July 31, 2025
A new paper from State Policy Network and EdChoice offers a fresh approach to improving Education Savings Account (ESA) programs across the country.
Author Katherine Bathgate, a Senior Advisor for Education Strategy, outlines how states can avoid the trap of overregulation and instead design ESA policies that align with human incentives—encouraging responsible use while preserving the flexibility that makes school choice meaningful.
As more families turn to ESAs to customize their children’s education, many are finding the system unnecessarily complex and restrictive. From long reimbursement windows to rigid expense approvals, ESA programs too often burden parents with red tape.
In an effort to prevent misuse, many states have created policies that assume the worst of parents—treating them as guilty until proven innocent.
This paper argues that states can reduce misuse and improve program integrity not by tightening controls, but by shifting incentives. Drawing lessons from other successful government programs—like Health Savings Accounts and FEMA disaster aid—Bathgate proposes two key reforms:
- Allow all ESA dollars to roll over and be used for future years and eligible postsecondary expenses.
- Allow parents to spend ESA dollars without pre-approval, but make them directly responsible for purchases instead of relying on administrators and vendors to be the judges and arbiters.
These reforms would encourage families to spend ESA funds more carefully by letting them save unused dollars for future education expenses, including college. At the same time, they reduce red tape by trusting parents to make purchases directly—while holding them accountable for misuse through clear legal consequences.
“By aligning incentives through both positive and negative reinforcement,” Bathgate writes, “we can encourage all ESA users to spend responsibly—keeping misuse to a minimum—while protecting the flexibility and customization education choice is intended to promote.”
As ESA programs continue to grow across the country, this new framework provides state leaders with a roadmap for smarter, simpler implementation of ESAs. It’s a call to replace micromanagement with trust—and to build systems that respect families while protecting public dollars.