There is a major change in how students, schools, and educational programs can be funded, taking effect on January 1, 2027, with a small window of time to ensure the program is well managed. We have to move fast.
The Education Freedom Tax Credit (EFTC) creates a new federal tax credit for taxpayers who make qualified contributions to approved nonprofit Scholarship Granting Organizations (SGOs). SGOs, in turn, use that money to award scholarships for tutoring, tuition, or other qualified education expenses for students, regardless of whether they attend public, private, or charter schools. The money is contributed directly to SGOs by taxpayers, who can receive a dollar-for-dollar tax credit on their 2027 tax filing, up to $1,700 for individuals and $3,400 for married taxpayers filing jointly.
Students can only benefit if their state opts in, but taxpayers in any state can contribute because it’s a federal, not state, program. It could move billions of dollars into education, injecting new money into education programs and local education provider businesses at unprecedented levels – with families choosing how scholarship dollars are used. How can anyone not be excited by that?
The devil will be where it always is, though: in the details.
Wherever you may find yourself politically or on education funding policies and practices, no program with this much potential will work or even survive without oversight and compliance. Strict, transparent, clear, and obvious tracking, disclosure, and accountability aren’t nice-to-haves; they are essential.
History has taught us well that whenever money moves, misuse follows. Peddlers and pirates are, I am sure, already waiting to siphon money away from what could be a good thing – which is funneling more money directly to students for education, giving parents the resources and power to choose the services and supports their children need like never before.
Agreeing on this point feels easy because no one is in favor of fraud and theft. Stopping fraud before it starts ought to be the most common of all common grounds in education, a responsibility that falls to the states to provide oversight and fraud prevention. How states approve and oversee SGOs participating in the EFTC and how those SGOs approve and vet the credentials of education providers will form the firewall against misuse and abuse of the billions of dollars that may flow through the system.
Regardless of whether you love or hate this program, we can also agree that in addition to oversight, it's about high-quality, unbiased, agnostic information not driven by hype, philosophy, or profit. If we are going to be confident in where scholarship funds go, we must first design and steward a compliance system through which the funds flow.
Whether a taxpayer wants to support Jewish Day Schools in Denver, Colorado, or public reading enrichment programs in Raleigh, North Carolina, they need to have access to as much information as possible about the SGOs and their network of schools and providers. Good choices rest on good information, and with a new program such as this, one that’s had a history of hot rhetoric, good information will also be essential to any success or notion of fairness.
This will undoubtedly shake up how we fund students, schools, and support programs; however, we’re outside the debate-and-planning window and well into the preparation-and-implementation window. We need to address accountability and build robust information systems now. The window for doing this right won’t be open for much longer.
Cecilia Retelle Zywicki, Esq., M.Ed., is the CEO and co-founder of LearningSpring, which is partnering with states to implement the Education Freedom Tax Credit while helping districts, Scholarship Granting Organizations, and providers simplify and scale education freedom through a unified school choice platform.
