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When Congress passed the first federal tax credit for education last year, one compromise was that states would decide whether to participate. 

To Kirsten Baesler, who oversees K-12 programs at the U.S. Department of Education, the legislation reflects the Trump administration鈥檚 approach to policy. 

鈥淩eturning education to the states means we have to accept the decisions some states are making,鈥� the assistant secretary said last week at a Harvard University gathering where discussions over the dominated the event. Thirty states have opted in, but most Democrat-led states have not.

Starting next year, the program will allow taxpayers to donate up to $1,700 annually to a nonprofit scholarship granting organization, or SGO, and deduct that from their tax liability. Families receiving scholarships would be able to use the money for a broad range of education expenses, from private school tuition to supplemental tutoring and therapy services. For now, supporters have tried to warn the holdouts that donors will just direct their contributions to an SGO in another state. 

鈥淎s a Coloradan I hope California doesn鈥檛 opt in,鈥� Gov. Jared Polis quipped at the event. 鈥淭here are a lot of donors out there.鈥� 

He鈥檚 the lone Democratic governor who has signed up so far. While New York Gov. Kathy Hochul has said she would opt in, she鈥檚 also getting from teachers unions and civil rights leaders to walk back that promise. 

Some Republicans in Congress want to take the choice away from governors. Members of the House and Senate last week that would repeal the opt-in requirement, meaning that students in every state would be eligible for awards. Experts consider the bill a long shot, especially since 34 Democrats in the Senate are to kill the program altogether. 

鈥淓ven if that suggests that a few more Democrats might be open to the [tax credit], it’s a big leap to get to wanting to force all states to participate 鈥� and an even bigger leap to vote with Republicans to make it happen,鈥� said Jon Valant, director of the Brown Center on Education Policy at the Brookings Institution, a center-left think tank.

Not 鈥榪uite so simple鈥� 

The Harvard event, focused on the rapid growth of education models like microschools and homeschooling, took place as the Treasury Department prepares to release official regulations for the program. The White House is currently reviewing the rules, which are expected before the end of the month.

A few key questions remain unanswered. 

One is whether married couples would be able to donate up to $3,400 or whether the contribution is capped at $1,700 per household. in Congress would prevent a so-called 鈥渕arriage penalty.鈥�

Another lingering issue is whether homeschoolers, who often attend microschools part time, will be able to participate. That too will likely be left up to states, Baesler told the attendees. IRS officials have said that in states that define homeschoolers and microschools as private schools, those students would be eligible for scholarships, but not all states do that.

Some at the Harvard event hoped that Baesler, speaking for the administration, would provide more clarity. But instead, she urged participants to lobby lawmakers in their states to make any changes that would allow more students to qualify. 

鈥淚 did not at all think she cleared anything up. I am not sure it is quite so simple as 鈥榣et the states figure it out,鈥� 鈥� said Angela Watson, a Johns Hopkins University researcher who focuses on . 鈥淢y sense is that people are hopeful but worried and that there are a lot of ways this thing could go wrong 鈥� especially at the state-level.鈥� 

Others want more details on the list of eligible expenses. The references Coverdell Education Savings Accounts, which parents can create to pay for a variety of education expenses, like fees, books, uniforms and technology, but from the Treasury Department offered few additional details. Ellie Cash, senior K-12 education policy adviser at Third Way, a centrist think tank, said that while the initial proposed rules will apply to scholarships in 2027, future final rules could include some changes based on public comments.

Public awareness

from the American Federation for Children, one of the leading pro-school choice advocacy groups that pushed for the tax credit, estimates that at the top end, the program could generate $160 billion a year for education if every eligible donor contributed the full $1,700. A more realistic figure, experts say, is in the $25 billion to $50 billion range, still significantly more than the federal government spends on Title I ($18 billion) and the Individuals with Disabilities Education Act (around $15 billion). 

But despite excitement over the program among school choice advocates, from EdChoice, an advocacy and research organization, shows that 40% of adults still haven鈥檛 heard about it. Another 17% said they had only heard 鈥渁 little.鈥� When it was explained to them, 64% of respondents, expressed support while the rest were opposed or had no opinion.

While it was always clear that the tax credit would fund services for students in private schools, attention in recent months has shifted to the ways that public school students can benefit. Organizations that have long supported public schools are becoming SGOs so they can begin accepting donations. Polis said he was 鈥渕ost excited鈥� about students having more afterschool opportunities. 

Officials with the nation鈥檚 largest teachers union don鈥檛 share the same enthusiasm.

鈥淭he members have made it clear that they are opposed,鈥� National Education Association Executive Director Kim Anderson told the attendees. 鈥淲e do see it as a diversion of public taxpayer dollars.鈥�

Others on the panel urged her to view the program as a potential windfall for public school students.  Greg Nadeau, who leads Ed3, a weekly webinar about education topics, said because the majority of students attend public schools, he would predict that 鈥渢he single most successful SGO in a state would be a teachers union SGO.鈥�

But Anderson stood firm, saying that while the union won鈥檛 鈥渨alk away from a conversation鈥� about how the program might benefit kids in public schools, members are highly skeptical of what Nadeau said will be the 鈥渓argest and least-regulated鈥� federal education program ever.

鈥楿nder scrutiny鈥�

Valant, with Brookings, said it鈥檚 still unclear what authority governors will have to prevent waste fraud and abuse in the program. Polis added that if Democrats retake the House in Congress, there could be a push for transparency and accountability.

鈥淚 would love to be able to show the efficacy of different donations,鈥� he said. 

Some observers also worry that the Trump administration, in keeping with its stance against equity-focused policies, might try to place restrictions on SGOs.

鈥淚t is realistic to imagine an SGO devoted to, say, getting more Black teens into high quality high schools 鈥� even private high schools 鈥� would come under scrutiny,鈥� said Josh Cowen, a Michigan State University professor who has urged blue states to opt in to the program. He called the administration鈥檚 intent to strip nonprofit colleges of their if they show any racial preferences a good example of 鈥渨hat鈥檚 actually keeping Democratic governors from jumping into the tax credit.鈥�

Democrats that do sit out the first year, he said, will likely be more responsive to requests from superintendents to participate than to pressure from school choice advocates.

鈥淭his entire thing among Democratic governors rises or falls in direct proportion to how useful it is for public schools,鈥� Cowen said. 鈥淪o yes, it may take a roll-out year to demonstrate that.鈥� 

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