Ending E-Rate Would Reduce U.S. Real GDP by $4.2 Billion, Says Advocate
SHLB and other E-Rate supporters commissioned a new report from the Brattle Group
WASHINGTON, Oct. 8, 2026 – Sunsetting a broadband subsidy for schools and libraries would hurt the U.S economy, according to a new study commissioned by the program’s participants.
Axing the E-Rate program entirely would reduce the country’s real gross domestic product by $4.2 billion, the Schools, Health & Libraries Broadband Coalition study said.
That’s about $1.60 in lost economic activity for every $1.00 of rescinded E-Rate funding, according to the group. E-Rate spends about $2.6 billion annually discounting broadband subscriptions and networking gear for schools and libraries.
Put another way, “for every $1.00 that is spent on E-Rate, it generates $1.60,” SHLB Executive Director Joey Wender said Thursday. “That is a type of return any private equity fund would dream of.”
SHLB released the study, conducted by Brattle Group, at its AnchorNets conference in Arlington, Va.
The Federal Communications Commission, which manages the fund, is in the midst of a wide-ranging review of the program. Among several other things, the agency asked for input on whether E-Rate should be sunset or limited to rural areas, given the expansion of broadband infrastructure since the fund’s inception in 1996.
SHLB and other groups have been making an effort to defend the program, fearing the agency might follow through on reducing funding.
The group’s study said it was unlikely that schools, despite already being strapped for cash, could afford to lose broadband or cybersecurity capacity even without E-Rate support. A reduction in the program would correspond to less money available for other things, the report said.
“If E-Rate ends, the cost of connectivity doesn't disappear. It lands on schools and libraries, and they will have to pay for internet access by cutting teachers, counselors and programs,” Wender said in a statement released with the report. “Protecting E-Rate is an investment in our communities and in the economic opportunity these institutions create.”
Brattle used an internal model aimed at approximating the U.S. economy and tried to capture the network effects of schools spending less on their typical labor and material costs to afford connectivity. The affected suppliers and workers would have lower incomes and spend less in the aggregate, Brattle said.
The group found that if E-Rate were zeroed out, annual real wages in the U.S. would fall by $2.8 billion, and tax revenues would fall by about $1.5 billion.
Brattle also looked at the effects of canceling out only category two funding. That supports networking gear like routers and Wi-Fi access points and accounts for about $1.2 billion of E-Rate’s annual spending.
If category two funding were eliminated, Brattle estimated GDP would fall by $2.5 billion. As of the second quarter of 2026, the U.S.’s real GDP was $24.4 trillion, according to the Federal Reserve Bank of St. Louis. The metric is measured in 2017 dollars
In addition to SHLB, the study was sponsored by the School Superintendents Association, the American Library Association, the Association of Educational Service Agencies, the Association of School Business Officials International, the Consortium for School Networking, InnovateEDU, the National Coalition for Technology in Education & Training, the National Rural Education Association, and the Software & Information Industry Association.
FCC comments
Comments in the FCC’s inquiry are due Oct. 13.
Spurred by SHLB and other groups, dozens of schools, school districts, and others have been submitting comments urging the agency not to curtail funding. They generally said schools in rural and low-income areas needed the funding to shore up their budgets.
In a recent blog post for the Free State Foundation, former Republican FCC commissioner Mike O’Reilly argued it wasn’t out of bounds for the agency to ask whether E-Rate was having a positive effect.
