School Vouchers Explained: What the New Federal Program Means

Congress has passed the nation’s first federal school voucher–style program, set to begin in 2027. Supporters call it a landmark expansion of parental choice, while critics fear it will divert billions from public schools. Professor Martin West says the program raises important questions about the future of American schooling and even how the program will operate.

The new program, part of the “One Big Beautiful Bill Act,” is officially called the Educational Choice for Children Act. Although it isn’t a direct voucher, it will operate as a tax-credit program where individuals can receive up to $1,700 in credits for donating to nonprofit scholarship-granting organizations. These groups can then distribute scholarships for private school tuition, tutoring, transportation, or even special education services. Families earning up to 300% of their area’s median income are eligible, and states must opt in, giving governors control over implementation.

“What is clear, is that in any state that wants to do so, the program can be used to support private school choice, and that's what makes it significant,” West says. “It really does have the potential to turbocharge the movement to expand private school choice in the United States, which already had significant momentum at the state level.”

The idea of vouchers has a long and varied history in the U.S. tracing back to 1955 when economist Milton Friedman proposed funding education through competition rather than government-run schools. Early programs often focused on targeting low-income families, but as West explains, this shifted over time, especially in recent years as the pandemic accelerated private school choice options.

The research on vouchers is often mixed. As West points out, studies often showing modest academic gains, especially for disadvantaged students, and positive effects on civic outcomes and graduation rates. The need for further research on the effects of vouchers is needed.

If one thing is certain, politically, vouchers remain deeply divisive. “The issue of private school choice has for decades, been the one education policy issue that most cleanly divides Republican and Democratic elected officials,” West says. Going forward, West will be paying close attention to how and whether the new federal program is adopted throughout the country. “What will the governors of blue states decide? Will they opt into the program or will they not? If they don't, this will further extend a new phenomenon in American education really in the past several years — which is that we're starting to see a red state model of education delivery and a blue state model of education delivery,” he says.

In this episode of the Harvard EdCast, West shares the history of the voucher movement, what research tells us about its success, and whether this national policy will transform American education or further fracture it.

Transcript

JILL ANDERSON: I'm Jill Anderson. This is the Harvard EdCast. 

Congress just passed the first national school voucher program, set to launch in 2027. Supporters call it a major expansion of parental choice. Critics worry it could divert billions from public schools.

Harvard professor Marty West, a leading expert on education policy and school choice, says there's many questions about what this might mean for education in America. Marty has studied vouchers, charter schools, and education systems both in the U.S. and internationally.

I wanted to better understand not just what this legislation means for education policy, but also what history and research tell us about the real impact of vouchers. First, I asked Marty to tell us more about the national school voucher program.

MARTY WEST: The program you're referring to is part of the One Big Beautiful Bill Act, which is the law that President Trump and Congressional Republicans passed in July via the reconciliation process. That is the procedural quirk that allows some bills to avoid the filibuster, and therefore, the need to win 60 votes in the Senate.

The program is known as the Educational Choice for Children Act. And strictly speaking, it's not a school voucher program, but it is the first national program to support private school choice. So, here's how it works. Starting in 2027, individuals will have the opportunity to receive dollar for dollar tax credit of up to $1,700 for donations that they make to what are known as scholarship-granting organizations or SGOs. These are nonprofit organizations that distribute various types of scholarships to students attending traditional, public, charter, private, or religious schools.

Now, in a traditional voucher program, the government provides funds directly to parents, who in turn, can use those funds for private school tuition. They have to use them for private school tuition. This new program is different, in that it operates through the tax code. That said, the end result is much the same. The government takes in less tax revenue, and more families are able to enroll their children in private schools as a result.

There are a few other details that are important to understand. First, not all families are eligible for scholarships. In order to qualify, their household income needs to be no more than 300% of the median income in their local area. So, it's not a universal program. That said, 300% of median income is a pretty generous cap. It rules out the truly wealthy, but a large majority of families will be eligible.

The second key detail is that states are not required to participate in the program. Rather, the governor in each state will decide whether to opt in. If they do, they then submit a list of SGOs, those organizations that are approved to receive donations to serve students in their state.

Now, governors may feel some pressure to participate, since they would otherwise be leaving federal money on the table that could benefit students in their state. But at least some Democratic governors have already signaled that they do not plan to opt in.

And then finally, as I said earlier, students are eligible for scholarships regardless of what type of school they attend. And those scholarships could be for tutoring, for special education services, for curriculum materials, or even transportation.

For example, a given SGO could decide that it isn't interested in giving families private school tuition, but instead, wants to offer support for tutoring for students in traditional public schools.

