjacent districts in some regions
• Teacher salary disparities of $20,000-$30,000 between wealthy and poor districts
• Facility and infrastructure quality vary dramatically based on the local tax base
• Access to specialized programs (AP courses, career technical education, arts) is concentrated in wealthier districts

Research reveals that the wealthiest 25% of school districts spend $1,500 more per student than the poorest 25%, underscoring how property tax reliance perpetuates educational inequality across generations.

Sources: National Center for Education Statistics, EdSource California Analysis, CBCFINC, U.S. Department of Education

Where does the money go?

1. Instruction vs. administrative costs

In fiscal year 2022, instruction-related costs accounted for nearly 60% of current spending, translating to approximately $9,440 per pupil of the national average of $15,591. Instructional salaries alone consumed $266.4 billion of the $767.8 billion in total K-12 spending. 

Where K-12 dollars go (FY 2022):

• Instruction (salaries, benefits, materials): Approximately 60% of current spending
• Support services (administration, transportation, facilities): Approximately 40% of current spending
• Capital outlays (construction, major equipment): 11% of total expenditures
• Operational costs: 89% of total expenditures

Higher education spending breakdown:

• At public four-year institutions, instruction accounts for a smaller percentage compared to K-12. Research, auxiliary services (including dormitories and dining), and combined academic/student support consume larger shares.
• At private for-profit four-year institutions, the combined support category represented 68 percent of core expenses ($11,790 per FTE student) in fiscal 2020-21.

Geographic spending disparities:

• The wealthiest 25% of school districts spend $1,500 more per student than the poorest 25%
• Schools serving the neediest students often operate with fewer resources despite requiring more support
• This represents fundamental misalignment between resource allocation and student need

2. Teacher compensation and classroom investment

Teacher salaries represent the single largest expense in education. The national average reached $72,030 per year in 2023-24, a 3.8% increase, the largest one-year jump in over a decade. However, when adjusted for inflation, teachers make approximately 5 percent less than they did ten years ago. Inflation-adjusted starting salaries are now $3,728 below 2008-2009 levels.

Highest average teacher salaries (2023-24):

• California: $101,084
• New York: $95,615
• Massachusetts: $92,076
• Washington: $86,804
• Connecticut: $81,185

Lowest average teacher salaries (2023-24):

• Mississippi: $53,704
• Florida: $54,875
• Missouri: $55,132
• West Virginia: $52,870
• South Dakota: $49,761

Key salary statistics:

• National average starting salary: $46,526
• Only DC ($55,209) and New Jersey ($51,443) offer starting salaries above $50,000
• Montana has the lowest starting salary: $31,418 (below the state's $47,000 livable wage)
• 34 U.S. states have starting teacher salaries below $40,000 annually
• Teachers in collective bargaining states earn 24% more on average

How spending differs across states and education levels

Perhaps no statistic better captures American education's inequality than this: a student in New York receives three times more public investment than a student in Utah. This dramatic variation in per-pupil spending reflects differences in state wealth, political priorities, cost of living, and funding philosophies. These differences shape profoundly different educational experiences for children based simply on where they live.

K-12 per-pupil spending by state

The fiscal year 2022 data reveal a striking range in state investment. At the national average of $15,591 per pupil, the United States invests substantial resources in K-12 education, but this average conceals enormous variation:

Highest spending states (per pupil, FY 2022-23):

• New York: $30,867—nearly double the national average
• District of Columbia: $26,766
• Vermont: $26,749
• Connecticut: $23,290
• New Jersey: $22,731

Lowest spending states (per pupil, FY 2022-23):

• Idaho: $9,599
• Utah: $10,282
• Oklahoma: $11,089
• Arizona: $11,355
• Mississippi: $11,519

The drive for the massive differences in spending by the state 

Multiple factors intersect:

• Cost of living plays a significant role. Teacher salaries in New York City must compete with one of the nation's most expensive housing markets. 
• States with diverse, robust economies can generate more revenue without imposing burdensome tax rates. 
• Some states have historically made education a central budget commitment, while others emphasize lower taxes and limited government. 
• Student demographics also influence spending, as states with higher concentrations of students requiring specialized services often spend more.

Higher education spending patterns

Higher education presents an even more complex funding landscape. State and local appropriations totaled $139.1 billion in fiscal 2024, with state governments contributing $124.3 billion (a 7.7 % increase from the prior year) and local governments adding $14.8 billion. However, these aggregate figures mask significant per-student variation and declining state support as a share of institutional budgets.

Public institutions face dramatically different funding environments than private colleges. The United States spent $37,400 per full-time equivalent student at the postsecondary level in 2019, second only to Luxembourg among OECD countries and more than double the OECD average of $18,400. However, this high average reflects substantial private spending, including tuition, rather than just public investment.

Per-student spending patterns:

• Public four-year institutions: Varies widely by state, from under $5,000 to over $20,000 in state appropriations per student
• Community colleges: Typically $8,000-$12,000 per student, heavily dependent on state funding
• Private institutions: $20,000-$60,000+ per student in total institutional spending, with significant variation

State disinvestment in higher education represents one of the most significant funding shifts over the past two decades. Many states drastically cut appropriations following the 2008 recession and have only partially restored that funding. This withdrawal of state support shifted costs to students through higher tuition, contributing to the student debt crisis. 

