There will soon be a lot of talk about Education Freedom Accounts (also known as Education Savings Accounts) in New Hampshire.
Here’s a brief explainer of what they are and how they work. We’ll use the general term Education Savings Account, or ESA, for clarity.
Education Savings Accounts empower families with the freedom and flexibility to purchase a wide variety of educational products and services such as private school tuition and fees, tutoring, special education services, online education, and community college or other higher education expenses. Most states ensure that ESA funds are spent only on approved purchases via restricted-use bank accounts or online portals like ClassWallet.
Five states — Arizona, Florida, Mississippi, North Carolina, and Tennessee — use Education Savings Accounts as one method of purchasing educational services for students.
It’s important to understand that Education Savings Accounts do not give parents access to all of the money that otherwise would be spent to educate their child in a traditional public school. They use only a portion of that money, leaving the rest in the traditional public school system.
Education Savings Account spending is severely restricted. It typically is limited to purchases such as private school tuition and fees, tutoring, special education services, online education, and community college or other higher education expenses.
This year, House Speaker Sherm Packard has introduced House Bill 20, the Education Freedom Account Act, to enable the creation of Educational Savings Accounts in New Hampshire.
HB 20 would change state law in a few important ways.
Currently, the state sets aside $3,708 a year for every student who chooses a publicly funded education. The state offers additional money for low-income and special-needs children, so the average per-pupil state expenditure is higher than the base amount (closer to $4,600).
Under state law, parents have little say over where that money is spent. If they want to use it, their child must attend the local public school to which he or she was assigned, or a chartered public school.
Though the purpose of that money is to educate each child, the state forbids parents from using it on any form of education that is offered outside the state-controlled system.
As a result, if the local district school is not a good match for a child, families have only two options. They may enroll their child in a charter school if they can find one nearby that is a better fit. Or they can move to another school district, if they can afford to.
An Education Savings Account allows parents to spend their education dollars on a broader menu of educational options, while still maintaining state oversight.
HB 20 states that to receive an Education Freedom Account, a parent “shall agree” to use the funds only for certain qualifying expenses listed in the law.
Those include private school tuition and fees, online learning programs, tutoring, educational services offered by a public or chartered public school, textbooks and other instructional materials, computer hardware, internet connectivity or other tech services used to meet a child’s educational needs, educational software, school uniforms, test and exam fees, special education services, career or technical school expenses, summer school expenses, higher education expenses, and travel to and from an education service provider.
The state would designate a scholarship organization to oversee the accounts. A parent who wanted an EFA would apply. If approved, the state would deposit the student’s per-pupil allotment into the account. The parent could then withdraw it for use on the qualifying expenses listed above.
In this way, the state still exerts control over how the money is spent, but the parent can decide which service best suits the child.
This funding mechanism broadens the number and type of educational services available to families who choose a publicly funded education. Instead of being limited to their assigned school or a charter school, families could choose from many more educational services — including public schools outside their home district.
Under the current system, some families struggle to find an education that is the right match for their child. With an ESA, families would be able to shop for a better fit — with the state still maintaining oversight of the money.