Hidden in the 887 pages of the “One Big Beautiful Bill Act” is a federal school voucher program poised to siphon as much as $56 billion (yes, BILLION) a year into a system that disproportionately benefits wealthy, white families. EdTrust has been sounding the alarm about the potential, devastating fallout from the Educational Choice for Children Act (ECCA) for months, and even created a toolkit on how to oppose vouchers and protect public schools. Now that this federal school voucher program has become law, here’s everything you need to know about it, and what it means for students in your state.

How will the federal voucher program work?

This new federal voucher program is an uncapped dollar-for-dollar tax credit to individuals who donate up to $1,700 annually to Scholarship Granting Organizations (SGOs) in their state (more on this below). This means that for every dollar an individual donates to an SGO, the federal government will reduce the amount they owe in federal income taxes by the same amount. This is the first credit of its kind and while it may sound like “free money” it is the opposite — every dollar the government gives out in tax credits is a dollar they no longer collect from taxpayers, and therefore cannot spend on critical public goods and services long-valued by the American people, such as public education, support for hungry families, and healthcare for low-income households. In short, this program will still cost the government, and taxpayers, money; it’s just done in a back-door way, given the unpopularity of school voucher programs nationally. It’s like if someone buys you a coffee, but you pay them back afterwards — the government, and by extension the taxpayers, are the ones who end up footing the bill for school vouchers.

In the end, it’s the public schools, students, and families who will suffer. This won’t just affect states who opt-in to the voucher program; it will impact every public school in the U.S., particularly those in low-income and rural areas

What will the voucher tax credit do?

In creating this tax credit, the federal government incentivizes taxpayers to donate to SGOs. These SGOs collect the funds and then, after keeping up to 10% for themselves, disperse them in the form of vouchers for students and families. Families can use the voucher on certain allowable expenses, including tutoring, disability support services, and crucially, tuition for private schools. While this program may formally allow families to use funds on a variety of expenses, Republican lawmakers created it with the primary intention of increasing families’ ability to “flee” public schools for private ones. We therefore expect the majority of families to use their vouchers to pay for private school tuition.

Who can use these vouchers?

1. States whose governors opt-in: Only students in states whose governors have opted into the program can apply for a voucher from a state-approved SGO. Crucially, this opens the door for governors to create a voucher program without the approval of their state legislature or their constituents. This is a very real possibility, as many states where governors have voiced support for vouchers have seen voters reject such a measure at the ballot box. While exactly which states will opt-in remains to be seen, all states with existing state-level voucher programs will likely do so.
2. Families in those states with incomes up to 300% of the annual median income in their area: While the exact income limit varies widely by county, this represents about 90% of all families in the U.S., including the very wealthy. For example, in the DC suburbs, families making almost $500,000 a year would be able to participate in the program. Given the demographics of families using state voucher programs, we can assume that the vast majority of families who use a federal voucher will be extremely wealthy and likely already attend private school.

With slim details in the final law, many questions remain about what this new program will mean for students and schools. However, with voucher programs operating in over 18 states, we can get a sense of its likely impact on students and schools. Unfortunately, the picture is a bleak one, with states like Arizona facing school closures and skyrocketing voucher costs that have pushed the state into a deep budget deficit and led to significant cuts for public education.

How will federal vouchers impact public schools?

• Public schools will lose funding. With no cap on the amount of tax credits issued under this new voucher program, it could cost the federal government as much as $56 billion annually. With less tax revenue, the federal government will have fewer funds to invest in vital public services. Additionally, the multitude of recently proposed or enacted cuts to public education and vital programs that support students and families like Medicaid and SNAP demonstrate the priorities of the Trump administration. Those priorities are cutting and block granting federal education spending, and with this new investment, possibly dwarfing existing funding streams that benefit underserved students, like Title I, IDEA, and Pell Grants, it’s clear that if the federal government is going to invest in education, it is much more likely to be through this tax credit for individuals than the programs that directly fund K-12 public education.
• Public schools, especially in the South, will suffer. Although federal funds represent a small portion of overall K-12 education funding, the loss of this funding would still be catastrophic, especially for Southern states that are more reliant on federal funds. State leaders will then face a difficult choice: either they find a way to make up for this lost federal funding, or they pass the cuts on to districts and schools. In the end, it’s the public schools, students, and families who will suffer. This won’t just affect states who opt-in to the voucher program; it will impact every public school in the U.S., particularly those in low-income and rural areas.
• Public school enrollment declines will be exacerbated. While the majority of students who use vouchers are already enrolled in private schools, some students will likely move from a public to private school using a federal voucher. Not only will this decrease enrollment in public schools, which has led to school closures or consolidation, it will also decrease schools’ funding — since the majority of public school funding is tied to student enrollment.

How will federal vouchers impact students?

• Students with additional needs will be shut out. Unlike public schools, private schools can, and often do, discriminate against students. This means students with disabilities, those with low test scores, students with disciplinary histories, and even students of faiths or sexualities that do not align with that of private schools, the majority of which are religious, will likely be denied admission even if they have a voucher. These students will, in practice, be unable to use this purportedly public program.
• Students who continue to attend, or are only served by, public schools will likely receive a lower-quality education. Despite their shrinking budgets, public schools will continue to educate those students whom private schools reject, or who cannot afford the extra costs associated with attendance. Many of these students, such as those with disabilities or those who have experienced severe trauma, will require expensive additional services that private schools refuse to pay for. In short, public schools will once again be asked to do more with less, likely creating a lower-quality educational experience for all public school students.
• Students won’t be guaranteed a high-quality education. With no accountability measures built into the federal program, taxpayer dollars will be used on schools that have no proven record of educating students effectively. Our nation’s education landscape will become an even more fractured one, in which families bear the burden of determining which schools will effectively educate their child without any of the guarantees that come with federal accountability measures like curriculum guidelines or educator licensure requirements.

So, what comes next?

Which states will opt-in to this federal program? What, if any, regulations will the Treasury Dept. or state leaders implement to reign in the rampant discrimination and unchecked spending we’ve seen in other voucher programs? What, if anything, will they do to hold SGOs, private schools, and educational service vendors accountable for educating and supporting all students? How will this program interact with existing state-based voucher programs?

Many questions remain unanswered. What we do know is that while this program could end up representing the largest federal investment in public education to date, it won’t be in service of all students, and it will devastate communities. Instead, it will represent yet another chapter in the long history of creating separate and unequal schools by encouraging those with the wealth, knowledge, and resources to abandon the public school system that forms the bedrock of our nation – at the expense of students, schools, and taxpayers.