Federal Scholarship Program to Aid Private School, Homeschooling Expenses Proposed
Nearly all schoolchildren in at least 30 states could be eligible for a new federal scholarship program aimed at supporting private school and homeschooling expenses, according to proposed regulations from the Trump administration.
The Trump administration has proposed regulations for the Federal Scholarship Tax Credit, a new national school choice scholarship program set to launch on January 1. This initiative aims to provide a taxpayer-funded incentive for families to opt for private schooling or homeschooling in participating states.
Under the proposed program, taxpayers who donate to organizations distributing these scholarships will be eligible for a federal tax credit. Officials estimate that approximately 96% of children in at least 30 states will qualify for the program. Children currently attending public schools may also utilize these scholarships for supplementary educational expenses.
The program differs from many existing state-level school choice initiatives by not requiring students to leave public school to be eligible. Public school students could potentially use the funds for services such as tutoring or special education therapies, though specific criteria for eligible expenses have not yet been detailed by the administration.
To simplify the application process for lower-income families, the proposed regulations would allow for proof of participation in a government assistance program in lieu of income documentation. Foster children would be exempt from any income verification requirements.
The program is structured to allow taxpayers to donate to scholarship organizations in participating states, regardless of their own residency. Individuals can receive a federal tax credit equal to their donation, up to $1,700, with married couples filing jointly potentially able to contribute double that amount. Scholarship organizations within each state will determine the scholarship amounts based on available funds and student need. Eligibility for students in elementary through high school will be based on family income up to three times the area's median income.
Funds from these scholarships can be used for a variety of expenses, including tuition for religious or private schools, homeschooling costs, tutoring, special education therapies, books, and computers. Federal officials have stated that states cannot enact laws or regulations to restrict the uses of these scholarships or the types of organizations that can grant them.
States have the option to participate in the federal program. As of mid-September, a list from the Treasury Department indicated that Alabama, Alaska, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming are set to participate in 2027. Governors in Arizona, Minnesota, Wisconsin, and Oregon have announced their states will not join, citing concerns about diverting resources from public schools. New York is also expected to sign up, with Governor Kathy Hochul expressing support.
Treasury Department officials project that once taxpayer donations increase, the program could annually direct nearly $26 billion towards approximately 2.2 million scholarships. The Federal Scholarship Tax Credit program was established last year as part of President Donald Trump's tax legislation. The public has a 60-day period to comment on the proposed regulations.