(The Lion)–As the Treasury Department solicits input for the federal school choice program that starts in January 2027, a conservative group has issued recommendations to protect private and religious schools from overregulation.

The federal tax credit scholarship program was signed into law on Independence Day as part of the One Big, Beautiful Bill Act. The $1,700 credit will be available to taxpayers in every state, but only states that opt in can use the money for private school scholarships or to help public school students with expenses such as tutoring.

Federal rules will determine everything from which schools can participate to what types of expenses are eligible and rules for scholarship granting organizations (SGOs).

Ideally, the stipulations will “protect private schools from overregulation, clarify definitions, and streamline the process,” writes Daniel Buck and Anna Low, policy experts with the American Enterprise Institute’s Conservative Education Reform Network.

Blocking political interference

While Republicans have long sought to advance educational freedom, Democrats have sought to regulate private schools, Buck and Low write, subjecting them to the same testing and non-discrimination requirements as public schools.

Buck and Low’s report acknowledges that once private schools become reliant on students who are receiving federally funded scholarships, that could become a tool for a new administration – Democrat or Republican – to regulate those schools.

“Federal programs risk being hijacked or killed by future unfriendly administrations,” they write. “While upcoming rulemaking will ideally render it unlikely, the introduction of federal funds into school choice carries the inherent risk of government control.”

Their recommendations include three general guiding principles, chief among them protecting private schools from burdensome rules and shifting winds in Washington, D.C. The law, they warn, should be “carefully crafted” to “prevent a future President Alexandria Ocasio-Cortez from politicizing standards of compliance or approval for SGOs.”

Although states that opt in would be responsible for submitting a list of approved scholarship granting organizations to the IRS, the authors say that the process should be as administrative as possible so that “SGOs don’t become a partisan football whose approval or censure depends on the changing colors at the governor’s mansion.”

SGO requirements

The rules already require SGOs to “devote 90 percent of their income to scholarships, serve more than 10 students who do not all attend the same school, and provide moneys only to students from households earning less than 300 percent of the area’s median income.”

Treasury may add more requirements during the rules process, which Erika Donalds of the America First Policy Institute told The Lion could take about six months.

Buck and Low cite state school choice programs such as West Virginia’s, where “schools or education providers are ‘not required to alter [their] creed, practices, admission policy, hiring policy or curriculum,’ to participate in scholarship programs.”

Similar rules would protect schools, especially in blue states – many of which do not have broad school choice programs – should they opt in.

In terms of definitions, the rules must define which types of schools qualify to participate, including whether accreditation is required. Texas, which will debut its $1 billion school choice program in 2026, recently determined schools must be accredited and have been in operation for at least two years to qualify.

Then there’s the question of exactly which expenses are allowed. Qualified items under Coverdell education savings accounts (ESAs) will form the backbone, but “software, therapies, and online learning subscriptions” are handled differently by different states, with Arizona having one of the most exhaustive lists of what is and isn’t allowed.

The report warns allegations of fraud are the top reasons Democrats have used to try to shut down state programs. It lists verification steps, including state oversight and IRS audits, that can be implemented to reduce this.

While the federal bill limits participation to students in households earning less than 300% of the area median income, it doesn’t spell out how that will be verified and how often. Other questions include whether SGOs can use third-party processors for donations, and if married couples filing jointly can both claim the $1,700, which is available per taxpayer.

Conservatives also could lobby to include opt-in options on tax forms and auto-pay methods on employment paperwork to “make donating functionally effortless.”

Many states are waiting to see the rules before choosing whether to participate, and SGOs participating in state programs are also waiting.

“If supporters remain focused, then this scholarship tax credit can succeed,” the authors conclude. “Achieving that success might be an uphill battle, but the waiter is already on his way out of the kitchen with the roughly $5 billion filet,” they write about the program’s potential impact.

“For conservative education reformers, it’s time to start mopping the slippery floors and smoothing the path to the table to give more students – regardless of state borders or income – the opportunity to succeed.”