In E-rate’s Direct Impact parts one and two, we took a look at the number of students served by the E-rate program. The program impacts roughly 95% of the students in the United States, and almost 60% of those students attend school at sites that qualify for a 70% or higher E-rate discount rate.
Since Funding Year 2000, an average of $44 per student has been available for distribution based on the annual funding cap. In years where a rollover of unused funds occurs, the E-rate funds available per student can be as high as $62.
Despite the availability of rollover funding, the funding requested per student is consistently higher than the total amount authorized for distribution. In Funding Year 2012 – the funding year with the largest single rollover in program history – requests totaled $87 per student, almost 30% more than the amount of funding available. Had the Funding Year 2012 rollover not occurred, the available funding per student would have been roughly half of what was requested.
If the demand for E-rate eligible services continues to increase at the average rate we have observed for the past twelve years, it is probable that within the next few years we could see the first year in program history where there is not enough available funding to satisfy any Priority 2 funding requests, even when a rollover is possible. But the issue doesn’t stop there. If Priority 1 demand trends hold true, the program will be faced with a harsh reality: the amount of funding disbursed per student will be lowered significantly, or the total number of students who receive a direct benefit from the program will begin to decline.