BOULDER, CO (October 7, 2025)—In a policy memo released today, Federal Vouchers, Treasury Regulations, and State Flexibility, NEPC director and University of Colorado Boulder professor emeritus Kevin Welner cautions governors that the promised state flexibility under the new federal “scholarship” program is unlikely to materialize, leaving states vulnerable to federal overreach and harmful voucher expansion.
The 2025 Reconciliation Act, or “One Big Beautiful Bill,” creates a federal program that offers individual taxpayers 100% tax credits for donations to Scholarship Granting Organizations (SGOs) in states that opt into that program. Starting in January 2027, SGOs in these states will distribute these funds to selected families to pay for education expenses, which—depending on the Treasury Department regulations and then perhaps on a state’s decision—could include private-school tuition.
Voucher advocates initially framed the program as flexible, allowing states to shape the policy to local needs. But the statute itself is vague on key points and thus turns to President Trump’s Treasury Department to fill in those gaps. Welner explains in the new policy memo that Treasury’s regulations will likely strip states of the promised flexibility. This means that states like California and Colorado, where voters have repeatedly rejected private-school vouchers, would not be able to opt into the program in a way that excludes vouchers, focusing on public schools instead.
Those two states are not alone. Vouchers have been on state ballots 17 times, and each time the state’s voters have rejected the idea—most recently, in Nebraska and Kentucky. This alone should give governors pause about opening the door to what could become an expansive, federally controlled voucher system. Beyond that voter voice lies daunting research evidence concerning large-scale voucher programs, showing that using a voucher to move from public to private school results in severe academic declines, particularly in math. Voucher programs also undermine civil rights protections, limit access for students with disabilities, and funnel taxpayer subsidies into private schools with little oversight.
Ultimately, unless states are guaranteed full flexibility to protect their students and taxpayers, opting in would mean ceding state authority to Washington and exposing students to the well-documented harms of today’s voucher programs.
Find Federal Vouchers, Treasury Regulations, and State Flexibility, by Kevin G. Welner, at:
https://nepc.colorado.edu/publication/vouchers