In fiscal 2024, the 7.7% increase in state funding represented a positive trend, but appropriations in many states remain below pre-recession levels when adjusted for inflation and enrollment.

Financial aid distribution (FY 2024):

• Federal Pell Grants: $33 billion supporting low-income undergraduates
• Federal student loans: Hundreds of billions in outstanding loans, with new loans issued annually
• State grant programs: Vary dramatically, with some states offering robust need-based aid and others providing minimal support
• Institutional aid: Private colleges often use tuition revenue from wealthy students to subsidize financial aid for lower-income students

Sources: National Center for Eductaion Statistics, NEA Rankings and Estimates 2024, SHEEO

Global and historical context: Is the U.S. spending enough?

When Americans debate education funding, a crucial question inevitably arises: How does U.S. investment compare to that of other developed nations, and what does this comparison reveal about our priorities? 

International comparison: Where does America stand?

The United States spends more on education than nearly every other OECD country, both in absolute dollars and as a share of GDP. 

• In 2021, the U.S. devoted 5.6% of its GDP to education, compared to the OECD average of 5.0% 
• At the elementary and secondary level, U.S. per-student spending of approximately $15,600 in 2019 was 38% higher than the OECD average of $11,300, placing America fifth among OECD nations

Higher education spending reveals even more dramatic differences. At $37,400 per full-time equivalent postsecondary student, the United States spent more than double the OECD average of $18,400 in 2019, second only to Luxembourg. Part of this reflects America's unique higher education model, with substantial private spending (tuition) supplementing public investment.

Key international comparisons (as percentage of GDP, 2021):

• United States: 5.6% total education spending
• OECD average: 5.0%
• Israel: 4.8% (highest for elementary/secondary specifically)
• Norway: Higher K-12 investment despite free university tuition
• Germany: 4.5%
• Japan: 3.5%

Sources: OECD, National Center for Education Statistics, American Enterprise Institute Analysis 

Historical growth and recent trends

Per-pupil expenditures grew from $16,600 in 2003 to close to $20,000 in 2022 when measured in constant dollars, outpacing both inflation and student enrollment growth. This sustained investment represents a long-term commitment to education, though critics note that increased spending hasn't translated into proportional improvements in student outcomes.

Recent years brought unprecedented fluctuations. 

The COVID-19 pandemic triggered massive federal intervention, with $190 billion in emergency relief funding flowing to schools through three rounds of legislation. This temporary surge elevated federal contributions to historic highs, 13.6% in fiscal 2022, but these funds came with expiration dates. As COVID relief dollars wind down, districts face potential fiscal cliffs, particularly those that used one-time federal money to fund ongoing expenses like staff positions.

Historical trends worth noting:

• Sustained real growth in per-pupil spending over two decades
• Federal share typically 8-10%, spiking to 13.6% with COVID relief
• State and local shares remaining relatively stable around 43-45% and 42-44% respectively
• Growing recognition of funding inequities, though limited progress in addressing them systematically

The international and historical context reveals a crucial fact about how America invests heavily in education by global standards, yet struggles to convert that investment 

Sources:OECD, NCES, American Enterprise Institute Analysis

Does education spending align with the results?

Despite high educational spending, U.S. student performance on international assessments remains middling. 

The international performance gap

• In the 2017 PISA assessments, Estonia, Canada, Finland and Ireland were the highest-performing OECD countries in reading
• 16.5% of urban Chinese students and 14% of Singaporean students scored the highest mathematics proficiency level
• The United States typically scores near or slightly below OECD averages on these assessments

This disconnect becomes even more stark when comparing spending levels. At $37,400 per full-time equivalent postsecondary student, the U.S. far exceeds the OECD average of $18,400. Yet Estonia, Poland, and other nations achieve higher performance with significantly lower per-student spending.

So, does more money mean better results?

Cross-state comparisons find no simple formula where extra dollars always yield proportionally higher achievement. Washington, D.C., for example, spent $37,835 per pupil in fiscal 2020-21, more than any state, yet consistently ranks below national averages on assessments.

Conversely, some states achieve strong outcomes with moderate spending. While adequate funding is necessary, how money is spent matters as much as the total amount invested.

What explains the spending-outcomes disconnect?

• Curriculum quality and coherence
• Teacher preparation and professional development
• Social support systems and family engagement
• Educational culture and student expectations
• Health, nutrition, and socioeconomic factors

Sources: NCES, NEA Ranking and Estimates 2024, Urban Institute Education Finance, Brookings Institution State-Level Analysis, SHEEO, AEFP

What these numbers tell us about the future of U.S. education spending

The United States invests more than $1 trillion annually in education, showing its conviction that learning drives economic growth and social progress. Yet the data make clear that spending alone doesn’t guarantee results. Large disparities between districts and states reveal that how money is distributed, and how effectively it’s used, matter as much as the total amount spent. Moving forward, policies that tie funding to measurable outcomes, equity, and student support will be essential to making education dollars work harder and fairer.

At the classroom level, innovation and engagement are proving to be powerful equalizers. Tools like Wooclap give teachers real-time insight into student participation, helping bridge the gap between funding inputs and learning outcomes. When paired with smarter spending decisions and transparent data, such innovations can ensure that every dollar invested in education produces not only higher budgets but also stronger, more inclusive results for students nationwide.