The Delta Issue #103
The Education Freedom Tax Credit is coming. Do you have a strategy?
Hi everyone, Kunjan here.
Last summer, the Education Department announced that beginning in January of 2027, American taxpayers could receive a credit of up to $1,700 for donations to organizations that provide education scholarships.
Depending on who you ask, this new credit—dubbed the Education Freedom Tax Credit—is either a landmark school choice victory or a major threat to public education.
But I think there’s another conversation we need to be having, that’s getting a lot less attention. And that is: How can education leaders make the most of this new program to create opportunities for public school students?
So today, I’m bringing you a conversation with Deb Gist, the former Commissioner of Education in Rhode Island and the former superintendent of the Tulsa Public Schools.
As the founder and CEO of @Future School Fund, the nation’s only scholarship granting organization focused exclusively on public school students, Deb is the perfect person to explain what this tax credit does, where the funding goes, and how public school leaders can tap into these new dollars to benefit students, families, and communities.
Check out our conversation however you prefer: watch on YouTube, listen on your favorite podcast platform, or read the transcript below.
The transcript below has been edited for brevity and clarity.
Kunjan:
Deb, I’m thrilled to have you here and excited to hear your perspective. Thanks so much for joining. So much of the conversation is framing the Education Freedom Tax Credit as a school choice initiative. There’s also a lot of confusion about what the program actually is—and what it isn’t. So for people hearing about this for the first time, what is it?
Deb:
One way to think about the federal scholarship tax credits is as an incentive for charitable giving. Instead of sending up to $1,700 in federal taxes to Washington, eligible taxpayers can redirect that money by making a contribution to a scholarship granting organization, which is a nonprofit organization. However, it’s not a charitable deduction like we’re used to, it’s a dollar-for-dollar tax credit. So in the end, they are net neutral. It’s private charitable giving that’s encouraged and supported through the federal tax code.
Kunjan:
People sometimes say, well, this is just like a federal voucher program. Is that the right way to think about this?
Deb:
That was my first thought too when I saw that the legislation passed last summer. But no, I don’t believe this is a voucher, and here’s why. A voucher is generally like government funding that’s appropriated by a legislature that follows a student typically to fund a scholarship for their private school tuition.
This is different from that. This is a private donation to a nonprofit organization, a scholarship granting organization for which the taxpayer receives a federal tax credit. And then the dollars provide access to scholarships for students for education. So the specifics of what it pays for depend on the scholarship granting organization that they’re sending it to. This program may look similar in some ways from the outside because it can—and will—provide access to scholarships for students who are leaving public schools and attending private schools, but they also pay for educational opportunities for students in public schools. That’s the biggest difference.
Kunjan:
So can you tell us more about the kinds of opportunities this could unlock for kids in public schools? Like what kinds of programs or experiences could these dollars help support?
Deb:
This question honestly is what gives me so much energy to get this done on behalf of public school students. So after I found out about this last summer and heard that they had included public schools in this, I pulled up the bill language. And once I read it, I immediately began thinking of all different kinds of programs and experiences that the students I’ve served over the years could have benefited from having. We need the final rules from the Treasury Department to know precisely, but we know some of the pretty evident ones like tutoring, which could be tremendous. I would also say these dollars could be used for after-school opportunities and just those two alone—tutoring and extended day opportunities—just gives me so much energy for what we’re building.
Kunjan:
How can a public school district or a school take advantage of the opportunity that your organization and others like it are seeking to provide?
Deb:
If I were to put my superintendent hat on from having led a public school system, I think the first thing one needs to do is figure out whether your state has opted in, and then figure out what your strategy is.
Because of how this program is structured, you need a scholarship granting organization. That’s the only entity that can provide these scholarships to your students. You have two choices: Either create one—that is, a standalone 501(c)3 that’s explicitly designed for this purpose, or you can find one that already exists to administer scholarships on your behalf.
And then the other thing that you would want to do—this is the fun part—is just to start dreaming about what your students need and deserve to really, fully thrive. Figure out what it would cost for a scholarship, and then work with the granting organization to carry out the program.
Finally, start telling your community about the program. This launches in January of 2027, so we have just a few months to let people know about it.
Kunjan:
What do you say to people who are still skeptical about this?
Deb:
Well, I mean, first of all, I appreciate the reticence that people might have for this program because I’m not one who pretends like there isn’t the potential downside for public school systems. But at the same time, where I’m coming from on this and what drives me about it, is that under almost any realistic scenario, it’s not being halted—certainly not any time in the next few years. So we have to implement it in a way that makes sure that these billions of dollars that are going to flow into education, that our students, that public school students, those farthest from opportunity get access to these dollars. I personally believe that this is really one of the most exciting and important new developments to come along. Our children need extra help at times and they need educational and engaging experience out of school. And these resources can do that for them.
Kunjan:
Deb, I cannot thank you enough for making time to join us today and for sharing both your work, your passion, and your insights on this. I could not be more excited that you are doing this for kids in our country.
Let’s Get Muddy
- For more information on the Education Freedom Tax Credit, check out this fact sheet from the U.S. Department of Education.
- Read a range of different views about this tax credit in this week’s piece by @Linda Jacobson in @The 74: 52 Million U.S. Kids Eligible for New Scholarships, but California Hasn’t Opted In
- Follow Deb on LinkedIn for updates on the Future Education Fund, or reach out to her directly at deborah@futureschoolfund.org.
