Historically, those are the three pots of funding districts have relied on to educate America’s students. One of the nation’s leading school finance experts says leaders should start planning for a fourth — the new from the IRS.

Advocates for the program, which Congress passed last year as part of President Donald Trump’s One Big Beautiful Bill Act, have promoted it as a way to expand for parents who want to leave public schools. But according to Marguerite Roza, director of Georgetown University’s Edunomics Lab, district schools could also be big winners.

Under the program, which kicks in next year, taxpayers will get a dollar-for-dollar credit, up to $1,700, if they donate to a scholarship granting organization. Just like an SGO can provide scholarships to private and religious schools, another could direct awards to kids in district schools.

“Given that 90% of the kids in our country, and their families, have attended public schools,” Roza said during “these SGOs could have …broader appeal, to the average taxpayer.”

The Treasury Department further confirmed that public school students will be eligible for scholarship funds during a Tuesday with advocates, according to reporting from the New York Times. The agency is still finalizing rules for the program, and states that opt in [] will have to approve a list of SGOs to accept donations. With the vast majority of U.S. K-12 students eligible for the scholarships, a variety of organizations, like the , have already envisioned how the tax credit could support public school kids who need afterschool and summer learning programs. Chad Aldeman, an education analyst and frequent contributor for The 74, , including public school foundations, to become SGOs. 

But some who oppose the program warn that districts shouldn’t get their hopes up, arguing that the Trump administration’s ultimate goal is to weaken public schools.

The federal tax credit “will give tax money that should be used on public goods, like public education, to unregulated SGOs to fund mostly private school tuition and other private education expenses,” Jessica Levin, litigation director for the Education Law Center, said during .

She suggested that it’s unrealistic to expect the administration to make it easy for public school students to benefit from the program “now that they finally achieved their dream of a federal voucher law.” 

Cecilia Retelle Zywicki, founder of LearningSpring, which is building a system for states to track SGOs and payments, attended the closed-door meeting at Treasury Tuesday. While excited about the prospects for helping more students, she urged caution until the administration releases rules for the program later this year.

“This is big, and represents a lot of opportunity for a lot of people,” she said. “But this means the details matter. Compliance and accountability are paramount. It’s exciting, but requires outstanding management and unbiased information.” 

‘Maximize those dollars’

Before Congress passed the law that included the new tax credit, organizations supporting public schools worked hard to stop it. In March 2025, Sasha Pudelski, director of advocacy for AASA, the School Superintendents Association, the “greatest threat to public education we’ve ever had at the federal level.” She noted how private schools accepting scholarships would be able to discriminate in admissions based on students’ religion, disabilities or academic performance.

But the potential for public school kids to benefit is one reason Colorado Gov. Jared Polis, a Democrat, opted into the program. Gov. Kathy Hochul in New York, also a Democrat, plans to participate as well. 

Scott Smith, chief financial and operating officer in the Cherry Creek district, southeast of Denver, is among those who have been skeptical that the tax credit will be a windfall for public schools. 

“This administration has shown that it doesn’t support traditional public education,” he said. But he’s still hopeful, and said across the district’s 70 schools, there is uneven access to opportunities like summer camps and afterschool enrichment. “If the rules get written in such a way that allow public schools to benefit, we will most certainly do everything we can to maximize those dollars and invest them into the students who need them the most.” 

The tax credit will pay for a broad range of , including supplies, fees, field trips, uniforms and digital devices — a lot of the items that public education foundations already provide to supplement district budgets across the country, said Mike Taylor, CEO of the National Association of Education Foundations. 

Many public school districts currently charge tuition for students who live outside of their boundaries. A district, Taylor said, could accept more of those students through scholarships. 

There has been “a sea change” in attitudes toward the program, he said. “It’s happening, and we’re going to make sure we take advantage of this.”

Even Josh Cowen, one of the nation’s most outspoken voucher critics, , “It’s important to squeeze every dollar out of the new federal scholarship tax credit for public school families.” 

He urged nonprofits to learn from the well-established SGOs supporting private schools and said he wouldn’t “” public school supporters if they need guidance on how to use this new “revenue stream.” 

