State Policy Network
Everything you need to know about Education Savings Accounts (ESAs)

There are thousands of underperforming schools across the country. And that matters because the students they’re supposed to educate aren’t getting the tools they need to succeed. While some families can afford to send their child to a better school, low-income students don’t always have that option.

Americans want all children to have a quality education that prepares them for college, a career, and life. How can we reach that goal?

Some argue the answer lies in more funding for education, but America already spends more than any other country in the world. And we’re not seeing results. According to Pew Research, the US ranked 38th in math and 24th in science when compared against 71 other countries.

If more money isn’t the answer, what is? One solution is empowering parents to make the best educational choices for their children through Education Savings Accounts (ESAs). ESAs actually save taxpayer money while giving families the education options they need and deserve.

A student’s Zip code shouldn’t limit their ability to access quality education options

In the United States, where you live determines where you go to school, and in some cases, the quality of education you’ll receive. Some parents can afford to send their child to a private school if their public school is inadequate, but low-income families that are zoned for an underperforming public school may not have the resources needed to send their child somewhere else. America’s one-size-fits-all approach to education often hurts minority and low-income children the most, who can’t afford to pay for alternate education options. ESAs are a solution to this problem.

What are Education Savings Accounts?

Education Savings Accounts, sometimes known as Education Scholarship Accounts, are state-supervised funds that parents can use to pay for a wide variety of education options. The state government deposits a portion of what the state would have spent to send the child to public school into a private account that parents can use for education-related expenses. Parents can use these funds for private school tuition, online learning, textbooks, and even services and therapies for students with disabilities—whatever their child most needs to thrive.

ESAs empower parents by giving them the freedom to choose the education option that best meets their children’s needs.

Which was the first state to adopt an ESA program?

Arizona was the first state to enact an ESA program in 2011. The program, called Arizona Empowerment Accounts, gave parents of special needs children the ability to find the school that was the best fit for their child by applying the funds towards the cost of that school. The Goldwater Institute pioneered this program and has been working to ensure even more children have access. In February 2021, the Arizona Legislature passed legislation that would extend Arizona’s ESA program eligibility to include low-income communities—giving even more students education opportunity in the Grand Canyon State.

Which states have Education Savings Account programs?

Five states have active ESA programs: Arizona, Florida, North Carolina, Mississippi, and Tennessee. An estimated 19,109 students are using ESAs in those states. Twenty-three states have introduced ESA legislation.

Who do Education Savings Accounts help?

ESAs help students with special needs: Meet Riley Thornton

A trip to the doctor’s office confirmed Amanda Thornton’s suspicions. Her five-year-old son, Riley, had autism. Shaken but undeterred, Amanda was determined to find the best school for Riley. She and her husband Mark knew their public school could not give him the special attention he needed to help manage his behavior issues. Through her research, Amanda heard about Mississippi’s ESA program.

In February 2019, Riley received an ESA. Amanda and Mark enrolled him in Spectrum Academy, a school for children with autism. Riley is learning to communicate and is doing well in school. Amanda noted in an interview with Empower Mississippi: “Riley has to have one-on-one attention. He doesn’t do well if he doesn’t have it. He would fall between the cracks in a public school.” Amanda and Mark said they would not be able to afford Spectrum’s tuition without the help of the ESA.

Riley is just one example of all the special needs children ESAs have helped. There are countless others. Students with special needs thrive with individualized attention and a tailored education environment, something their public school can’t always provide. ESAs empower parents of children with disabilities to find a school that best fits their child’s unique needs.

ESAs help low-income families

ESAs also help families and children with the least. They give poor families the same opportunities available to families with more resources. With an ESA in hand, low-income parents have options for where to enroll their child—in many cases, that’s a school where they have a better chance to succeed.

ESAs help parents impacted by the coronavirus pandemic

Many parents are frustrated with their child’s learning experience during the coronavirus. While many schools have reopened, some remain closed or are implementing a mix of in-person and virtual learning. If a parent is dissatisfied with their child’s public school—due to a lack of reopening or for some other reason—an Education Savings Account would give those parents the resources they need to send their child to another school. ESAs give parents options at a time when they need them more than ever. The appetite for those options is growing. According to polling from Heart +Mind Strategies, nearly half of Americans favor an approach to education where public school is not the only option.

In addition, many parents are taking money out of their own pockets to pay for education expenses related to virtual learning. Many parents have lost their jobs in the last year and are struggling financially. ESAs can help parents pay for education costs during this difficult time.

ESAs help states dealing with budget issues

States are grappling with budget shortfalls from the coronavirus. Education Savings Accounts can help alleviate state spending on education while improving education options for thousands of students. Here’s how it works.

Each state sets aside a certain amount of tax dollars for each student’s education. With an ESA, that money directly follows the student. However, the state government does not give an ESA recipient all of those allotted tax dollars, only a percentage. The rest goes back to the public school that child would have attended.

In Arizona, for example, the state spends $10,120 per public school student. ESA recipients received an average award of $6,148 for non-special needs students in 2019—significantly less than what the state usually spends to send that child to public school. The remaining amount, $3,972, goes back to the public school, even though that child won’t attend school there. ESAs reduce the amount the state spends per child, saving the state money and alleviating some of the budget pressures public schools face.

