The E-rate program provides discounts on certain services and products that are essential for classrooms and libraries to receive Internet connections. The amount of discount depends on the level of poverty and location of the entity receiving service. The discount ranges from 20% to 90% of the cost of eligible services.

School districts, charter schools, and library systems can all apply. To be eligible to receive discounts, a school or library must meet certain eligibility criteria. In general elementary and secondary schools are eligible to receive discounts — including many private schools and religious schools. Public libraries and library systems can also receive E-rate discounts.

Program History

The E-rate program, officially known as Universal Service Schools and Libraries Discount Mechanism, was created as a part of the Telecommunications Act of 1996. In the act, a fourth Universal Service Fund program was established to help schools and libraries connect to the Internet.

The program's policies and rules are designed to promote competition between service providers and to give applicants the most cost effective means to connect to the Internet. The E-rate program is funded with over $4 billion annually from the Universal Service Fund. This program is supported by assessments on telecommunications companies, not the federal budget. The program will continue indefinitely until Congress decides to end it. The E-rate program enjoys broad support from all program stakeholders and Congress.

The program's rules change fairly regularly through Orders issued by the Federal Communications Commission.