Opinion
School Choice & Charters Opinion

Don’t Be Fooled by Claims That Tax-Credit Scholarships Can Help Public Education

The latest federal school choice scheme is a Trojan horse
By Miguel Cardona & Robert Kim — October 23, 2026 5 min read
Collage-style illustration of tall vertical clippings of green lockers, a school bus and a wooden desk, all split apart. In between the images are clippings of text from the IRS webpage that has information about the Federal Scholarship Tax Credit.
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As a former U.S. secretary of education and the director of a national education-focused nonprofit organization, we believe in the value of our nation’s public schools and the promise those schools make to educate future generations.

That promise is being broken by the current administration as it pursues its aim to dismantle the U.S. Department of Education, holds back federal funding for public education, challenges state and local laws and policies that protect vulnerable students, and attempts to privatize education.

That last category of attacks includes the new federal tax-credit scholarship program, which was signed into law in 2025 and takes effect on Jan. 1, 2027.

Let’s be clear: This program is a voucher program whose primary function is to enable public funds to be used to pay for private school tuition and expenses. The only difference between vouchers and the scholarship program is the label and the mechanism.

In the next few months, and on an annual basis thereafter, each state will need to decide whether to opt in to the federal program. We urge all governors and state leaders to steer clear of this dangerous federal scheme, which is nothing more than a Trojan horse that will gut public schools under the guise of a gift.

On Oct. 1, the long-awaited proposed regulations for the program were released by the U.S. Department of the Treasury. There is absolutely nothing in these regulations that makes this voucher scheme a net positive for public education.

Much has been written about how public schools and students can supposedly benefit from the program. But the measly sum that may reach public school students is certainly not worth pushing private education voucher programs into states that don’t currently have them. That’s especially true when study after study has shown that previous voucher programs divert money from public schools, increase student segregation, negatively impact academic outcomes, strip students and families of civil rights protections, and promote waste, fraud, and abuse.

State leaders concerned about the negative effects may have hoped that they could counteract them by adopting additional restrictions or guardrails for the scholarship-granting organizations receiving these donations. But the proposed regulations released this month confirm that states will not be allowed to impose conditions that are more stringent than the minimal ones contained in the federal law. For example, states will not be permitted to require SGOs to give scholarship funds only to public school students, deny funds to students attending private schools that exclude particular students or families, or adopt any other policy designed to mitigate the negative effects of the program to protect students or favor public education.

Make no mistake: The race to establish and expand SGOs (which are permitted to pocket a whopping 10% of contributions received) is well underway, with massive backing from billionaires and private equity firms seeking to profit. As you read this, existing SGOs that cater to private schools are poised to gobble up taxpayer money and provide it to families to fund the private education they’ve already chosen and are paying for. And any public school students receiving federal scholarship funds—which an SGO cannot unilaterally send to a public school—will likely largely use that money to pay private providers for services. That’s because public schools themselves do not (and, with few exceptions, cannot) typically charge for the education programs and services they provide.

We are well aware (and have worked throughout our careers to address) that American public schools are often underfunded and that resources don’t always reach the students who need them most. That backdrop makes it hard to turn down money that might benefit public school students.

But the money from this federal program will not make up for the eventual and perhaps precipitous decline in education funding and services for public schools and their students and communities that comes from diverting this tax revenue. If the federal program is allowed to grow unfettered, billions of federal taxpayer dollars may no longer be available to support critical federal funding streams like Title I to improve opportunities for low-income students and Individuals with Disabilities Education Act funds for students with disabilities. There is no cap on the total amount of tax credits that can be doled out in the program, and the Treasury Department itself estimates the program will reach $26 billion annually by 2030. School districts that experience pupil enrollment declines will also lose state and local dollars.

Our public schools will suffer, even as they continue to educate students with disabilities, homeless students, English learners, preschoolers, students in alternative programs, and students from all income levels—without turning away a single child.

The lack of accountability over SGOs and private schools taking advantage of this massive new federal K-12 program is reminiscent of a similar nightmare we’ve experienced in higher education: During the Biden administration, the federal government was obliged to spend billions to relieve and discharge the loans of hundreds of thousands of students who had been defrauded by predatory, substandard colleges, most of which were private, for-profit institutions. Of course, private higher education institutions make up a significant part of the education landscape in the United States, and the vast majority are not defrauding students. But they are, by definition, largely unaccountable to the public over their use of funds and how well they serve students. This is especially true of private K-12 schools. We cannot have different standards of accountability if public dollars are being used.

States must not be fooled: The federal tax-credit scholarship program is not the way to support public schools and the students and communities that count on them. Instead, Congress must rescind this harmful federal tax-credit scheme. And states and public school supporters should press the federal government to return to its important role of providing robust assistance and vital support for public schools and their students.

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