What Is an Education Savings Account (ESA)?

Learn how ESAs work, who qualifies, and how families can use their funds.

How Do Education Savings Accounts Work?

Education Savings Account programs give families greater control over how a portion of their child's education funding is used. Instead of limiting those funds to a traditional public school setting, participating families can direct them toward educational products and services permitted by their state's program.

Although Education Savings Account is one of the most common names, states use different terminology for similar programs. You may encounter Education Freedom Account (EFA), education scholarship account, education scholarship program, or a unique name such as Alabama's CHOOSE Act.

Each state establishes its own program, including how much funding students receive and how that money can be spent. The process generally works like this:

1. A family applies to its state's ESA, EFA, or scholarship program.
2. The state or program administrator determines whether the student qualifies.
3. Education funds are allocated to the eligible student.
4. The family accesses the funds, often through a digital education wallet.
5. The parent purchases approved educational products or services using the payment methods permitted by the program.

Families don't necessarily receive ESA funds as cash deposited into a personal bank account. Many programs instead use platforms such as ClassWallet or Odyssey to manage student accounts and ensure funds are spent on eligible educational expenses.

Depending on the program, purchasing methods can include Marketplace, Direct Pay, reimbursement, or other restricted digital payment options.

With Marketplace purchasing, parents shop from approved vendors and products within an education marketplace.

With Direct Pay, the education program pays an approved provider using the student's available funds. Some programs require parents to submit a vendor invoice, while newer systems can connect the parent and vendor digitally.

With reimbursement, parents purchase an eligible item or service themselves and submit documentation to be reimbursed from the student's education account.

The options available depend on the individual program. A digital-wallet provider may support several payment methods, but the state determines which methods its families can use.

Who Qualifies for ESA or EFA Funds?

There is no single national eligibility standard for state ESA or EFA programs. Each state determines which students can participate.

Eligibility requirements may consider:

• State residency
• Student age or grade
• Public, private, or homeschool enrollment
• Household income
• Previous public school attendance
• Disability or special education status
• Participation in other education programs

This is particularly important for homeschool families.

Some state programs specifically allow homeschool students to participate. Others require students to enroll in a participating private or nonpublic school or follow another designated educational pathway.

As a result, parents shouldn't assume that an ESA advertised as broadly available to K–12 families automatically applies to their particular homeschool arrangement.

Before enrolling, changing your student's education status, or purchasing products, check your state's current eligibility and participation requirements.

How Homeschool Families Use ESA Funding

For homeschool families, Education Savings Accounts can provide funding for many of the resources used to build and support a student's education at home. Depending on the state program, ESA funds may help pay for homeschool curriculum, online courses, instructional materials, tutoring, educational services, testing, and other approved learning expenses.

The exact process varies by state, but homeschool families generally use ESA funding through these steps: