By BOB GRIFFIN
One of the impacts of the Great Big Beautiful Bill is the ability of low- and middle-income families to be able to afford private school.
The bill allows taxpayers to take a tax credit of $1,700/year and send it to a Scholarship Granting Organization (SGO) to fund private school scholarships, instead of sending that money to the federal government.
The SGO’s would be able to offer scholarships to kids from families that are below 300% of the median family income in each area. That income level in Anchorage would be roughly $290,000/year– but would vary by the local median income, for a statewide average of about $270,000 in income to qualify for a scholarship.
The impact could be huge. If one quarter of the federal taxpayers in Alaska took the $1,700 credit sending that money to an SGO instead of the federal government, that would result in $137 million going to the SGO’s, or enough to fund 19,600 scholarships of $7,000 each. A large portion of the current 5,080 private school students in Alaska would likely be eligible to receive a scholarship. In addition, 15,000 new students would be able to get a scholarship at that level.
If the parents of 15,000 students in traditional public neighborhood schools thought an affordable private school was a better fit for their kids and moved over, it would save $213 million/year in formula funding expense for the state of Alaska. That’s $213 million/year that wouldn’t needed to be diverted away from PFD’s.
This would certainly foster an environment of healthy competition that would provide our public schools a much need spur to innovate and improve parent satisfaction to avoid losing more students and having to manage the fixed cost and infrastructure problems associated with rapidly declining enrollment.
In the end it’s a win-win. Parents have more choices and traditional schools are motivated to innovate and improve the quality of their programs to keep parents interested.
Bob Griffin is on the board of Alaska Policy Forum and served on the Alaska Board of Education and Early Development.
It’s a great day for American students. NEA/AFT: this is hopefully the beginning of the end of your grift and your stranglehold over our children and grandchildren. Suck it, socialists.
Unfortunately, Mr. Griffin is wrong, the education tax provision failed in the final version of the Big Beautiful Bill. The federal tax credit was for donations to Scholarship Granting Organizations (SGOs). This proposal, originally offering up to $5,000 per donor and later scaled back to $1,700 in an attempt to comply with budget rules, aimed to create a nationwide school choice system by incentivizing private donations to fund scholarships for students attending private or religious schools. The Senate Parliamentarian ruled that this provision violated the Byrd Rule, which restricts the types of policies allowed in reconciliation bills to those with clear and direct impacts on federal spending or revenues. Because of this ruling, reinstating the provision required a 60-vote supermajority in the Senate. During the July 1 vote-a-rama, an amendment to restore the credit received a 50–50 vote, falling short of the required threshold, it failed.
Other broad school choice provisions also failed to make it into the final law. These included enhanced education tax credits and various federal supports aimed at increasing access to private or religious education. These proposals either ran afoul of Senate budget rules or lacked the political support needed to survive amendment votes during reconciliation.
Despite the removal of the voucher provisions, the final bill did include two notable education-related tax policy changes. First, the legislation significantly expanded the allowable uses of 529 education savings accounts. Traditionally limited to post-secondary education expenses, 529 plans can now be used for a broader range of K–12 educational costs, including private tutoring, curriculum materials, and education-related technology. Some homeschool expenses also qualify. This change gives families increased flexibility to manage and direct educational funds, even though it does not provide a new federal tax credit.
Second, the bill included a tax exemption for small college endowments. Institutions with fewer than 3,000 full-time students are now exempt from the endowment excise tax enacted under earlier tax reforms. This exemption is intended to provide relief to smaller, often regional, colleges and universities that do not possess the massive endowments of elite institutions but were nonetheless affected by the prior tax structure.
While the Big Beautiful Bill maintained some useful tax benefits for education, particularly through expanded 529 account flexibility and endowment tax relief for small colleges, it did not include any direct federal tax credits or incentives for private school tuition or scholarship donations. Efforts to include such provisions were struck down under Senate reconciliation rules and failed to be reinstated due to the lack of a 60-vote majority.
For clarification, there is a similar provision in the bill; it is a scaled-down version that allows for a non-refundable federal tax credit up to $1,700 per year, but only in states that opt into the program and set up approved SGOs under federal guidance.
I’m confused by this article. I thought the school choice provision was removed by the Senate because it ran askance of the senate finance rules. Can someone clarify?
The $1700 tax credit is in the Act. It was reduced from $5,000 to $1,700 per taxpayer.
What happened to Trumps promised $10k per student for their own school
Choice?
The $10,000 per student is still possible if enough Conservative taxpayers take advantage of the tax credit — and they should. In my circles — people would certainly rather give $1,700 to their local private school than send the same $1,700 to the federal government.