General Education

Private School Financial Aid: External Funding and Scholarships

Private School Financial Aid: External Funding and Scholarships
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Jon Golbe February 8, 2019

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The first place to look for assistance with private school tuition is the school itself. They will let you know about financial aid options, including payment plans which are available for a fee from lending institutions. The school may also have information about putting away money toward tuition in a tax-free account. It also pays to look out for scholarships sponsored by religious groups and community organizations. In addition, there are ways in some states to get money for private school from the government.

One of the most common of these is a school voucher, in which the state gives families access to money they can put toward private school tuition and sometimes other education-related expenses, as well. Some vouchers only go to families living below a certain income level, some only go to students with disabilities, and in some cases any student can apply but a lottery determines which students receive voucher money. Some states restrict their programs to districts in which the public schools are “failing,” and sometimes the voucher can only be used for nonsectarian education. (That is, with no religious affiliation or emphasis.) The values of the vouchers vary but are generally around a few thousand dollars, which may or may not cover the tuition at a given school.

Vouchers are now generally referred to as “scholarship programs” because the term voucher became controversial in the 1990’s. The controversy stems from the source of the money for the programs — the public school system. Under the rules of the scholarship program, the expense of educating students in the public schools is calculated to a certain dollar amount per student. For every student who withdraws from the public school, that amount is withdrawn from the public school’s budget. This puts pressure on the public school, as it will no longer be able to operate if too many students withdraw. For advocates of school choice, this is a good thing. “Competition would force the government schools to shape up or close down,” said Rose Friedman, co-founder with her husband, conservative economist Milton Friedman, of the Freidman Foundation for Educational Choice. People on the more liberal/progressive end of the political spectrum tend to oppose voucher programs because they take revenue from public school systems and transfer it to private schools that are less accountable to public standards. (It also means in some instances that public money is being used for religious education.)

A different, increasingly common way for state governments to help pay for private school is scholarship-granting organizations. These are known by various names, including School Tuition Organizations in Arizona, Student Scholarship Organizations in Georgia, and Scholarship Funding Organizations in Florida. In states where they’re legal, individuals or corporations donate money to scholarship-granting organizations which in turn award scholarships to eligible students. The donors then usually get their money back as a tax credit, which comes out of the state budget. As with vouchers, the students and schools that can attain the benefits of scholarship-granting organizations vary– some organizations only award scholarships to the disabled, to students of color, or to students in districts with public schools that have been given poor evaluations, whereas others are available to anyone. Some organizations work on a “first-come, first served” basis, others have a lottery for all applicants. Donors may have some influence over which schools or which students receive the scholarship money, but officially the donor’s preference cannot be the only grounds by which the student’s eligibility is judged. This can be a slightly murky process, so rules exist to prevent discrimination and favoritism. For instance in Arizona it’s illegal to donate scholarship money to be used primarily by one’s own dependents or to arrange a “swap” with another set of parents in which each pays for the others’ children.

You can find out more about vouchers and scholarship-granting organizations by going to sites like and or via your state’s Department of Education site (Look for the “School Choice” section). Be sure to read the details of the programs, like how often one needs to renew one’s scholarship (generally yearly) and whether the scholarship follows students if they transfer schools (generally yes if the new school fits the eligibility requirements).



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