What isn't clear in the law, is whether a governor would be able to say, in my state, we only allow SGOs to support tutoring, and not SGOs that provide private school scholarships. That will have to be determined in the regulatory process. And it may end up determining whether governors in blue states choose to participate.

But what is clear, is that in any state that wants to do so, the program can be used to support private school choice, and that's what makes it significant. It really does have the potential to turbocharge the movement to expand private school choice in the United States, which already had significant momentum at the state level.

JILL ANDERSON: So, we're already seeing some movement in that area.

MARTY WEST: That's absolutely right. For many Republican governors, this is very complementary to programs that they have already been creating and advocating for in their states. And this provides an additional source of funding to allow parents to access a new set of educational options.

In contrast, Democratic elected officials have tended to be skeptical of private school choice programs, in part, because they view them as a threat to support for and funding of traditional public schools. And so, some have been very clear already in saying that they sort of reject this.

I think more of them are waiting to see again what the regulations look like and is there a way that they could allow scholarship-granting organizations that provide support for families in educating their students but can't be used to access private schools.

JILL ANDERSON: Where did the idea of school vouchers come from, and how have programs changed over time compared to other school choice options, like charters?

MARTY WEST: Well, the idea that the government would give parents funds to use at private schools, either as an alternative to, or in addition to operating public schools, dates back a long time. You see it in the writings on education of thinkers like Thomas Paine and John Stuart Mill, for example, both of whom saw that as a way to protect individual or family liberty.

But the modern debate over vouchers is often traced to a 1955 essay by economist Milton Friedman. Friedman conceded that the government had a legitimate role to play in funding elementary and secondary education, and for him as a libertarian, that was a significant concession.

But he said that didn't mean the government needed to operate schools, much less that it needed to be the only operator of schools receiving funds from the government. He argued that a voucher system would make schools more efficient and effective by introducing market competition. And he argued that it would let parents choose schools that meet their child's needs.

So, this was a debate carried out in academic and policy circles for a number of years. The first publicly funded school voucher program was launched in 1989 in Milwaukee, and it was limited to low-income students.

Interestingly, it was the product of an unusual political alliance between conservative Republicans in the state government and advocates in Milwaukee, who were fed up with the quality of education available to them in the city's public schools. And that seemed to be the formula for political success when voucher programs were created early on, that sort of strange bedfellows’ alliance.

And all of the programs that were created in the first couple of decades that voucher programs emerged, were targeted in one way or another, at low-income families, at students with disabilities, at students in a particularly troubled school district, or students assigned to particularly low performing schools. But they were not available as a universal benefit.

And that's what's changed in more recent programs. Starting around 2021, in the wake of the pandemic, many Republican states started creating programs that were universal, rather than targeted. That is, any family who is not enrolling a child in a public school is eligible for financial support, regardless of their income.

And then the other recent development, is the emergence of Education Savings Accounts, or ESAs, as they're known, as an alternative to vouchers. And an ESA is very similar. It's essentially a pot of government funds that families can use, but they can use it on more than just private school tuition. 
They can use it for school supplies, for homeschooling curricula, for tutoring, and it's a way that allows families to unbundle their child's education and not say, we're simply giving all of the resources we're receiving from the state to a private school. They can actually use it more flexibly. And this has really opened up school choice, or ESAs become a vehicle for supporting homeschooling, as well.

JILL ANDERSON: What does the research tell us about the impact of vouchers, both on students who use them and those students who remain in public schools?

MARTY WEST: How much time do you have?

JILL ANDERSON: Mixed, right?

MARTY WEST: I think you're right to suggest that the research on school vouchers can be divided into studies addressing two main questions or sets of questions. The first is, what is the effect on participants of being offered the opportunity to enroll in a private school rather than their assigned public school. And that research looks at the effects on academic achievement as measured by test scores. It looks at the effects on civic outcomes, political tolerance, and the like. And it looks at the effects on educational attainment, how likely students are to graduate from high school and to go on to enroll in and graduate from college.

And then a second body of research says, wait, we can't worry only about the participants. We need to worry about all students, including those who remain in public schools. And so, a second line of research addresses that question, looking at what researchers often call systemic effects.

Let's talk first about the participant effects. Early studies of that question and their effect on academic achievement found modestly positive results. That is, students seem to learn more as measured by standardized tests when they were given that opportunity to enroll in a private school. That was particularly the case for disadvantaged students, who may have had the lowest quality options in traditional public schools. That research also found generally positive effects on civic outcomes, as well as on educational attainment.

