How Education Savings Accounts Work

January 23, 2019

What happens when a student is trapped in a school that doesn’t meet his or her needs and their parents can’t afford another school, tutoring, or other necessary support? As we celebrate National School Choice Week, we’re taking a look at one answer: Education Savings Accounts (ESAs).

In some states, ESAs (known as Empowerment Scholarship Accounts in Arizona) are a lifeline for parents and students looking for help. With an ESA, the state deposits part of a student’s funds from the state education formula into a private account—money that can then be used toward tuition, tutoring, and other educational tools. Today, ESAs are available in Arizona, Florida, Mississippi, North Carolina and Tennessee.

Typically, ESAs can be used to pay for the following expenses:

• Private school tuition;
• Textbooks;
• Educational therapy;
• Tuition for a vocational program;
• Assistive technology (e.g., braille translation services);
• Personal tutors;
• Curricular materials such as workbooks;
• Online classes;
• Standardized test fees (e.g., for college entrance exams or Advanced Placement tests);
• College tuition;
• College textbooks;
• Public school class fees;
• Extracurricular activity fees;
• School uniforms;
• Transportation costs; and
• Computer hardware.

Research has shown that families who use ESAs are satisfied with the results. In a 2013 Goldwater Institute focus group, 94 percent of respondents reported being “very satisfied” with their child’s account, while the remaining 6 percent were “somewhat satisfied.” Meanwhile, researchers in Mississippi found that 63 percent of participating families reported being “very satisfied” with their child’s account, and 28 percent reported being “somewhat satisfied.” 

Reporting requirements and eligibility for ESAs can vary from state to state. You can read more about the program in Arizona and other states at GoldwaterInstitute.org/empowerment. Another great resource is A Primer on Education Savings Accounts: Giving Every Child the Chance to Succeed, by Jonathan Butcher, Senior Fellow at the Goldwater Institute.