How Do Education Savings Accounts Work? A Parent’s Guide
Not sure how ESAs work? This guide breaks down how funds are used, who qualifies, and what it means for your child’s education.
Figuring out the best way to support your child’s education can be challenging, especially when the traditional route doesn’t quite fit. Education Savings Accounts, or ESAs, give families more say by letting them use public funds for education-related expenses like private school, tutoring, or even online classes that better match their child’s needs.
Outschool partners with several ESA programs to support flexible learning through live online classes, tutoring, and self-paced courses. If you're considering using an ESA, this guide will help you understand how they work, what they cover, and how to check if your family qualifies.
What are Education Savings Accounts (ESAs)?
An Education Savings Account (ESA) is one way states are giving families like yours more control over how education dollars are spent. Instead of all that funding going straight to a public school, the money goes into a secure account you can use for approved learning expenses—like private school tuition, tutoring, online classes, homeschool materials, and even therapy services, depending on where you live.
Each state runs its own version of the program, and the names can sound totally different. In Arizona, it’s called the Empowerment Scholarship Account. New Hampshire uses the Education Freedom Account. You might also hear about Utah Fits All or Alabama’s CHOOSE Act. As of this writing, 18 states offer ESA programs, each with its own guidelines and eligibility rules.
If you’ve ever wished you had more options—whether that’s one-on-one support, a specific curriculum, or a different pace—an ESA can open that door. These programs are meant to give families added flexibility to create a learning setup that feels like the right fit for their child.
How ESA funding works
While every state runs its ESA program a little differently, most follow a similar process. Once approved, families gain access to state-authorized funds that can be used for a wide range of educational expenses. Here’s how the typical ESA process works:
Funds come from your child’s per-pupil public school allocation. When you opt into an ESA, that money is redirected into an account you can manage, rather than going to a public school.
Applications require documentation. Expect to submit proof of residency, income (if applicable), identity, and sometimes your child’s previous school enrollment or special education status. Applications are usually completed online, but can vary by state.
Once approved, funds are distributed through state-selected platforms. Some families receive access to a debit-style card, while others use digital wallets managed by the state-selected program administrator. Some states may also issue reimbursements after you submit proof of spending.
You’ll need to track expenses and follow state guidelines. Depending on your program, some purchases may require pre-approval, and you may need to submit receipts or reports.
Rules around application periods, funding amounts, and eligible purchases can change year to year. With that in mind, always double-check your state’s official ESA page for updated information.
What ESAs can (and can’t) be used for
Once your ESA account is funded, it can be tempting to dive right in—but knowing what’s eligible (and what isn’t) is important. Approved expenses vary by state, but most programs include a wide range of educational tools and services.
Here are some of the most common approved ESA expenses:
Tuition and fees at eligible private schools or microschools
Homeschool curriculum and instructional materials
Tutoring and educational therapy from licensed providers
Online learning programs and virtual classes
Educational software, technology, and devices used for learning
Standardized test fees, including SAT, ACT, or AP exams
Special education services, like speech or occupational therapy
Transportation costs, when allowed by the program
Most ESA programs do not allow funds to be used for:
Non-educational purchases (e.g., clothing, general childcare, food)
Family vacations or field trips not approved by the program
Materials from vendors who are not pre-approved
Services that don’t directly support a child’s education plan
When in doubt, check your state’s list of eligible and restricted purchases before making a purchase. A quick review can help avoid delays, denied claims, or the need to repay funds later.
Eligibility criteria for ESAs
Wondering if your family qualifies for an ESA? The answer depends on where you live and a few other key factors. While some programs are open to everyone, others focus on helping families with unique needs.
Here’s what can affect eligibility:
Residency requirements: Your child typically needs to be a resident of the state offering the program.
School status: Some programs are available only to students currently enrolled in public school or those who previously attended one for a set amount of time.
Income guidelines: A few states base eligibility on household income, offering priority to low- or middle-income families.
Special education needs: Many ESAs are designed specifically for students with disabilities or those who qualify for an Individualized Education Plan (IEP).
Grade level or age range: While most programs cover K-12, some include pre-K learners or have rules based on age and school enrollment status.
Since each program works differently, your best move is to explore your state’s current guidelines or contact the program administrator for clarification.
Frequently asked questions about how ESAs work
If you still have questions about Education Savings Accounts, here are a few quick answers to common questions about ESA basics:
Do I need to contribute money to an ESA?
No—unlike 529 or Coverdell accounts, ESAs are funded by the state. If your family is approved, the funds are provided to you to use for qualifying education costs.
Are state ESAs the same as a Coverdell ESA?
Not quite. While the names sound similar, they work very differently. State-run ESAs are funded by public dollars and designed to give families more flexibility with K-12 education expenses like tuition, tutoring, and online learning. Coverdell ESAs, on the other hand, are personal savings accounts that families contribute to themselves, often used for both K-12 and college expenses.
Is my child guaranteed to receive the same amount every year?
Not necessarily. ESA funding amounts vary by state and can change depending on program rules or state budget decisions. Some states also have funding caps or application limits each year.
What's the best way to keep track of ESA spending?
Simple record-keeping can help you stay organized. Save receipts for class registrations and learning materials, and take advantage of your ESA program's digital tools to track spending. You can also create monthly spending plans based on your children's learning goals.
What learning experiences can I pay for with my ESA?
Your ESA opens doors to countless learning opportunities! From interactive classes and creative writing workshops to science experiments and music lessons, you can choose what fits your child's interests. The fund typically covers learning materials, online courses, educational support services, and learning technology.
Can I use my child’s ESA funds with Outschool?
Outschool currently accepts ESA and Microgrant funds from select state programs. If you live in Arizona, Arkansas, Florida, New Hampshire, New York, North Carolina, South Carolina, Utah, you may be able to use your ESA funds to enroll in Outschool classes. Outschool is actively working to partner with ESA programs in other states. Check back in to see if we go live with your ESA program soon!
Families in these states can typically pay through approved platforms like ClassWallet or submit for reimbursement, depending on their state’s process. Just make sure to follow your state’s spending guidelines to ensure the purchase qualifies.
For details on how to get started, visit Outschool's ESA information page to see if your state is supported.
Giving your family more choice in education
Education doesn’t look the same for every child, and ESAs are helping more families explore what works best. From personalized learning paths to flexible resources, these programs make it possible to support your child in ways that fit their needs and interests.
If you’re using an ESA to shape your child’s learning experience, Outschool offers a variety of ESA-eligible classes, tutoring, and enrichment options in select states. Wherever your education path takes you, having more choices means you can build something that truly works for your learner.
