The 1945 constitution instructs that at least twenty percent of the national budget (APBN) is for education. The government and the parliament (DPR) of the Republic of Indonesia in 2010 through UU no 2 year 2010 on APBN-P 2010 agree that part of the funding allocated for education shall be made the National Education Development Fund (Dana Pengembangan Pendidikan Nasional (DPPN)) which shall be managed as an endowment fund by a public service agency (BLU).

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In 2011, Minister of Finance and Minister of Education and Culture agree that the management of DPPN and the use of that funding management result shall be carried out by the Ministry of Finance, but with staff which consists of the combination of staff from both ministries.

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Minister of Finance through the Regulation of Minister of Finance (Peraturan Menteri Keuangan (PMK)) number 252/PMK.01/2011, December 28th 2011, established Organization and Management of LPDP as an agency outside of the structural positions, which is held responsible directly to the Minister of Finance and is subjected to the policies established by the LPDP Board of Trustees (Minister of Education and Culture, Minister of Finance, and Minister of Religion). Through the decree of Minister of Finance (Keputusan Menteri Keuangan (KMK)) number 18/KMK.05/2012, January 30th 2012, LPDP is established as a governmental institution which implements the monetary patterns of Public Service Agency.