Education Freedom Scholarships: A New Federal Tax Credit Plan

By CSF President Darla M. Romfo

Last week, a new federal tax credit plan was unveiled by Education Secretary Betsy DeVos, Senator Ted Cruz, and Representative Bradley Byrne that could significantly increase the impact of your gifts to CSF and CSF partner programs. The plan, called the Education Freedom Scholarships and Opportunity Act, would offer a dollar for dollar federal tax credit for donations to scholarship granting organizations.

You can find out more reading an op-ed Secretary DeVos, Senator Cruz, and Representative Byrne published in USA Today.

Under the Education Freedom Scholarships plan, states would have the freedom and flexibility to decide whether to participate, which scholarship organizations would be eligible to receive tax credit donations, and what the eligibility requirements for scholarship recipients would be. This means an organization like CSF might be allowed to participate in some states and not in others.

States also would have flexibility on what kind of services could be funded with a scholarship. As DeVos, Cruz, and Byrne state in their op-ed: “We recognize that each student is unique and deserves an education personalized for them. Scholarships could help students access a whole menu of opportunities, including dual enrollment, special education services, advanced or elective courses not available in their assigned school buildings, transportation to out-of-zone opportunities, among many others. All Americans need to be equipped for successful careers, and vital workforce preparation is in high demand. That’s why students could use scholarships to access career and technical education and apprenticeships, as well.”

Individual donors would choose from a menu of scholarship granting organizations organized by state (although donors could choose to give to an out-of-state organization, as well) and earn a dollar for dollar tax credit on their gift, which could be up to 10 percent of their adjusted gross income. Businesses would be permitted to give up to 5 percent of their net taxable income. Tax credits would be capped at $5 billion.

The tax credit would not create a new federal program and wouldn’t take any funds away from traditional public schools. Rather, scholarships would all be funded with private dollars.

Our experience has shown that children thrive when their families are empowered to choose the school that best meets their needs and allows them to flourish and live up to their full potential. A federal tax credit would incentivize more donations for scholarships and allow many more families to enjoy this benefit.

As Secretary DeVos, Senator Cruz, and Representative Byrne said in their op-ed: “Our country needs students to be freed to pursue the education that will unlock their potential and unleash their creativity so they — and generations after — can achieve unlimited success. And no child should have to wait for another generation of adults to get this right.”

We are very encouraged by the Education Freedom Scholarships and Opportunity Act. The very prospect of a federal tax credit for scholarships is a big step forward for education!

We will continue to keep you posted, and please contact CSF at any time if you have questions or need additional information. As always, thank you so much for your help in giving low-income children the quality education they need to put them on the path to success in life.