Tennessee
Education Savings Account Program
- Education Savings Account (ESA)
- Enacted 2019
- Launched 2021
Tennessee’s Education Savings Account program is for low-income students in the Hamilton County (Chattanooga), Shelby County (Memphis), and Metro Nashville Public Schools systems. Participating families can customize a student’s education with broad approved expenses.
We do not administer this program.
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3,578
Participating Students (2024–2025)
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76%
Families in Hamilton County (Chattanooga), Nashville and Shelby County (Memphis) Income Eligible
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$9,329
Average Education Savings Account Value (2024–2025)
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80%
Maximum Value as a Percentage of Public School Per-Student Spending
Percent of Tennessee students eligible for the Education Savings Account Pilot Program
Student Funding
Use of Funds
In addition to tuition or fees at a private school, parents may also use ESA funds for textbooks required by the school; tutoring services; transportation to and from a participating school or provider; fees for early postsecondary opportunity courses and examinations required for college admission; computer hardware and technological devices (purchased through the school); uniforms; tuition and fees for approved summer education programs and specialized afterschool education programs (not including afterschool childcare); tuition; fees and textbooks at an eligible postsecondary institution; approved educational therapy services; fees for the management of the ESA by a private or non-profit financial management organization (not to exceed 2% of the funds deposited in a fiscal year); and other approved educational expenses. Account holders are not required to spend the entire ESA each year. The amount unspent will be eligible to rollover year after year while a student remains in the program.
Funding Amount and Source
The Education Savings Account amount is equal to the per-pupil state and local funds generated and required through the TISA (Tennessee Investment in Student Achievement) and the local education agency in which the participating student resides, but the amount must not exceed the combined statewide average of required state and local TISA allocations per pupil. Program funding is provided through the state education formula through state and local funds for education. Families may pay for tuition and educational services in excess of the maximum Education Savings Account amount. Funds are deposited into accounts at least four times per school year. For the first year, there is a 5,000-student enrollment cap. If there are more applications than 75% of that figure, the cap is allowed to grow by 2,500 students a year until reaching 15,000 students. If there are more applications than Education Savings Accounts available, the state will conduct a lottery that prioritizes (1) siblings of Education Savings Account recipients; (2) students zoned to a priority school as designated by the Tennessee Department of Education; (3) students directly certified to receive benefits from the Supplemental Nutrition Assistance Program (SNAP) program, and; (4) all other eligible students.
(Last updated July 15, 2024)
Student Eligibility
A student is eligible to receive an education savings account if they meet all of the following criteria: (1) is a Tennessee resident; (2) is zoned to attend a school in the Achievement School District, Hamilton County Schools, Memphis-Shelby County Schools, or Metro Nashville Public Schools; and (3) is a member of a household with an annual income for the previous year that does not exceed 200% of the federal income eligibility guidelines for the Free and Reduced-Price Lunch (FRL) program. They must also meet one of the following criteria: (1) the student was previously enrolled in and attended a Tennessee public school for one full school year immediately preceding the school year for which the student receives an education savings account; or (2) the student is eligible for the first time to enroll in a Tennessee school; or (3) the student received an education savings account in the previous school year; or (4) the student was enrolled in and attended a Tennessee public school for one full year in the 2019–2020, 2020–2021, or 2021–2022 school year; or (5) the student was eligible for the first time to enroll in a Tennessee public school in the 2019–2020, 2020–2021, or 2021–2022 school year. Participating students must be enrolled in a state-approved private school to continue receiving Education Savings Account funds. If students move into a different school district while receiving an ESA, they are no longer eligible. Absent this stipulation and annual income verification, returning students are guaranteed Education Savings Accounts.
