The Friedman Foundation for Educational Choice

Advancing Milton and Rose D. Friedman's Vision of School Choice for All Children

The Way of the Future: Education Savings Accounts for Every American Family

Released: 9/27/2012

Author(s): Matthew Ladner

Education savings accounts are the way of the future. Under such accounts—managed by parents with state supervision to ensure accountability—parents can use their children’s education funding to choose among public and private schools, online education programs, certified private tutors, community colleges, and even universities. Education savings accounts bring Milton Friedman’s original school voucher idea into the 21st century.

Arizona lawmakers were the first to create such a program, called Empowerment Scholarship Accounts (ESAs). Through that program, the state of Arizona deposits 90 percent of the funds for a participating child into an account, which can cover multiple educational services through use-restricted debit cards. Parents can choose to use all of their funds on a single method—like private school tuition—or they can employ a customized strategy using multiple methods (e.g., online programs and community college classes). Critically, parents can save some of the money for future higher education expenses through a 529 college savings program. That feature creates an incentive for parents to judge all K-12 service providers not only on quality but also on cost.

A fully realized system of ESAs would create powerful incentives for innovation in schooling practices seeking better outcomes for lower costs. Also, the broader use of funds may help to immunize choice programs against court challenges in some states. Policymakers must fashion their system of accounts to provide reasonable state oversight, fraud prevention, academic transparency, and equity.

If Milton Friedman were alive today, he likely would agree that education savings accounts represent a critical refinement of his school voucher concept. Existing voucher programs create healthy competition between public and private schools, but ESAs can create a much deeper level of systemic improvement. ESAs would allow parents to build a customized education to match the individual needs of every child, thus transforming education for the better.

Programs

Empowerment Scholarship Accounts

Enacted 2011 • Launched 2011

Arizona’s Empowerment Scholarship Accounts (ESA) program allows parents to withdraw their children from public, district, or charter schools and receive a portion of their public funding deposited into an account with defined, but multiple, uses, including private school tuition, online education, private tutoring, or future educational expenses. In the 2013-14 school year, eligibility expanded beyond the original pool of students with special needs to students assigned to public schools or school districts with a “D” or “F” letter grade, children of active-duty military members, and youth adopted from the state’s foster care system.

News

4/15/2014 Breaking the ice for a growing school choice plan to bloom
4/15/2014 Mississippi parents of children with special needs drive ESA legislation
4/15/2014 Two-Minute Talk with Jonathan Butcher
2/6/2014 Tulsa World | Education service accounts put parents in charge
10/1/2013 Education Week | Ariz. Scholarship Program Ruled Constitutional
9/20/2013 Savannah Morning News | Commentary: A new way to fund education
8/28/2013 Study reveals how Arizona parents use education savings accounts
10/22/2012 VOICE of Wisconsin Rapids | Parent Choice Program is the Future of Education
10/15/2012 Education News | Are Arizona’s Ed Savings Accounts a Model for Voucher Programs?
10/12/2012 Forbes.com | Can Education Savings Accounts Level The Playing Field For All American Students?
10/11/2012 Heartlander | New Report Labels Education Accounts ‘Way of the Future’
9/27/2012 New School Choice Model Bridges K-12, Higher Education

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