And the benefits in terms of educational attainment, were actually larger than what you would expect based on the very modest effects on measures of student learning.

More recently, however, and in particular, when you look at some of the recent state level programs that have been adopted in the past five or so years, you see some examples of studies that have a very different set of findings and have even found quite large negative effects on student learning as measured by standardized tests.

Now, one question that we have about this research, is that you're comparing students who are in public schools who are following standards and curricula aligned to state tests, who are incentivized to help students perform well in those tests, to students who are attending private schools that may have very different curricula and approaches.

And so, could some of what we're seeing in terms of negative effects of being enrolled in a private school under one of these programs, could that be an artifact of that difference? And I don't think we know enough to be sure at this time.

And I'd also say, it's pretty early stages in terms of starting to generate a body of evidence about the effects on participants of these new programs. One of the challenges, is that in many of the state programs that have been adopted, and this would be true under the federal program, as well — students who enroll in a private school aren't required to participate in state testing system, so it's often very hard to find ways to compare their learning to that of their peers who remain in public schools. So that's a bit on participants.

And we need to ask, well, what's the effect on the system as a whole? That's a question I've tried to look at in some of my own research internationally, by trying to compare countries that have something akin to a voucher system, where you have students who are able to attend publicly-funded schools that are run by private entities, often religious entities, that have been very long-standing.

Now, these private schools tend to be more regulated than American private schools are, but my research has shown that countries that open up public funding to more different kinds of entities and create a more competitive environment, do tend to achieve at higher levels.

Other research has tried to look at that in the U.S., trying to say, what happens to a school district when you create a new voucher program, what happens to achievement statewide in one of these states that's created a large private school choice program.

And I'm actually not aware of any research that finds, as critics of voucher programs fear, negative effects on students who remain in traditional public schools. The majority of that research finds either null effects or modest positive effects that they attribute to the creation of more competition.

So over time, it could certainly be a headache for school systems if they're losing enrollment to private schools. But if we're thinking about, does it affect how well they're able to serve their students, we haven't seen much negative evidence in that regard.

JILL ANDERSON: Is that thinking along the lines of, because the money goes with the students, so less money, less quality education, is that the thinking there?

MARTY WEST: Well, that's certainly the fear. The fear that critics of voucher programs have, is that they will drain public school systems of their most engaged and motivated students, who may be more inclined to seek out an alternative option. It will drain them of the resources that they receive to serve those students. And because some of their costs are fixed, that may put them in a worse position to serve their remaining students. And they worry that over time, it could undermine public support for public education if fewer families have their children enrolled, I think we haven't seen much evidence to suggest harms in the short run, but obviously, we're in the very early days of experimenting with private school choice at scale.

JILL ANDERSON: How much do we know about who tends to use vouchers today?

MARTY WEST: Well, when it comes to the early programs, the question of who participates was largely determined by the rules around eligibility. These were targeted programs, and so in order to be eligible, you had to be a low-income family or a family assigned to a particular school. And it was those families who were in a position to take advantage of the opportunity.

The big question right now is, who will participate in these new universal programs? And there's some new research from Tulane University, a federally-funded center on school choice there, that suggests at least right away, many of the families who take advantage of these programs are families who already were enrolled in private schools.

So, they show that between 2019 and 2023, the number of students nationwide using a voucher to attend a private school more than doubled, from 500,000 to 1.3 million. But private school enrollment during this period increased by a far smaller amount.

So that implies that a good chunk of these families who are receiving vouchers now, would have been in private schools anyway. And so, they haven't been given new access, but they're being subsidized. And some would view that as a positive development, that they deserve the support, just as someone who has enrolled their child in a traditional public school. But others see that as a concern. And it certainly means that the program is not in the immediate term, providing new families with access.

I think we need to be cautious about drawing strong conclusions based on what happens in the very early years of a program's existence. Over time, more people will become informed about the program's existence.

And even more importantly, over time, the supply side of the education marketplace, that is, the private school sector, will likely respond to the existence of the program. And we may see new entrants that are well-positioned to serve new families interested in private school, rather than simply the ones who are already there.

JILL ANDERSON: Right. So, it's just too early to know how this might shape the equity debate that a lot of people raise around school choice.

MARTY WEST: I think that's right.

JILL ANDERSON: Conservative leaders have leaned heavily into vouchers as part of their education agenda. Why has this become such a political flashpoint?

