Tax Credit-Funded Scholarships

The program uses federal tax credits to encourage private donations to Scholarship Granting Organizations (SGOs). These organizations then give scholarships to K–12 students, which families can use to pay for private school tuition and related educational costs. Donors receive a dollar-for-dollar tax credit, making participation more appealing and potentially generating significant funding for private education.
Broad Eligibility Criteria

Eligibility is set so that families earning up to 300% of their region’s median income can qualify for these scholarships. This means even higher-income households in some areas may be eligible. Additionally, students who already attend private schools can apply, making the program available to a large portion of the population.
State Opt-In Requirement

States are not automatically included in this program; instead, each state must decide whether to participate. If a state opts in, it will manage the oversight of SGOs and ensure proper distribution of scholarships. This opt-in system will likely lead to differences in how widely the program is available and how it is run from state to state.
Potential Financial Impact

There is no federal cap on the amount of tax credits that can be claimed, raising questions about the potential cost. If used to the fullest extent, the program could cost the federal government over $100 billion per year, making it more expensive than current major federal education programs.
Debate Over Educational Equity

Supporters claim this program increases parental choice and offers alternatives to public schools, especially in underperforming districts. Critics argue that it could divert funds from public education, lacks sufficient accountability, and may not guarantee equal access for students with disabilities, since private schools are not always bound by the same regulations as public schools.

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