More states are allocating funds to families opting out of public schools, creating a pool of resources for online learning and microschool programs. This shift is driven by various factors, including dissatisfaction with public schools exacerbated by the Covid-19 pandemic and the increasing availability of state stipends, totaling $5 billion annually, for families exploring alternatives to traditional public education.
The homeschooling trend has gained momentum, with 3.7% of children aged 5 to 17 primarily schooled at home in 2019. A subsequent surge in homeschooling during the 2019-2020 and 2020-2021 school years has persisted, with some students now enrolling in microschools. This parent-driven shift presents a promising market for the edtech industry, particularly microschools, homeschooling, charter schools, low-cost private schools, and virtual charter schools.
Educational savings accounts (ESAs) have become a pivotal financial tool, offering financial support to parents seeking alternatives to public education. The growth of ESAs is evident as 13 states now provide $5 billion annually to parents, a significant increase from four programs serving 25,000 children in 2020. While the edtech industry is recovering from a decline in funding, ESAs are injecting new resources into the sector, fostering innovation and meeting the demands of parents seeking greater control over their children’s education.
The eligibility criteria, funding amounts, and spending options for ESAs vary widely among states. This diversity reflects an ongoing trend toward broader eligibility, empowering parents to customize their children’s education. Despite occasional political challenges, ESAs enjoy broader public support compared to traditional private school voucher models, with 56% of likely 2024 voters expressing support for spending taxpayer dollars on education savings accounts. As the federal stimulus fades, the prominence of state-funded ESAs is set to grow, providing a lifeline to an edtech industry navigating a changing landscape.