Originally, Forest Education Foundation was two separate organizations: Dollars for Scholars and the Forest City Education Foundation. Forest City Dollars for Scholars had started in 1991. The group hosted several annual fundraisers and a business drive to raise scholarship funds. The goal was to award students based on academics, character, activities/work and those who volunteered during a fundraiser hosted by Dollars for Education.

Founders of the Education Foundation believed each Forest City student wanting to attend a college or university should have the chance. The group began in 1999 and gave out a scholarship of $750 or $1250 (if attending Waldorf College in Forest City or North Iowa Area Community College in Mason City) to any student who applied. No restrictions were put on the student applying, other than he/she had to attend college full-time and maintain a 2.0 grade point average while there. Funding for the Education Foundation came from private donors, primarily the Hanson Foundation.

While both groups worked hard to serve Forest City graduates, there was a realization that more could be done together. In March of 2008 the two groups merged under one umbrella to become Forest City Education Foundation. Several years later, in April 2010, a director was hired to market the group, target an increased amount of private donors and better communicate with Alumni. In 2013, Forest City Education Foundation dissolved its affiliation with Dollars for Scholars.