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Education policy maven Rick Hess of the American Enterprise Institute think tank offers straight talk on matters of policy, politics, research, and reform. Read more from this blog.

School Choice & Charters Opinion

What Is an Education Savings Account, and Why Does It Matter?

The accounts may prove to be a very big deal, but we’re not there yet
By Rick Hess — May 08, 2023 5 min read
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I occasionally take up reader queries. If you’d like to send one along, just send it to me, care of Caitlyn Aversman, at caitlyn.aversman@aei.org.

Dear Rick,

I’ve been seeing a lot about education savings accounts in the past six months. I understand that several states have passed laws, and Republicans here are talking about them. Maybe I’m behind the times, but I don’t quite get what they are. Is this another name for a school voucher? Is this something totally different? I’ve seen you mention them a few different times and I’m hoping you can shed some light.

Sincerely,

A Little Bit Puzzled

Dear Puzzled,

Fear not, you’re in good company. I’ve encountered savvy reporters who aren’t quite clear on what education savings accounts (ESAs) are. Heck, there are Republican lawmakers who support them yet aren’t real clear on the difference between an ESA and a voucher. So, it’s a timely question. I’ll do my best to help clear things up.

I’ll offer a short, practical answer first. Then, I’ll talk more fully about why ESAs could be really significant and close by acknowledging that their practical significance is very much up in the air.

In theory, ESAs are very different from more familiar forms of school choice like school vouchers or charter schooling, which give parents a mechanism to move their child from one school to another. ESAs, on the other hand, entail states depositing a student’s education funds into a dedicated account. Families are then able to use those dollars to mix-and-match education goods and services from schools and other providers. This works the same way as health savings accounts, with which many readers may be familiar. ESAs seek to shift us from a system of “school” choice to one of “educational choice, opening the door to a less school-centric system of education and blurring the lines between traditional schooling, home schooling, and online learning. Of course, how the laws get written, how these programs will actually work, and whether families will want to take advantage of this flexibility are open questions.

OK, now the longer answer. While some regard this kind of shift as disconcerting, the truth is that parents routinely make complicated decisions on behalf of their kids. Heck, we take for granted that families will choose child-care providers, pediatricians, dentists, babysitters, and summer programs. Many of these choices involve parents making decisions that are subsidized or covered by public funds. And all of them have big implications for a child’s health, well-being, and upbringing. In other words, there’s nothing remarkable about families making publicly subsidized decisions about how to raise their kids.

In a field like health care, even passionate advocates of universal, publicly funded coverage (like Bernie Sanders) still think people should get to choose their own doctor. And even the most ardent champions of public housing want families to have more freedom to choose where they live. There’s just no debate about whether we should seek to give families more agency when it comes to such high-stakes decisions in health care or housing.

And there’s more. The promise of publicly provided health care is not just that you can choose whether to use hospital A or hospital B; it’s that you can choose individual practitioners. If you like your pediatrician but need a specialist, your doctor will provide a recommendation, but you can choose to go elsewhere. While many patients defer to their doctors, there are all sorts of reasons for wanting the right to mix-and-match. The weird thing is that the cutting edge in education has been a fight about whether it’s OK for families to leave school A for school B. I mean, what’s remarkable is that the proponents of socialized medicine have offered a more robust vision of publicly funded choice than have school choice advocates!

ESAs are, in large part, a response to the limits of school choice. School choice isn’t really a good solution for parents who like their schools but have more specific concerns. And given that the lion’s share of parents say they like their kid’s school, this means that school choice isn’t much help for many students or families. After all, parents can like their school and still want better speech therapy, math instruction, behavioral coaching, tutoring, or whatnot. Telling those families, “You can change schools,” isn’t all that helpful, especially if it means arranging transport to a less convenient school, away from the student’s friends.

The result is that school choice primarily serves those families who view their schools as unsafe, academically inept, or fundamentally misdirected—it doesn’t do much to help make an OK (or good) education better. ESAs can potentially remedy that by allowing those families to swap out a school’s math class or speech therapy for an online option or other alternative. This could be good for students, schools, and parent-school relations—and this kind of mix-and-match dynamic might even encourage parents to be more aware of cost and quality.

The distinction between ESAs and school vouchers (or charter schools) is clear in theory. In practice? Not as much. Eleven states now have ESA programs on the books, and, given that, it’s natural to think that these are, you know, full-blown ESAs. In truth, though, the ESAs created by these laws frequently work a lot like lump-sum voucher programs, with families quite limited in their ability to mix-and-match. Add the fact that these programs frequently require parents to pull their children from public schools to be eligible for the ESA, are subject to a variety of restrictions, depend mightily on execution, and may be available to only a limited number of families, and we’re a long way from the kind of radical evolution that supporters seek and critics fear.

As I’ve so often noted, theory is swell, but practice is what matters. And, when it comes to ESAs, there is a big difference between theory and practice today. Whether ESAs deliver on their potential will ultimately be a function of how laws are written, implemented, and managed, and whether families choose to make use of them.

For good or ill, ESAs may prove to be a very big deal. But we’re not there yet.

The opinions expressed in Rick Hess Straight Up are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.

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