MARTY WEST: Well, the issue of private school choice has for decades, been the one education policy issue that most cleanly divides Republican and Democratic elected officials. That, interestingly, is not anywhere near as much the case if you look at opinion in the electorate, where you see plenty of Democrats are expressing support for school choice, and plenty of Republicans being skeptical to it. But among elites, that has always been the case. I think what has happened since the first Trump administration, and in particular, in the wake of the COVID-19 pandemic, is that that issue of private school choice has become more central to the Republican party's agenda, not just for education, but its agenda overall. And I think in part, that reflected the really single-minded way in which President Trump and his first Secretary of Education, Betsy DeVos, emphasized the issue when talking about education between 2016 and 2020.

And then the experiences that many families had of frustration during the pandemic, frustration that schools weren't open, frustration in some cases, in what they learned about curricula when they saw their child participating in school via Zoom in their living room.

And I think Republicans, both at the national level, but also at the state level, saw an opportunity to capitalize on that sense of frustration with what was available through public schools. And private school choice, in turn, became a much more important issue for Republicans. It used to be the case that it was often hard to build support for the adoption of statewide private school choice programs, even in Republican states. 
And that was because, especially in rural areas, you often have Republicans who are quite happy with their public school, who see it as a central institution in their community and weren't on board with something that they thought might pose a threat.

Texas would be a good example of that. School choice advocates have worked to get a school choice program passed in Texas for decades with very little success. And it was often those rural Republican legislators that it was hard to get on board. Well, after Governor Greg Abbott failed in an attempt to push through a voucher program a couple of years ago, he decided to go out and run primary campaigns against some of those rural Republicans who had voted against it. And that shifted the composition of the legislature, and they were able to enact quite a sweeping education savings account program in the past year, that's now in the process of being implemented. And so, there you see, it's not something that people were just going to support at a high level, but they were actually going to invest political capital in it.

And that also explains why you saw the new federal program included in the reconciliation bill that Republicans passed in Congress earlier this year. When that same idea was out there in 2016, when Republicans had unified control of Congress, they were using the reconciliation process to advance their priorities, and they chose not to do it at that time.

JILL ANDERSON: Marty, I know we could talk all day about school vouchers, and for you, what are the biggest questions?

MARTY WEST: Well, I think there's a set of interesting questions to ask about the new federal program. First, what will the regulations look like? And how will they resolve some of the legitimate ambiguities in the language that Congress passed? One of the interesting aspects of that, is that the regulations will be drafted not by the Department of Education, but by the Treasury Department, which of course, oversees the tax code.

A second question is, what will the governors of blue states decide? Will they opt into the program or will they not? If they don't, this will further extend a new phenomenon in American education really in the past several years — which is that we're starting to see a red state model of education delivery and a blue state model of education delivery. And again, if Democrats don't participate or Democrat-led states don't participate in this new opportunity, that will amplify that trend.

And then, once the program is in place, at least in some states, I'm interested in seeing whether it will be used to continue the emergence of innovative alternative school models that started during the pandemic, the emergence of microschools, of hybrid homeschooling, of homeschool co-ops.

That is something that really gained a lot of momentum in the last several years and may provide a new set of options for families to decide among. And then, there is so much activity going on at the state level, in addition to what will be generated by this new federal program. Researchers will be able to address a whole new set of questions about school choice. How will it operate at scale?

For a long time, proponents of school choice have reacted to disappointing findings by saying, well, you've tested our ideas in such a constrained and modest way, that you're not seeing the benefits that would really emerge if we took Milton Friedman's ideas seriously.

In the same way, critics have reacted to findings like those I described that have not shown detrimental effects on public school systems and the students that they serve, by saying, well, that's because the programs have been very modest in size. Well, now we have the opportunity to see what happens when we implement these programs at scale.

I think there's a whole set of questions about what's the right approach to regulating private schools that participate in government funding programs. Should they participate in state testing systems? What degree of control should be placed on their admission practices and the like?

And then a third question, maybe less a research question, but something I think we'll be thinking about, is what is the future for charter schools? Charter schools have often been positioned as an alternative to voucher programs, something that advocates of school choice supported when they weren't able to get a private school choice program created. And that's been at least one factor contributing to their success. Now that private school choice has significant momentum, is it possible that support for charter schools as an alternative will dry up?

JILL ANDERSON: So that's a lot of questions that are out there to be answered. It's just interesting to see what that would mean for the future of education in the country. So anyways, Marty, I'm going to thank you for taking the time. There's a lot to learn about school vouchers. There's a lot of questions.

MARTY WEST: All right, thanks for the opportunity.

JILL ANDERSON: Marty West is a professor and academic dean at the Harvard Graduate School of Education. I'm Jill Anderson. This is the Harvard EdCast, produced by the Harvard Graduate School of Education. Thanks for listening.