Heritage Report Raises Concerns About E-Rate Spending

WASHINGTON, March 13, 2025 - A new report out this week suggests that a major internet subsidy program, supervised by the Federal Communications Commission, has been wasting taxpayer dollars.

The Heritage Foundation issued a report Monday critical of the FCC’s oversight of the Education Rate or E-Rate program, which spent $2.4 billion in 2023 to keep schools and libraries connected to the Internet. 

Under the Biden Administration, the FCC expanded E-Rate to provide free Wi-Fi on school buses and hotspot devices for schools and libraries to loan to students. 

Heritage Policy Analyst Annie Chestnut Tutor said that this expansion of the E-Rate program, to include off-premises use, broke with FCC precedent and violated the language of the Communications Act, which she said confines E-Rate support to “classrooms."

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Tutor further raised concerns that the E-Rate has been charged rates that are much higher than the rates normally paid by other consumers.

“The FCC has spent a shockingly large amount of taxpayer money connecting three-year-olds to five-year-olds to the Internet—in some cases, it has provided more than $20,000 per month per preschool. This amount grossly exceeds the market rate of advertised business broadband rates, which reportedly runs around $250 to $350 per month, raising serious concerns about the E-Rate program’s integrity and susceptibility to waste, fraud, and abuse,” Tutor said. 

Tutor, in a conclusion that might surprise some, said that the expansion of the program has not actually benefited the students that the funding was intended to support.

“What is clear, however, is that the primary beneficiaries of E-Rate’s unchecked expansion are not students, but tech companies, telecom providers, and consultants, and perhaps faculty who can now download large files and videos (educational or not) at much faster speeds,” Tutor said.

Because of the complexity of E-Rate’s application process, many participating schools hire consultants to run the process for them. Tutor says that this has  resulted in a cottage industry of E-Rate consultants taking advantage of the program’s complexity to extract up to hundreds of millions of taxpayer dollars from the E-Rate program, for themselves, each year.

Tutor said that the FCC should halt the expansion of the E-Rate program and recommended that Congress or DOGE audit the program and ensure it actually benefited children, rather than the myriad of adults who could be abusing the system.