The Education Debit Card

In 2011, the Arizona Legislature approved the first education savings account (ESA) program in the United States — called the Empowerment Scholarship Accounts in Arizona. The beauty of an ESA is that parents are able to use the account like a debit card to purchase a host of education services. This is in contrast to a traditional voucher, where dollars can only be used at a private school. ESAs can be used to purchase textbooks, curriculum, and other approved education services.

Recently, the Friedman Foundation for Educational Choice released a report about Arizona’s ESA program, “The Education Debit Card: What Arizona Parents Purchase with Education Savings Accounts.” The report demonstrates that ESA accounts give parents flexibility to spend their education dollars as they see fit. As Figure 5 from the paper shows, parents are using these accounts for a host of different items, including therapy for students with disabilities.

What’s more, many families do not spend all of their education dollars. The ESA allows them to save that money for future education expenses, including college tuition. Education expenses are steadily rising. The ability to save money in the account, however, helps put a downward pressure on those ever-increasing prices. It encourages private schools and other education service providers to keep their costs low. In fact, for the 2012-13 school year, approximately 43 percent of ESA funds were unspent.

When they were created, ESAs were expected to expand educational options for families. As the evidence shows, that is just what they are doing. Maybe that is why Arizona policymakers voted to expand the program in 2013.