ESAs help both private and public schools

ESAs can also help private schools survive the coronavirus. Due to the economic challenges of the coronavirus, many families can no longer afford private school tution. Without the income they need to operate, many private schools could close. Without private schools, families lose a valuable choice in where they can send their child to school. But these closures would also be devastating to public schools, as private school students will have to enroll in the public system, which is already facing significant budget and capacity challenges of its own. ESAs can help parents afford tuition so these private schools can stay afloat.

What are some of the arguments against ESAs?

Some critics claim ESAs will take money away from public schools, who often struggle with reduced funding and smaller budgets. But research shows this isn’t the case. As noted above, ESAs typically take a portion of a state’s per pupil funding and give it to parents. The remaining amount goes back to the public school, even though the child is no longer attending school there. Here’s another good example from the Grassroot Institute of Hawaii:

“In Hawaii’s current system, every student is assigned a dollar amount—$11,823 as of 2016—which follows the student to his or her public school; this is known as per-pupil funding.

Nalu goes to Wahiawa Elementary School, which is a public school. His parents decide to withdraw him and send him to Ho’ala School, a private school. With an ESA law in place, Nalu’s parents would get $8,867 to pay for the tuition. Meanwhile, Wahiawa Elementary School will keep $3,000 even though Nalu is no longer going to school there. With his absence, the school gets more money to spend per student.”

A study by the Goldwater Institute pointed out that public schools actually benefit from ESAs. Goldwater noted:

“The nation’s most established ESA program has actually benefitted public schools by redistributing funds back to remaining public school students, directing program savings to public school IT infrastructure, and helping to serve one of the most high-need, high-cost student populations in the state—all while decreasing taxpayer costs and safeguarding public funds.”

Which states are considering ESA legislation?

Fourteen states are considering ESA-type legislation that would fund students instead of systems.

5 Fast facts about Education Savings Accounts

Additional Resources

What is an Education Savings Account?
EdChoice

Education Savings Accounts: A Promising Way Forward on School Choice
The Heritage Foundation

Guide to the Issues: Education Savings Accounts
Alabama Policy Institute

The Facts on Education Savings Accounts
Beacon Center of Tennessee

Education Savings Accounts Will Give American Families Certainty
The Buckeye Institute

ESA Facts
Cardinal Institute for West Virginia Policy

Education Savings Accounts for West Virginia Students with Special Needs
Cardinal Institute for West Virginia Policy

Education Savings Accounts Are an Innovative Way to Provide Flexible, Safe K-12 Options
Cascade Policy Institute

Education Savings Accounts: A targeted solution during the coronavirus crisis
Center of the American Experiment

State leaders should seriously consider Special Education Savings Accounts to better serve Minnesota’s most vulnerable students
Center of the American Experiment

How Education Scholarship Accounts (ESAs) Work
Commonwealth Foundation

Understanding Back on Track ESAs
Commonwealth Foundation

Nine Irrefutable Truths About Education Savings Accounts
Commonwealth Foundation

Save Our ESA: These kids are going to grow up to be productive citizens because of the ESA
Empower Mississippi

Students Benefit from ESA Program
Empower Mississippi

Education Savings Account: Providing School Choice to Children and Families Who Are Looking for a Different Option
Georgia Center for Opportunity

Education Savings Accounts: Getting ‘More’ for Georgia Students
Georgia Public Policy Foundation

The Public School Benefits of Education Savings Accounts: The Impact of ESAs in Arizona
Goldwater Institute

Education Savings Accounts: A New Way Forward
Grassroot Institute of Hawaii

Popularity of Florida’s ESA Program Shows It’s Time for Universal Expansion
The James Madison Institute

Funding Students Instead of Systems: Education Savings Accounts In North Carolina
John Locke Foundation

Will Education Savings Accounts Decimate Public Schools? Putting ESA Funding in Context
Josiah Bartlett Center for Public Policy

Michigan Parents Want Educational Options
Mackinac Center for Public Policy

Education Savings Accounts Provide Families More Schooling Options Amid COVID-19
Maine Policy Institute

Education Savings Accounts and the Future of School Choice in Maine
Maine Policy Institute

Education Savings Accounts
Nevada Policy Research Institute

With Schools Closed, Education-funding Reforms Could Alleviate Parents’ Burdens
Oklahoma Council of Public Affairs

Learning is a Joy: What’s an ESA?
Palmetto Promise Institute

Education Savings Accounts Would Help Louisiana Students During COVID-19
Pelican Institute

Removing Barriers in Nebraska Part Four: Taking Lessons on Education Options
Platte Institute

So…What Is an Education Savings Account?
Show-Me Institute

What are ESAs?
State Policy Network

Sutherland Signs Coalition Letter Urging Expansion of 529s (Education Savings Accounts) for COVID-19 Home Learning
Sutherland Institute

How Do ESAs Work?
Tax Education Foundation of Iowa

Education Savings Accounts for Texas
Texas Public Policy Foundation

Education Money for Families: How Education Savings Accounts Can Help Children Learn in Washington State
Washington Policy Center

Education Savings Accounts: Empowering Kids and Saving Money in Connecticut
Yankee Institute

Categories: News
Organization: State Policy Network