When the Australian Constitution was drawn up at the formation of the Commonwealth of Australia in 1901, there was no mention of Federal involvement in education. Responsibility for education was one of the powers reserved for the newly-formed States.

A system of schooling and funding had already evolved throughout the colonies over the previous 100 years and education legislation passed by colonial governments became the legal basis for the systems of education which still operate in the Australian States and Territories today.

However, the very existence of this new layer of government created the possibility that it might someday play a role in education. Governments have used Section 96 of the Constitution (which allows grants to the states for specific purposes) to provide the states with money for education. Following a referendum in 1946, a constitutional amendment allowed the Government to provide financial assistance to students in the form of Commonwealth Scholarships.