(Last updated July 15, 2024)
EdChoice Expert Feedback
Like Iowa’s ESA program, students participating in Tennessee’s pilot Education Savings Account for low-income students in Chattanooga, Memphis, and Nashville must be enrolled in a private school. Policymakers could do more to expand educational opportunity. Eligibility for the scholarships is limited to students in Chattanooga, Memphis, and Nashville from households earning less than 200 percent of the federal free lunch program ($111,000 for a family of four in 2022–23). About two-thirds of students in Chattanooga, Memphis, and Nashville are eligible to receive a scholarship. The Education Savings Account program is still subject to litigation, but the state is moving forward with implementation. Additionally, less than 1 percent of students statewide participate in Tennessee’s Individualized Education Account program. The maximum scholarship size is projected to be about $8,200, which is 82 percent of the average expenditure per student at Tennessee’s district schools. Enrollment is capped at 15,000 students in year 5 and beyond, which is less than 7 percent of the K–12 student population in Chattanooga, Memphis, and Nashville. In order to expand access to educational choice, Tennessee policymakers should dramatically increase funding for the scholarships and expand eligibility to all students (prioritizing scholarships based on need). In addition to tuition or fees at a private school, parents may also use ESA funds for textbooks required by the school, tutoring services, transportation to and from a participating school or provider, fees for early postsecondary opportunity courses and examinations required for college admission, computer hardware and technological devices (purchased through the school), uniforms, tuition and fees for approved summer education programs and specialized afterschool education programs (not including afterschool childcare), tuition, fees, and textbooks at an eligible postsecondary institution, approved educational therapy services, and fees for the management of the ESA by a private or non-profit financial management organization (not to two percent of the funds deposited in a fiscal year. Tennessee’s Education Savings Account program imposes some unnecessary and counterproductive regulations. For example, the program requires Education Savings Account students to take the state’s standardized test. Instead of mandating a single test, policymakers should allow parents and schools to choose from a variety of nationally norm-referenced tests. (Last updated May 10, 2023)Rules and Regulations
Program Guidelines
- Income Limit: 200% x Free Lunch
- Prior Year Public School Requirement: Yes, with exceptions
- Geographic Limit: Memphis-Shelby County Schools, Metro Nashville Public Schools, Hamilton County Schools, or a school in the Achievement School District
- Enrollment Cap: 15,000 (2025– 26 and thereafter)
- Budget Cap: None
- Education Savings Account Cap: $9,423.58 for Shelby and Davidson counties and $9,346.05 for Hamilton County (2024-2025).
- Testing Mandates: State test
- Special Needs Pathway: None
Participant and Family Guidelines
- Click Here for the Program Administrator’s Parent Handbook
- Education Requirements: N/A
- Parent Supplemented Funds/Scholarships: Allowed
- Disbursement Payment/Frequency: Quarterly
- Reimbursement: Not permitted
- Miscellaneous: N/A
Education Provider Guidelines
- Accreditation/Approval: Be approved to participate by the state department of education
- Employment Standards:
- Conduct criminal background checks on employees
- Not employ any staff member that might reasonably pose a threat to the safety of students or that advocates for or belongs to a political party advocating for the overthrow of the American form of government
- Nondiscrimination: Meet state and federal nondiscrimination policies
- Calendar/Curriculum/Attendance: Administer annually to participating students the Tennessee Comprehensive Assessment Program (TCAP) tests for math and English language arts
- Financial: State audit
- Miscellaneous:
- May not share or refund Education Savings Account funds to a participating family
- Comply with all state and federal health and safety laws applicable to nonpublic schools
- Maintain a school year that satisfies the state’s compulsory school attendance requirement
(Last updated December 18, 2024)
Legal History
This program is subject to pending legal challenges, neither of which have stopped implementation of the program.
Two lawsuits were filed in the same year (2020) only one month apart challenging Tennessee’s ESA Pilot program on similar grounds. Both lawsuits proceeded and were ultimately consolidated by the courts. The Metropolitan Govt of Nashville and Davidson County et al. v. Tennessee Dept. of Education, Chancery Court of Davidson County, Case No. 20-0143-II consolidated with McEwen et al. v. Bill Lee, Governor, Chancery Court of Davidson County, Case No. 20-0242-II.
Initially, the trial court ruled that the ESA Pilot violated the Tennessee Constitution’s Home Rule provision, which prohibits the legislature from targeting a particular county for legislation without a vote of citizens in that county approving the measure. The Metropolitan Govt of Nashville and Davidson County et al. v. Tennessee Dept. of Education, Chancery Court of Davidson County, Case No. 20-0143-II. The Tennessee Court of Appeals agreed with the Chancery Court and ruled against the program. The Metropolitan Govt of Nashville and Davidson County et al. v. Tennessee Dept. of Education, Court of Appeals of Tennessee at Nashville, Case No. M2020-00683-COA-R9-CV. However, on May 18, 2022, the Tennessee Supreme Court ruled that the program does not violate the Home Rule provision. The Court remanded the case back to the trial court to consider remaining challenges. Metropolitan Government of Nashville and Davidson County et al. v. Tennessee Department of Education, et al., Tennessee Supreme Court, Docket Number M2020-00683-SC-R11-CV.
Upon receiving the consolidated cases for review of remaining issues, plaintiffs requested an injunction against the program pending outcome of litigation, which the Chancery Court refused. The trial court dismissed the entire case in late 2022, but the Tennessee Court of Appeals reversed the dismissal on some claims in January 2024. The Metropolitan Govt of Nashville and Davidson County et al. v. Tennessee Dept. of Education, Court of Appeals of Tennessee at Nashville, Case No. M2022-01786-COA-R3-CV. The remaining claims are still pending further litigation in the trial court.
(Last updated December 6, 2023)