Education Savings Accounts ‘a critical refinement’ of school voucher concept?

by Grace

I’m not sure that Education Savings Accounts (ESAs) are “a critical refinement’ of the school voucher concept, but they could offer another way to save for college.

Matt Ladner makes the case for expansion of ESAs  in a new report from the Friedman Foundation for Educational Choice.  He argues that ESAs could fuel innovation, increase efficiency, and improve equity in American education.  ESAs cover the expenses of colleges, as well as those of K-12 education.

Education savings accounts are the way of the future. Under such accounts—managed by parents with state supervision to ensure accountability—parents can use their children’s education funding to choose among public and private schools, online education programs, certified private tutors, community colleges, and even universities. Education savings accounts bring Milton Friedman’s original school voucher idea into the 21st century.

Another way to save for college
If a family is going to keep their child out of public school anyway, choosing private school or homeschooling for example, an ESA could be a way to boost college savings.  This assumes the family would not have to use those funds for K-12 schooling first.

ESAs divert state funds from local public schools to accounts for the individual students.

What are Education Savings Accounts?
Education savings accounts allow parents to withdraw their children from public district or charter schools and receive a deposit of public funds into government authorized savings accounts with restricted, but multiple, uses. Those funds can cover private school tuition and fees, online learning programs, private tutoring, community college costs, and other higher education expenses.

Arizona has an ESA program that initially covered only special education students, but has since expanded to cover other categories including gifted and struggling students.  It is being challenged in the courts.

Arizona lawmakers were the first to create such a program, called Empowerment Scholarship Accounts (ESAs). Through that program, the state of Arizona deposits 90 percent of the funds for a participating child into an account, which can cover multiple educational services through use-restricted debit cards. Parents can choose to use all of their funds on a single method—like private school tuition—or they can employ a customized strategy using multiple methods (e.g., online programs and community college classes). Critically, parents can save some of the money for future higher education expenses through a 529 college savings program. That feature creates an incentive for parents to judge all K-12 service providers not only on quality but also on cost.

Without changing the property taxes are used to pay for public schools, ESAs unlikely to help low-income students.
Similar to the Romney-supported idea of “allowing poor and disabled schoolchildren to move their federal education funding across district lines“, ESAs would seem to offer little benefit to lower-income students aspiring to enroll in affluent, high-performing public schools unless those schools specifically made room for them.  Federal and state money combined usually comprise a relatively small percentage of public school funding, which is provided mainly by local property taxes.

HT Jay P. Greene


One Comment to “Education Savings Accounts ‘a critical refinement’ of school voucher concept?”

  1. Yes, in most cases I imagine that would be the case. But for wealthy families or those that receive private school scholarships, the money could be deferred and used for college. All in all, ESAs don’t strike me as a big reform idea, but maybe I’m missing something.


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