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If during any given year only $250 million remains available, a priority system will go into effect, in which the most disadvantaged schools and libraries that have not yet requested universal service funding will be funded first, followed by schools and libraries in the two most disadvantaged categories that have previously received e-rate discounts, and finally all other eligible schools and libraries.

What is the e-rate discount structure?

Discounts range from 20% to 90% on all commercially available telecommunications services, Internet access, and internal connections. The level of discount is based on a school's or library's level of economic disadvantage and its location in an urban or rural area, as shown on the next page.

A school's level of economic disadvantage is defined by the percentage of its students eligible for either a free or reduced price lunch under the national school lunch program, regardless of whether the school participates in this program; i.e., the percentage of its students whose family income falls within 185% of the poverty line. A school may also use federally approved alternative mechanisms to determine the percentage of their students eligible for the school lunch program [see 34 C.F.R. 200.28(a)(2)(i)(B)].

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