Educational Savings Accounts and Digital Learning
Educational savings accounts went from being among the most overlooked education topics in early 2023, to one in which expectations have outpaced reality, at least currently. This blog post, and an upcoming second one, reviews what ESAs are, how they intersect with online and hybrid learning, their trajectory over the past year, and the outlook for 2024.
What ESAs are—and what they are not
EdChoice provides a short definition of ESAs:
“Education savings accounts (ESAs) in K-12 education establish for parents a publicly funded, government-authorized savings account with restricted, but multiple uses for educational purposes. Parents may use the funds to pay for expenses including: school tuition, tutoring, online education programs, therapies for students with special needs, textbooks or other instructional materials, and sometimes, save for college.”
The concepts of ESAs builds on the idea of publicly funded school choice, and in some ways provide a logical next step to the concept of choice in education which had previously focused on charter schools, vouchers, and course choice.
Charter school laws introduced widely the idea the families could select a public school separate from the traditional public school district system, and have public funds flow to the charter school instead of the neighborhood public school the student would otherwise attend. As of fall 2021, according to the National Center for Education Statistics, 3.7 million students attended charter schools in 45 states and Washington DC, and the number of students attending charter schools had doubled in the prior decade. Many statewide online schools, and some hybrid schools, are charter schools and charter school laws have supported the growth of online learning options.
Private school voucher programs extended the concept of public funds going to different education providers, allowing education funds to flow to private schools. EdChoice counts 15 states as offering some sort of voucher program. Prior to the last couple of years and the emergence of ESAs, these voucher programs were limited to a few categories of students, such as students with special needs, which kept overall numbers low—at less than 10% of charter school enrollment. (Note that an additional confusing element to voucher programs is that some are awarded as tax credits, which can be difficult for parents to access.)
Course choice programs and policies allowed families to select publicly funded courses from a provider other than the school in which the student was enrolled, and have the pro-rated portion of the student’s funding flow to the course provider. These programs and policies often focused on online courses, although not always, as in Louisiana which had plenty of non-online course options.
ESAs represent, in some ways, a next step in educational choice, significantly extended to allow families far greater control over the use of the funds. As noted above, the funds may be used in a variety of ways. These ways include paying tuition at a private school, purchasing individual courses, or even, in some states, buying education-related materials and activities that exist outside of public or private schools.
It is also important to understand what ESAs are not. They are not monolithic. ESA laws vary widely by state in two key ways:
How many students are eligible now, and/or when all students will be eligible as current laws roll out over the next few years. EdChoice counts 13 states with ESA laws in place, but only 92,000 students having accessed ESA accounts as of school year 2022-23. That is in large part because almost all of those 13 states, with the main exception of Arizona, had limited the number of students who could apply. Some states, such as Iowa, have passed an ESA law that will allow increasing numbers of students to access the funds over several years, eventually reaching or approaching 100% of all students.
The extent of requirements of students/families accessing ESA funds. In some states, requirements to access public funds are minimal. In others, ESA-funded students must take state assessments or meet other requirements that homeschool families may balk at.
These two elements will together play a major role in determining how much ESA programs grow in the coming years.
The next blog post will look at the intersection of ESAs and digital learning, and the outlook for 2024.