Planning a child’s education can feel overwhelming, but there are tools to help cover most needs—from K–12 flexibility to long-term college savings. This guide explains how Education Savings Accounts (ESAs) are used in the U.S., how they differ from other options, and how to choose the right mix for your family.
What Is an Education Savings Account
An Education Savings Account (or ESA) can actually refer to two types of savings accounts. Knowing the difference is important when deciding how to fund your child’s education.
- A K–12 ESA is a government-backed account that lets families spend tax dollars on authorized education expenses. Parents can use their ESA debit card for things like tuition at private school, tutoring, therapy, online courses, and more, depending on what their state allows.
- Coverdell ESAs are similar to a traditional savings account you open at a bank or brokerage to save for education. This type of ESA is tax-advantaged, so qualified withdrawals are tax-free, making it a good option for families if they start investing earlier. This type of ESA has been around longer, but most of this article will cover the K–12 use of the term.
K–12 ESA Meaning and How It Works
Funded through sales and/or income taxes, Education Savings Accounts give parents a direct way to use the money they and their community give to the government. Parents receive a debit card pre-loaded with a set amount of money that they can use for state-approved educational purchases. Depending on the ESA, you can also roll over unused funds to pay for future educational expenses like college tuition or even trade school.
Who can open an ESA? What are the rules?
Every state has its own rules for who is eligible for a K–12 ESA, but common requirements include state residency, falling within a certain income bracket, or having a documented disability.
As of late 2025, 18 states have K–12 ESA programs. These states include Alabama, Arizona, Arkansas, Florida, Georgia, Indiana, Iowa, Louisiana, Mississippi, Montana, New Hampshire, North Carolina, South Carolina, Tennessee, Texas, Utah, West Virginia, and Wyoming.
Types of Educational Savings Accounts
In addition to K–12 ESAs and a Coverdell ESA, there also exist funding alternatives. Whether you’re looking for government-funded assistance or the best way to invest your own funds, there likely exists a program you can rely on. Websites like Edchoice offer a wealth of information on differentiating the different types of school choice programs on offer.
K–12 ESA vs. School Choice Vouchers
While they are both funded by state taxes, ESAs and school vouchers provide different services to families. The main difference to consider is that school vouchers are typically only centered toward paying for tuition, while ESAs can be spent on a wide variety of materials, curriculums, and services.
- A school voucher program is designed to help parents pay for tuition when enrolling their child in a private school (both online and brick-and-mortar). After selecting a private school your child is interested in, you can work together with the school to receive a voucher to pay for the tuition partially or in full, depending on the state.
- An ESA is designed to help families transition to alternative schooling options by giving an allowance to spend on approved purchases. While an ESA can be used to pay for tuition fees, it can also be used to pay for textbooks, therapy, and transportation, depending on the state.
Coverdell ESA vs. 529: Key Differences
Designed as state-supported savings plans, both Coverdell ESAs and 529s can be effective ways to prepare your child for future educational costs like tuition or room and board.
- Coverdell ESAs are a federal program with set contribution limits and eligibility restrictions. ESAs like this are effective for families whose income is below their state’s limit and who plan to make only small contributions. When your child comes of age, the account will be transferred to them.
- With 529 plans, the most significant difference is that they do not have contribution limits. This allows parents with the means to quickly invest in their child’s future. With 529s, when your child comes of age, you still have full control over the plan.
K–12 ESAs: A Step-by-Step Guide
Because every state has its own requirements, always check your state’s official program page for current details.
Preparation and Application
Before you start applying, make sure your state offers K–12 ESA programs. If not, try looking into other school choice programs in your state. Either way, most programs require essential documents like:
- Proof of residency
- Proof of income
- Proof of identity
In addition to these documents, you may also be asked to provide proof of enrollment in their current school and exam scores. Once you have these documents on hand, visit your state’s program page.
Applications can be made either by mail or online, depending on your state’s rules. Some ESAs also have an application deadline, which is why we gathered our essential documents ahead of time.
Common Eligible Expenses
If your application is approved, your ESA provider will reach out to you with the card information and the expected availability of your funds. While each state has different criteria for what expenses are approved, there are several common uses for ESA payments.
Here are a few examples of what you could use your ESA budget on:
- Tuition for participating schools
- Tutoring
- Online curriculums, like K12 Marketplace
- Costs for college admission tests
- School supplies like textbooks
- Transportation assistance
How to Manage Your ESA Spending
While funding expenses, it’s essential to monitor your child’s account to ensure that contributions and expenses are being accurately tracked. ESA regulations change often depending on the local political landscape, so stay up to date with changes that may affect your state’s program.
Making Informed Decisions About Educational Savings
Consider that some families use one or many of the financial support options mentioned in this article, and that there are plenty of effective ways to plan for your child’s future. Whether you’re looking to transfer to an online public school or completely shift to a homeschool curriculum, ESAs, Coverdell ESAs, or other school choice programs are here to offer financial support.