At least one group, which worked to expand internet access in schools and students’ homes, has already reinvented itself as an SGO. plans to deliver scholarships for high-quality literacy tutoring to kids nationwide who enter first grade off track in reading. 

“This is the pathway to take tutoring to scale in public school,” said Evan Marwell, the organization’s founder and CEO. The challenge is getting taxpayers without kids in public schools to donate, but he thinks he has the right approach. “A message of ‘America has a reading crisis, this is our way to fix it and here’s the evidence that shows it works’ is going to be incredibly compelling.” 

After the legislation passed, he began meeting with governors in both red and blue states to encourage them to add his organization to their approved SGO lists. He said it was clear they all care about improving literacy, but existing states and districts can’t afford to provide tutoring to all the students who need it. 

Roza described a more expansive scenario in which a district would set a price on a “bundled set of enhanced services” for every student, not just those with specific needs.

That bundle, funded by an SGO, might include field trips, a robotics lab or special assemblies — offerings that go above and beyond the basic education that schools are legally required to provide. She doesn’t think it would be hard for district leaders to convince local taxpayers to donate to an SGO that would direct scholarships to students in a specific district. 

“Donating a portion of your federal taxes to our SGO helps us go beyond the bare minimum to better serve our students,” is one pitch a school board might make to the community, she said.

‘Financial gaps’

Levin, with the Education Law Center, slammed the idea and said it’s wrong for districts to start charging parents for things that they don’t already pay for. The logistics of offering such a “premium package,” she added, would be difficult for districts to manage. 

“There are way too many variables for public schools to try to control,” she said, including the SGO raising enough every year to cover all students and ensuring parents apply for the scholarships.

Others wonder if district-focused SGOs would attract major donations in some communities, but not others — similar to cases in which PTAs in wealthier districts can collect enough donations for facility upgrades and while others can only raise enough for small grants to fund teachers or field trips.

“Taxpayers are most likely to fund an SGO that directly benefits their own school district,” said Katie Roy, executive director of the . An acronym for Strategic Public Education National Data, the new effort aims to preserve and collect education finance information after the many large surveys. “The benefits of these tax credits — and the resulting funding — are poised to flow primarily toward more affluent school districts, potentially widening existing financial gaps between schools.”

To take advantage of the full $1,700 credit on their income taxes, a donor must have that much to contribute to an SGO each year. In lower-income communities, many residents don’t earn enough to .

But the extent to which an SGO can narrow its scholarship eligibility to students in specific schools or districts will depend on the rules the Treasury Department sets for the program, said Kristin Blagg, a principal research associate at the Urban Institute, a left-learning think tank. 

“For those seeking to develop an SGO, I’d imagine it’s difficult to plan for the future without knowing what those federal regulatory guardrails are,” she said, “and what additional guardrails, if any, a host state may be able to impose.”

Supporters want the program to be uncomplicated, both for nonprofits granting scholarships and the private schools participating. Others want to ensure that students who remain in public schools can benefit from the program, while critics oppose the basic concept — a dollar-for-dollar tax credit for those who donate up to $1,700 annually to a scholarship-granting organization.

They want the Trump administration to focus instead on supporting public schools.

 “The federal government should invest in strong, inclusive, well-resourced public schools — not incentives that drain support and weaken safeguards,” one Tennessee man wrote in a letter to the Treasury Department and the IRS, among the more than 2,100 comments on the new law submitted by the Dec. 26 deadline. 

With the tax credit already on the books, the Federal Scholarship Tax Credit Coalition, which represents more than 200 school choice advocates, private schools and scholarship organizations, wants the administration to keep the program simple. 

The organization wants officials to make it “as easy as possible” for scholarship-granting organizations to participate, for taxpayers to contribute and to “maximize” the number of students who will benefit.

Their letter calls for the administration to clear up some potential confusion.They want officials, for example, to keep recordkeeping requirements for participating nonprofits from being “overly burdensome or onerous.” 

John Schilling, a consultant who lobbied in favor of the program, said he hopes Treasury officials will release rules by summer. 

