In a July 2026 Education Next essay, AEI’s Rick Hess, a supporter of the federal Education Freedom Tax Credit, argues that the program’s success turns less on the political fight over state opt-ins than on a quieter question: whether ordinary taxpayers actually claim a credit that pays them back dollar-for-dollar. History says free money often goes unclaimed, and the fixes are operational, not political.
Almost all of the public attention on the federal Education Freedom Tax Credit (FSTC / ECCA / §25F) is political: which governors have opted in, which are holding out, whether a future Congress might narrow the program. A July 14, 2026 essay in Education Next argues that this is the wrong thing to fixate on. Its author, Frederick “Rick” Hess, director of education policy studies at the American Enterprise Institute and a longtime supporter of school choice, warns that amid a “steady drumbeat of triumphal PR,” the questions that will actually determine whether scholarships reach students are being overlooked. His two concerns, whether donors will participate and whether a few bad-actor scholarship organizations could tarnish the rest, are not about politics or the merits of the credit, which he backs. They are about execution.
On participation, Hess marshals uncomfortable precedent. Employer 401(k) matches, among the closest things to free money in personal finance, go partly unclaimed by a large share of eligible workers. The presidential campaign checkoff, a box that costs the taxpayer nothing, saw participation fall from roughly 29% in the late 1970s to about 4% in recent years. His point is not that §25F will fail, but that uptake is never automatic: people routinely leave tax-advantaged benefits on the table “largely due to the hassle factor.” His prescriptions, user-friendly ways to contribute, employer facilitation, and adjustments that preserve take-home pay, are all about stripping out friction.
The encouraging read is that everything Hess worries about is fixable, and fixable without waiting on the political weather. Awareness spreads fastest through trusted local messengers; the paperwork fear is answered by §25F’s unique donor number, which lets the IRS match a claimed credit without the donor ever handing over a Social Security number; and the cash-flow concern Hess names most sharply is the most solvable of all, since donors can adjust their tax withholding to recover the credit across their paychecks instead of waiting for a distant refund. We lay out the full picture in why the real obstacle to §25F is the adoption gap, not politics.
For the people building this program, the essay reads less like a warning than a job description. The credit’s total impact is the sum of thousands of individual decisions to give, and those decisions are made at a single point in the system: the Scholarship Granting Organization that asks. An SGO that makes donating simple, issues clean receipts and donor numbers immediately, and keeps audit-ready books converts far more of its potential donors, and inoculates the whole program against the reputational risk Hess fears. Founders can start with our guide to starting an SGO and see the field already forming in the SGO directory.
