Education Rate, more commonly known as E-Rate, was established by the Telecommunications Act of 1996 and began distributing monies in 1998. E-Rate is overseen by the FCC and is administered by the Schools and Libraries Division (SLD) of the Universal Service Administration Company (USAC).

The program was created in order to support schools and libraries to obtain the telecommunications and Internet services at affordable prices, offering a discount on these services. Funding can be applied to four different classes of service: telecommunications, internet access, internal connections and basic maintenance of internal data connections. Cost reduction is based on the location of the applicant and the poverty level of the population served by the school or library, and varies from 20% (non-students eligible for free and reduced lunch) 90% (over 75% of students eligible for free lunch and reduced).

To be eligible to receive E-Rate discounts schools and libraries must meet certain criteria. Generally, primary schools, secondary schools, private schools and religious schools are entitled to receive discounts. Public libraries and library systems are also entitled to receive funding as long as they meet the requirements for libraries.

Eligible services of the E-Rate program are broken down into two categories, Priority 1 and Priority 2. Priority 1 services are all Telecommunications services and Internet Access. Priority 2 services are Internal Connections and Basic Maintenance of Internal Connections.

Some examples of Priority 1 Services include:

Some examples of Priority 2 Services include:

* This is a short list of some of the services that are eligible under priority 1 and priority 2 services. This does not constitute a full list nor does the inclusion on the above list guarantee approval. For the full list, and all changes, please see the Eligible Services List.