Policy Tip Sheet: Education Savings Accounts (ESAs)

Published August 21, 2017

Problem

Too many public schools across the country are failing to adequately prepare students for productive lives. Public schools are delivering too few graduates with the reading, writing, knowledge, and workplace skills necessary to meet the challenges of a global economy in the 21st century.

Per-pupil spending in public schools has never been higher, yet student test scores are stagnant. Over half of all parents say they are dissatisfied with the public education system in the United States.

Parents should be allowed to choose the schools their children attend and should not be penalized financially if that choice is a private religious or secular school.

Policy Solution

Under an education savings account (ESA) program, state education funds allocated for a child are placed in a parent-controlled savings account. Parents then use a state-provided debit card to access the funds to pay for the resources chosen for their child’s unique educational needs, such as tuition at a private or parochial school, tutoring, online classes, specialized therapies, textbooks, and even college courses that can be taken by students still in high school. Unused ESA funds may be rolled over year to year and saved to pay for future college expenses.

Although similar to school vouchers, ESAs are more versatile, giving parents increased flexibility in tailoring an education plan. Because of this flexibility, they may be more likely than vouchers to withstand a constitutional challenge, especially in states with Blaine amendments. Six states (Arizona, Florida, Mississippi, Nevada, North Carolina, Tennessee) have enacted ESA programs.

ESAs are popular with parents because they support parents’ fundamental right to direct their children’s education.

Policy Message

Point 1: Public schools are failing to adequately educate millions of children, many of whom have no other educational options available to them.

Point 2: The overwhelming majority of the available empirical evidence shows education choice offers families equal access to high-quality schools and does so at a lower cost.

Point 3: In the polls conducted on this issue, the majority of Republican, Democrat, black, and Hispanic respondents have said they support ESA programs, and polling of ESA parents shows they are very satisfied with the policy.

Point 4: Twenty-eight percent of parents use ESA funds to pay for multiple learning services.

Point 5: Thirty-one percent of ESA funds were saved in 2016, with $67,000 accumulated for college savings plans.

Point 6: ESAs give all families a greater opportunity to meet their child’s unique education needs.

Point 7: When parents are given the opportunity to choose, every school must compete and improve, which gives more children the chance to attend a quality school.

References

Timothy Benson, “Education Savings Accounts: The Future of School Choice Has Arrived,” Policy Brief, The Heartland Institute, June 20,
2 0 1 7 : h t t p s : / / w w w . h e a r t l a n d . o r g / _ t e m p l a t e -assets/documents/publications/ESA%20policy%20brief.pdf

Greg Forster, A Win-Win Solution: The Empirical Evidence on School Choice (Fourth Edition), EdChoice, May 18, 2016: www.edchoice.org/wp-content/uploads/2016/05/A-Win-Win-Solution-The-Empirical-Evidence-on-School-Choice.pdf

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For more information, contact The Heartland Institute at 312/377-4000 or by email at [email protected], or visit our website at www.heartland.org.