Catholic Schools Expecting Windfall of Scholarship Money From New Tax Credit
A new federal Education Freedom Tax Credit taking effect Jan. 1 is expected to expand scholarship funding for K–12 students, including those attending Catholic and other private schools. Donors can receive a dollar-for-dollar tax credit for scholarship contributions, up to $1,700 for individuals and $3,400 for married couples filing jointly. The program also allows public-school and homeschooled students to seek scholarships for expenses such as tutoring and school supplies; eligibility is not limited to families with significant financial need. The Trump administration estimates the tax credit could generate $26 billion in donations within three years, potentially providing a major boost to Catholic schools.
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A federal scholarship tax credit scheduled to take effect Jan. 1 is expected to generate substantial private donations for K–12 education, with Catholic schools anticipating additional tuition aid. The program could also fund educational expenses for public-school and homeschooled students, but scholarship access will depend on whether a student’s state participates.
The Education Freedom Tax Credit allows taxpayers to subtract eligible donations to scholarship-granting organizations from their federal tax bill. Individuals may contribute up to $1,700 and married couples filing jointly up to $3,400; the administration estimates the program could generate $26 billion in donations within three years.
The credit is not a deduction. Taxpayers without a tax liability do not receive an immediate cash refund, though they may be able to claim the amount later, within five years. Donors cannot select a specific student, but may be able to direct funds to a particular school or to a fund serving schools and families with greater need.
Students would apply through approved scholarship-granting organizations, which receive donations, determine award amounts, and distribute funds. Scholarships may cover private or religious school tuition, as well as tutoring, school supplies, and other educational expenses for eligible students in private, public, or home-school settings.
Eligibility is not limited to families with severe financial need. The article reports an estimate that 51.7 million students, or 91.7% of K–12 students nationwide, could qualify under the program’s income rules.
States must opt in for their resident children to receive scholarships. At the time of publication, 31 states had announced participation, while others were still considering the program; students in states that opt out would not be eligible for awards.
The federal tax credit is available to taxpayers nationwide, including residents of nonparticipating states. Those residents may donate to a scholarship fund in another state and claim the credit, but their own children would not qualify for scholarships if their state does not participate.
The U.S. Catholic bishops support the credit, describing it as an opportunity to help families afford private education and citing parents’ role as their children’s primary educators. Catholic dioceses are establishing scholarship organizations or working with national groups ahead of the program’s start.
Reficio, a national organization working with more than 30 dioceses and planning to operate under the name American Catholic Education Fund, expects to let donors contribute through designated schools’ websites. The De La Salle Christian Brothers also plan to create a scholarship organization serving schools sponsored by religious orders and independent schools.
State decisions have prompted political disputes. Some opponents argue that school-choice measures could divert resources from public schools, while Catholic leaders in states that have not yet opted in—including Massachusetts and Illinois—have urged their governors to participate; New York’s decision to opt in was welcomed by the state Catholic Conference despite teachers’ union opposition.
Catholic education officials point to existing state tax-credit programs as evidence of how scholarship funding can help schools and families. In Philadelphia, a state program provides about $80 million annually in scholarships, while the archdiocese estimates total aid needs at roughly $125 million; an education official said the new federal program could help address the remaining gap, particularly for high-school tuition.
In Wichita, a diocesan development director said Kansas’s state scholarship tax credit has been crucial to three Catholic schools, which he said would otherwise close.
Catholic education balances parental rights, solidarity, and public responsibility
Catholic teaching holds together three principles: parents are the first and principal educators of their children; education is a shared responsibility involving families, schools, Church, and society; and public authorities must serve the common good without taking over the family’s proper role.
Parental rights are not merely a preference. Parents have the right to choose schools and educational approaches consistent with their convictions, including their religious faith, and Catholic parents have a duty to provide for their children’s Catholic education.
But parental primacy does not mean parents must educate alone or that other institutions have no proper role. Schools, the Church, and civil society contribute according to their particular competence, in cooperation with families. Parents, in turn, have a responsibility to work actively with teachers and school authorities.
The principle of subsidiarity helps define public responsibility: government should support families and ensure that educational options are genuinely available, rather than replace parents or impose an educational monopoly. Catholic social teaching therefore calls for practical assistance—including fair public support for non-public schools—so that a family’s freedom to choose is not merely theoretical or limited by unjust financial burdens.
Solidarity adds that education is a concern of the whole community, not only of individual households. Public authorities should help secure the conditions in which all families can educate their children, while respecting their rights and conscience. The Catholic balance is therefore neither state control nor private indifference: it is family leadership, cooperative institutions, and public service ordered to the dignity and flourishing of every child.