Federal Vouchers, Local Consequences: What’s at Stake for Virginia’s Public Schools
July 10, 2025
July 10, 2025
Recently, Congress narrowly passed, and President Trump signed on July 4, the massive Republican reconciliation bill that includes the first-ever nationwide private school voucher program. This provision creates a federal tax-credit scholarship scheme that could drain billions from public education. Under the new law, any taxpayer will likely be able to donate up to $1,700 to a scholarship organization and receive a 100% federal tax credit in return. This unprecedented tax giveaway effectively shifts federal funding from public schools to private and religious education.
The Virginia Education Association and public school supporters are deeply concerned that this scheme will harm public schools by siphoning away funding and underscoring an agenda that undermines public education as a public good. We estimate Virginia public schools could lose between $222 and $956 million annually due to lost enrollment from this new voucher scheme, starting in 2027.
Importantly, in Virginia, the governor must opt in for residents to participate. If Virginia’s governor does not elect to participate, none of the students in the state would be eligible, and our public schools would be protected. The first opportunity to opt in will come at the start of 2027, and the governor at the time should reject this voucher scheme to protect our public schools. Here’s what you need to know about how the program works and why it poses a serious threat to education funding in Virginia.
Under this law, individuals could likely receive a dollar-for-dollar tax credit up to $1,700 (joint filers $3,400) for donations to private scholarship organizations. These scholarship organizations can then award unlimited private-school scholarships to families earning up to 300% of the area median income – roughly $492,000 annually for a family in Fairfax County, Virginia.
Unlike traditional charitable donations, this voucher scheme fully reimburses donors, incentivizing private-school funding over every other charitable purpose. Notably, there’s no cap on the total cost or number of credits available. Earlier proposals limited the credit program to $4-5 billion annually, but the final law removed any ceiling. The program is also permanent, with no expiration date. Every taxpayer donation that meets the criteria can be reimbursed. States can elect not to participate, and in Virginia, the governor would decide. Reporting indicates that the Secretary of the Education Department will finalize rules for the new scheme over the coming months.
While donors get the tax credits, students get the vouchers. The law doesn’t set a specific voucher amount per student – that will depend on how scholarship organizations dole out the funds. This means students attending expensive private schools in Virginia could have potentially all of their tuition covered by these new vouchers at taxpayer expense. That could be over $50,000 for each eligible student, per year, in backdoor public funding for some elite private schools in Northern Virginia.
The potential cost to public funding is staggering. Because there is no funding cap, the tax-credit vouchers function like an open-ended entitlement for private schooling. If every eligible taxpayer participated, the cost would be astronomical – over $100 billion a year according to an estimate by the Institute for Taxation and Economic Policy (ITEP), an amount greater than all current federal K-12 education spending. Even extremely modest participation rates translate to huge sums over $8 billion annually. The National Education Association estimates the annual cost at $25 billion.
While the tax credits come from federal dollars, Virginia’s public schools would still feel the pain if our state joins in. Every student who leaves a public school to use a voucher can reduce the funding that school receives. In Virginia, like most states, education funding is tied to enrollment – when enrollment drops, state, local, and federal aid and other support can drop. Yet the school’s fixed costs (teachers, facilities, transportation) don’t drop proportionately. If a few students in each class or school depart for private schools, the public school still must pay for the teacher, keep the lights on, run the buses, but with less money. Over time, a loss of enrollment can force painful cuts: fewer course offerings, larger class sizes, deferred building maintenance, or reduced staff.
To understand how this federal voucher scheme could impact Virginia, we look to other states that have implemented large-scale voucher programs. Below are examples of how vouchers affected public school enrollment elsewhere:
Applying these uptake percentages to Virginia’s current public school enrollment (approximately 1.26 million students), we estimate that between 12,600 and 54,200 students could leave public schools for private and religious institutions due to the new federal voucher scheme. The number could be even higher, given that the federal vouchers do not have a cap.
Financially, this could translate into an annual loss of roughly $222 million to $956 million unless state and local officials act to shield students from these harms (based on Virginia’s most recently reported average per-pupil spending of approximately $17,636 in fiscal year 2024). With schools having many fixed costs such as heating buildings that can’t be easily reduced with declining enrollment, students remaining in public schools would see a decrease in the quality of their education. Substantial funding losses would severely impact educational quality, forcing schools into difficult decisions such as increasing class sizes, cutting educational programs, or reducing staff.
Virginia should proactively reject participation in this federal voucher program to safeguard our students and public education system.
Research consistently shows that, on average, public school students who switch to private schools using vouchers experience negative academic outcomes. Virtually every large-scale comprehensive study finds negative outcomes. Major studies in Indiana, Louisiana, and Ohio found significant drops in student achievement for those who transitioned from public to private schools through voucher programs. Specifically:
Virginia has thus far largely resisted the voucher trend for a reason: Virginians value public education and have repeatedly opposed efforts to undermine it. In the 2022 legislative session, voucher and “education savings account” bills were introduced but failed to pass, even with heavy lobbying and a Republican-controlled state House and governorship. Parents, educators, and many lawmakers recognized that these schemes would pull money from public schools that serve over 90% of Virginia’s K-12 students. Governor Youngkin has pushed for privatization measures, but they’ve been blocked, reflecting a bipartisan understanding that public funds should support public schools.
Public opinion backs this up. Across the country, vouchers and similar plans are not broadly popular once people understand the trade-offs. In state after state, whenever voucher or tuition tax-credit programs have been put to a vote of the people, the people have said “No.” Since 1970, voters have rejected every single attempt to create or expand private school vouchers via ballot referendum. This new federal voucher tax credit is exactly the kind of backdoor maneuver voters distrust.
In the coming months, Trump appointees will be drafting regulations for how this national voucher program will operate, and there will be pressure on states to certify scholarship organizations and get the program running by 2027. Let’s make it clear that in Virginia, we choose to support our public schools. Our General Assembly should preemptively prohibit participation, and our Governor should prioritize the 90% of Virginia’s children in public schools, rather than diverting vast resources away from public education. With so much at stake and no clear timeline for federal regulations, Virginians deserve to know where their leaders stand – this must be a defining issue in the upcoming elections
According to the Economic Policy Institute, teachers in Virginia earn 67 cents on the dollar compared to other (non-teacher) college-educated workers. Virginia’s teacher wage penalty is the worst in the nation.
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