President Carter will shortly be forced to do something his administration has so far studiously avoided: set forth a policy on aid to education.

Within the next week, Carter and Health, Education and Welfare Secretary Joseph A. Califano Jr. will be given position papers on two of the most important educational issues they will face while in office: proposals to continue the largest single federal aid program for elementary and secondary schools, and whether or not to create a Cabinet-level Department of Education.

The issues have little popular appeal and have produced a minimum of public interest. But both hold far reaching implications for the federal role in education and have recreated an extraordinary amount of hand-wringing in Congress, education circles and inside the administration.

This is especially true to the extension of the Elementary and Secondary Education Act, the largest single federal aid to education program, which expires next year.

For months now, the heavies in the education world have been holding hearings, writing position papers, issuing studies and exchanging verbal brickbats over the program, which will supply $3.7 billion to the nation's schools this year.

They've spent more than $15 million doing so, and accumulated a bookcase full of official-looking documents.

Yet little breathtakingly different is expected to develop from the process, according to congressional and administration sources. The debate has been essentially over two basic issues: does federal compensatory aid to education do any good, and who should get federal dollars for what?

Carter is expected to submit his educational plans to Congress by mid-January. So far Califano and other policymakers have sketched only the broadest outlines of what these plans may be.

There is, however, general agreement in the administration and Congress that the heart of the ESEA, Title I, which is aimed at providing compensatory funds to disadvantaged children, should be continued with more federal dollars - 20 per cent more under one proposal sent to the Office of Budget and Management.

The key question is how to divide limited funds. Money for education is tight. And any shift in emphasis - or even in the statistical data used to distribute funds - can touch off emotional political fights.

Califano, in a recent Chicago speech, gave the best insight into administration thinking. He proposed more Title I funds for high schools, more money for inner-city schools, more emphasis on parent involvement, making schools "social service centers," and expanding Title I programs into the summer.

The administration, he said, "will explore new ways to help Title I areas with especially large concentrations of needy children." Only 5 per cent of the nation's high school students now receive compensatory education, he added, "yet it is in the high schools where test scores in many areas are falling and where the dropout rates are the highest."

The other area Califano has expressed a strong interest in testing to establish standards in basic reading, writing and arithmatic skills - an apparent reaction to the back-to-basics movement. In a speech last month, the secretary said he opposes a standardized national competency test, but "I believe that every state should have a program for developing and measuring basic skills that includes competency testing."

He also announced that HEW will throw its weight and dollars behind "a new emphasis on basic skills" and will finance a series of moves to support testing efforts.

A little background is in order here. When President Johnson signed the original ESEA legislation, a cornerstone of his Great Society program, back in 1965, he declared, "No law I have signed or will ever sign means more to the future of America."

Until that time, virtually the only assistance Washington provided for local schools was for impact aid, which gives money to districts with major concentrations of federal workers. ESEA, however, provided a major infusion of federal dollars to most of the nation's 16,000 school districts, aid that now amounts to 8 per cent of the budgets of the nation's elementary and secondary school systems.

It directed the major parts of these funds, through the Title I program, toward instructional help for the nation's poorest schools and children.

Since that time, the federal role in education has expanded by leaps and bounds; today, HEW manages 130 different education program. And this year Uncle Sam will shell out a total of $19.6 billion for education.

Not all of this gets to public school systems, nor to education per se, however. The U.S. education budget, for instance, includes $2.8 billion this year for child nutrition and $1.6 billion for educating servicemen.

The diversity of the programs and a desire to create a stronger advocate for educational spending in Washington have led to a concerted push by the National Education Association and other groups this year for a Cabinet-level Department of Education.

Carter, while a candidate, pledged to work for such a department and has set up a task force to study the mater as part of his government reorganization project. But Califano opposes a new department, and the administration has been notably silent on the issue.

The education task force has completed the initial phase of its work and expects to give Carter its findings within the next two weeks, according to Pat Gwalting, who heads the effort. The group, she said, has looked at three options: leaving education in HEW and upgrading its status there; creating a new department to oversee just education programs; or making a broader new Cabinet post that would include education and human development programs.

Education programs are now scattered in more than 40 different agencies in the departments of HEW, Agriculture, Defense and Labor. Policy often conflicts; the policymaking apparatus is cumbersome.

The difficulty in coming up with an administration policy on the elementary and secondary education bill provides a case in point. Discussions on it have taken almost six months.

HEW has three separate power centers involved in the fray, complicating matters. One is in the office of Commissioner of Education Ernest L. Boyer, formerly head of the State University of New York and a skilful bureaucratic infighter; another comes under Assistant HEW Secretary of Education Mary Berry, an aggressive former chancellor of the University of Colorado, at Boulder; the third, and most powerful is Califano's immediate circle. Each has its own policy staff, its own turf and interest to protect.

Each of the eight separate programs under ESEA presented policy conflicts. In addition, charges of mismanagement and too much paperwork in some programs had to be dealt with. But Title I and bilingual education developed into the task force's two most controversial issues.

The problem with bilingual education was that the government had spent a half a billion dollars in nine years to help students with little or no command of English, but it had done very little to find if the program did any good. Yet the program has entrenched, often vocal, constituencies, making it difficult to alter.

The evidence on Title I was conflicting. For almost a decade the evaluations of the program were poor. Charges of mismanagement on the federal, state and local levels were widespread.

But a National Institute of Education study, which came out in September, concluded Title I programs had dramatically increased reading and math abilities in first and third graders tested.

The study had a couple of holes. It didn't, for example, show that pupils retained what they learned through the summer during the school year. But the study told the administration and members of Congress what they wanted to hear.

The biggest single challenge to the status quo in Title I has come from Rep. Albret H. Quie, of Minnesota, the ranking Republican on the House Education and Labor Committee. He has proposed that funds be distributed on the basis of low achievement rather than poverty.

"I believe that every child who has serious problems learning to read, write and count is in need of special help," says. "Whether that child is rich or poor, lives in a ghetto or on a farm, is black or white or brown makes no difference. A child who can't read is one that needs our help."

Currently, Title I funds are distributed under a complex formula that uses the number of children from families with incomes below the federal poverty line and in homes that receive Aid for Dependent Children. Figures are based on the 1970 census.

Population, however, has shifted since 1970. The South, which has traditionally benefited more from Title I than other regions of the country, has grown more properous; the Northcast less so.