New York Gov. Kathy Hochul is no fan of President Trump. Still, she looked at the new federal school choice program and made a simple call. “I’m not going to leave money on the table when it could help our kids,” she said. Most of her fellow Democratic governors have not followed her lead.
The deadline is Jan. 1. By then, every governor must tell the IRS whether their state is in for the first year. So far, 31 states have opted in, but only two are run by Democrats. Meanwhile, five more Democratic governors just sent Washington a letter full of questions. Some of those questions are fair. However, the timing tells you a lot.
Key Takeaways
- The federal school choice program, the Education Freedom Tax Credit, passed in the One Big Beautiful Bill Act last year.
- Donors get a dollar-for-dollar federal tax credit of up to $1,700, or $3,400 for married couples, for gifts to scholarship groups.
- Thirty-one states have opted in, including just two led by Democrats: Colorado and New York.
- Five Democratic governors, including Gavin Newsom and Gretchen Whitmer, asked Treasury for more details in an Oct. 22 letter.
- Governors must tell the IRS by Jan. 1 whether their state will take part in the first program year.
How the Federal School Choice Tax Credit Works
First, the idea is simple. A taxpayer gives money to a nonprofit scholarship-granting organization. In return, that taxpayer gets a dollar-for-dollar federal tax credit. According to Education Week, the cap is $1,700 per person, or $3,400 for a married couple.
Those nonprofits then award scholarships to students. Families can use them for private school tuition. Public school students, though, can use them too, for things like tutoring, special education services and before- or after-school programs. In addition, The Hill reports that students from households earning under 300% of the area median income are eligible.
Here is the catch. Students can only take part if their governor opts the state in. In other words, one person in each statehouse decides whether thousands of families even get a shot.
Hochul and Polis Said Yes. Why Are Other Democrats Waiting?
Colorado’s Jared Polis and New York’s Hochul both signed up. Hochul said the program will “bring millions of additional dollars to New York students and families without taking a single dollar from public schools or our state or local budgets.”
That is the heart of it. In fact, federal school choice money does not come out of a state’s school budget. Instead, it flows from private donors through private scholarship groups. As a result, a governor who opts in loses nothing from the public school line item. Families simply gain another option.
So why the hesitation? One school choice advocate was refreshingly blunt. Leslie Hiner of EdChoice told The Hill that teachers’ unions “loom large” and that she wouldn’t even ask a governor to opt in before the November election. That is a candid admission. For many Democrats, the real calendar is not the IRS deadline. It is Election Day.
The Unions Have Picked Their Side
The National Education Association is not hiding its position. Its president, Princess Moss, said states should not opt in and called the program “a Trojan horse.” Oregon Gov. Tina Kotek has already said no. She said she cannot trust “any education policy coming from Trump’s White House.”
Simply put, that is a political answer, not an education answer. After all, a scholarship for tutoring does not care who sits in the White House. Neither does a child who is behind in reading. As we noted in our look at how Louisiana beat pandemic learning loss, results come from focusing on kids, not on adult turf wars.
The Governors’ Federal School Choice Questions Deserve Answers
To be fair, not every question in the Oct. 22 letter is a stall tactic. Govs. Maura Healey, Ned Lamont, Gavin Newsom, Mikie Sherrill and Whitmer asked how states can watch scholarship groups for fraud and abuse. They also asked whether Washington will help pay for oversight and how it will enforce the rules.
Those are reasonable questions. In fact, fiscal conservatives should ask them first. A tax credit is still a cost to the Treasury. So every dollar should reach a real student for a real educational purpose. Moreover, Treasury released proposed rules on Oct. 1 without detailed guidance on eligible expenses, and the IRS has not said when that guidance will come.
So Treasury should move quickly. Clear rules on expenses, audits and enforcement would remove the last honest excuse. Then the choice becomes plain. Either a governor wants more help for students, or a governor would rather keep the unions happy.
Critics Worry About Accountability
Some education researchers raise a different concern. Jon Valant of the Brookings Institution’s Brown Center told The Hill he worries the federal school choice design could send more money to wealthy areas and invite waste. He also argued there is little attempt to measure outcomes.
Still, that critique is worth hearing. But the answer is transparency, not a closed door. Parents are the best accountability system ever designed. When a scholarship does not work, a family can walk away. By contrast, a struggling district school rarely loses a dime when it fails a child.
Why Federal School Choice Is a Fiscal Conservative Win
Next, look at the scale. According to Education Week, the IRS projects the program could reach at least 2 million students and $26 billion a year by 2030. That is just in the 30 states that had opted in by Oct. 1. By comparison, Title I, the Education Department’s largest funding stream for schools, totaled $18.4 billion in 2026.
Also, that money moves through private choices, not a new federal bureaucracy. Donors decide where to give. Families decide where to spend. That is how conservatives want public dollars to work: close to the people and away from Washington. It fits the same logic as Workforce Pell Grants, which let students pick a path that works for them.
Voters also seem to agree. Democrats for Education Reform, a group that supports school choice, says 64% of voters want their governor to opt in. Only 21% oppose it, and 14% are unsure. Even Pennsylvania Gov. Josh Shapiro, a Democrat running for a second term, says he is “very open” to joining.
What Happens Next
Meanwhile, the clock is ticking. Fifteen of the 16 governors who have not announced a decision are Democrats, according to Education Week. Their choices will decide how big this program grows.
That is why parents in those states should speak up now. Call your governor. Ask a simple question: why would you turn down federal school choice dollars that cost your state budget nothing? We have already seen states try to shut faith-based schools out of programs, as in Colorado’s preschool fight. Families should not let politics close another door.
FAQ
What is the federal school choice tax credit?
It is the Education Freedom Tax Credit, created in the One Big Beautiful Bill Act. Donors who give to scholarship-granting organizations get a dollar-for-dollar federal tax credit of up to $1,700, or $3,400 for married couples.
Which states have opted in?
The Hill reports that 31 states have opted in. Only two of them, Colorado and New York, are led by Democratic governors. Oregon has said it will not take part, and most other Democratic governors are still deciding.
Can public school students use the scholarships?
Yes. Public school students can use scholarships for tutoring, special education services, and before- and after-school programs. Students from households earning under 300% of the area median income are eligible.
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