Editor’s Note: a guest post by Erin Bendily, Ph.D., Senior vice president at the Pelican Institute for Public Policy
The passage of the One Big Beautiful Bill and President Trump’s signature on the legislation represent a watershed moment for American education policy. Embedded within this massive tax reform package is the Educational Choice for Children Act, creating a first-of-its-kind, nationwide tax credit scholarship program that could fundamentally reshape how families access educational options across all 50 states.
For advocates of educational freedom, this development is undeniably welcome news. The program will provide an unlimited total amount of annual tax credits starting next year for individuals who donate to nonprofit Scholarship Granting Organizations, which will then distribute funds to families earning less than three times their area’s median income. These families can use the money for private school tuition, homeschooling expenses, tutoring, and other educational services.
The program’s broad appeal is particularly noteworthy, especially in states where lawmakers have traditionally blocked educational freedom initiatives or where state-level school choice programs are limited in their eligibility criteria and allowable uses of funds.
For Louisiana families, this is especially significant given recent polling data showing strong support for expanded educational options across every demographic. According to our Pelican Institute for Public Policy survey earlier this year, Louisiana voters overwhelmingly want more educational choices, with parents consistently expressing frustration with the current system’s limitations. The news of more education scholarship opportunities also serves as a lifeline after the state legislature’s meager funding of the new LA GATOR education scholarship program, where just about 700 students out of nearly 40,000 new applicants are being funded.
However, beneath our celebration of this win for education freedom lie concerns about the role of the federal government in education and fiscal responsibility that free-market advocates cannot ignore.
The Federalism Problem
Proponents are quick to point out that the nuts and bolts of this new program involve tax incentives and avoid direct federal control, but let’s be clear—the federal government is very intentionally and broadly changing the K-12 education landscape. This has long been a domain traditionally reserved for state and local governments in accordance with the U.S. Constitution’s Tenth Amendment, which reserves powers not explicitly granted to the federal government to the states. Education has historically been among those state responsibilities.
As explored in a recent Pelican Institute report, massive federal programs, including education ones, inevitably come with federal strings attached. And those strings have a way of multiplying over time.
More concerning is how this federal action could also undermine educational reform at the state level. When Washington provides a safety valve for educational frustration, it reduces pressure on governors and state legislators to enact comprehensive reforms. With more money flowing thanks to federal tax incentives, will Louisiana lawmakers feel less urgency to fund LA GATOR and achieve universal eligibility for families?
This dynamic creates what economists call moral hazard—when the availability of federal resources reduces incentives for state-level responsibility and innovation. Rather than leading on sustainable, locally-controlled education freedom, states may become dependent on federal largesse that could disappear with changing political winds.
The Fiscal Reality Check
Also concerning is the program’s contribution to America’s mounting fiscal crisis. The billions of dollars in taxes the government will lose out on have to come from somewhere, and with the national debt now exceeding $36 trillion, every new spending program or tax credit must be scrutinized for its fiscal impact.
The federal government currently spends about $1 trillion annually just on interest payments for existing debt. Adding billions more in tax credits—with potential annual increases—will exacerbate this unsustainable trajectory. While supporters argue the program will pay for itself through economic growth, such claims have proven overly optimistic for previous tax credit programs.
A Qualified Endorsement
Despite these concerns, the expansion of educational options for American families remains a net positive. Too many American children are trapped in schools that are failing or just don’t fit their unique needs. The consequence is that they don’t reach their full potential—and neither does our nation in an increasingly competitive global economy. Any mechanism that provides families with alternatives during their child’s critical, formative years deserves support. The federal program will particularly benefit families in states where local political establishments have blocked education freedom initiatives or failed to deliver at scale.
However, free-market advocates must remain vigilant about the program’s implementation and push for complementary state-level reforms. Federal intervention should be a bridge to state-level educational freedom, not a substitute for it. Louisiana lawmakers should view this federal program as temporary, supplemental relief while working to firmly establish LA GATOR and other robust state education options that don’t depend on Washington’s political whims.
The ultimate goal should be genuine educational freedom: a system where parents and other guardians control their children’s education through direct funding mechanisms, competitive markets drive innovation, and the government’s role is limited to ensuring basic safety and transparency standards. The federal tax credit program moves us closer to that goal, but it also creates new dependencies that could ultimately undermine the very freedom it seeks to promote.
As Louisiana families gain access to new educational options through this federal program, state leaders must not lose sight of the need for comprehensive education reforms that not only give families a choice between public and non-public schools, but also access to a diverse education marketplace that can help all young learners thrive. The path to educational freedom runs through state capitols, not Washington D.C., and no federal program—however well-intentioned—should obscure that fundamental truth.