The Benefits and Challenges of Education Savings Accounts

By Inez Feltscher

School choice programs, from charter schools to voucher and tax credit scholarship programs, enjoy bipartisan support and are growing quickly across a majority of states. However, not all school choice programs are created equal. Education savings accounts, sometimes called flexible education spending accounts or ESAs, are “the new kid on the block” in the arsenal of innovative programs that allow parents to direct funds toward the educational opportunities that best suit their child. ESAs take Milton Friedman’s initial voucher plans to the next logical step: allowing parents to fully control the dollars the state allocates for the education of their pupil.

This report explores the benefits and challenges that accompany the groundbreaking programs which allow parents to fully control state dollars allocated to their child’s education, as well as points to three tools – peer reviews, branding, and consumer reports – that parents will use in the future of individually-customized educational options.

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The Weak Predictive Power of Test Scores

The school choice tent is much bigger than it used to be. Politicians and policy wonks across the ideological spectrum have embraced the principle that parents should get to choose their children’s schools and local districts should not have a monopoly on school supply.

But within this big tent there are big arguments about the best way to promote school quality. Some want all schools to take the same tough tests and all low-performing schools (those that fail to show individual student growth over time) to be shut down (or, in a voucher system, to be kicked out of the program). Others want to let the market work to promote quality and resist policies that amount to second-guessing parents.

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