‘Very well prepared’

President Donald Trump signed the new program into law in July as part of a large tax cut and spending package. Because it’s hard to predict how many taxpayers will donate and claim the credit, it’s not yet clear how much the program will cost the government. Kristin Blagg, a principal research associate at the Urban Institute, a left-leaning think tank, that after an initial “ramp-up period,” the program could generate between $2.7 billion to $6.1 billion annually.

Scholarship groups could begin awarding funds to students in early 2027, but it might take until that fall for them to raise enough money.

“The ones that are serious about doing this are going to be very well prepared,” Schilling said. “I’m hopeful that they will line up a lot of donors who will give in the first quarter of 2027.”

So far, of Colorado, Iowa, Louisiana, Nebraska, North Carolina, South Dakota, Tennessee and Texas have said they intend to opt in, while those in New Mexico and Wisconsin have announced that they won’t. But Schilling said he thinks that’s a mistake because donors could just send their money to a scholarship organization in another state.  

“If you’re a blue state governor, why would you want taxpayers in your state sending their money to some other state?” he asked. “I think that’s a political liability.”

Despite Democrats’ longstanding opposition to vouchers for private school and education savings accounts, which can be used for homeschooling, some, like North Carolina Gov. Josh Stein, say the program is a chance for more public school students to receive tutoring and afterschool programs.. 

That’s what the Afterschool Alliance emphasized in its submission. The advocacy organization suggested that perhaps some scholarship programs could focus on students who need afterschool activities while others could stick to granting private school scholarships. 

According to a December , conducted for the National Parents Union, more than three-fourths of parents support the tax credit if it’s targeted only to public school students for tutoring, summer learning and afterschool programs. But that figure drops to 40% if the benefit is restricted to private school tuition.

In the spirit of “returning education to the states,” the advocacy group, , wrote that states should be able to design and run the programs in a way that reflects “their unique policy landscapes, community needs and family priorities.”

The organization also wants the Treasury Department to allow states to evaluate schools and providers “to assess whether the programs participating are delivering meaningful, measurable results.” Such data, including average scholarship amounts and the demographics of students served, should be publicly available, the comment said.

Roger Severino, vice president of domestic policy at the conservative , told The 74 that he’s not opposed to public school students receiving scholarships for tutoring or afterschool enrichment, but he doesn’t want the program to become “a backdoor diversion of funds to public schools themselves.”

To religious groups, one chief concern is that states might attempt to require private schools to change their admission policies. In its comment, the Christian Legal Society, an organization of Christian attorneys, referenced litigation in Maine, where religious schools are suing over a requirement that they accept all students, regardless of religion, disability, sexual orientation or gender identity, if they want to participate in a private school choice program.

“It is important that federal regulations prevent governors from yielding to the temptation to play politics with the program by adding additional regulations to distort it,” the group’s comment said. “Such regulations,” they wrote, would lead to “inevitable lawsuits” and limit options for families.

Microschool founders and advocates have additional concerns. A section of the tax credit law says that a K-12 “school” is whatever a state law defines it to be. The problem is that most states don’t legally recognize microschools even though they represent a fast-growing sector within the private school landscape. A published last year showed that most schools participating in state school choice programs enroll around 30 students — the size of many microschools.

“Families turn to programs like ours because their children’s needs cannot be met in traditional settings,” Alexandra Batista. the owner of Steps Learning Center in Orlando, Florida, in a comment to the Treasury Department. “Excluding these types of learning environments due to narrow or outdated definitions would further disadvantage students who already face significant barriers.”

Some organizations, like the left-leaning , want the federal government to adopt an official definition of microschools as a way to better track them and monitor the quality of education they provide. 

But those in the movement are “not excited about that prospect,” said Don Soifer, CEO of the National Microschooling Center. Some microschools in states with education savings accounts operate like small private schools, while others are more like homeschool co-ops. Some are required to earn accreditation in order to receive state funds; others aren’t.

In his to the Treasury Department, Soifer said that it would be “highly inappropriate and contrary to legislative intent” for officials to adopt an official definition of a microschool when “the industry itself has no consensus.”

Schilling, the lobbyist, said he hopes the Treasury Department addresses the issue in the rules. 

“Microschools feel like they ought to be able to participate in this and we completely agree,” he said. “The intent of the legislation was for a student, in any educational environment, to benefit.”