Once your family is approved for an Education Savings Account (ESA), the next step is to understand how you can use the funds. While the primary goal is to give you flexibility, all spending must fall under the category of "qualified educational expenses" as defined by your state's law.
Important Disclaimer:
The list below represents common categories of allowable expenses across most ESA programs. However, the specific rules, restrictions, and spending caps can vary significantly from state to state. Always consult your state's official program handbook for the definitive list of approved expenses. You can find your state's details on our State Comparison Chart.
Common Categories of Allowable Expenses
Tuition and Fees
The most common use of ESA funds is to pay for tuition and required fees at an eligible private school.
Curriculum and Textbooks
Funds can be used to purchase textbooks, curriculum packages for homeschooling, and other required instructional materials.
Tutoring Services
Parents can hire private tutors or enroll their children in learning centers for extra academic support.
Therapies and Special Needs Services
A key feature for many families, ESAs can pay for services like speech, occupational, physical, and behavioral therapies from licensed providers.
Online Learning Programs
The cost of enrollment in full-time or supplemental online courses and educational software is a common allowable expense.
Testing and Exam Fees
Funds can be used to cover fees for standardized tests, Advanced Placement (AP) exams, and college entrance exams like the SAT or ACT.
Transportation
Some states allow funds to be used for transportation costs to and from an approved school or educational provider, though this is often capped.
How are purchases made?
You do not receive cash directly. ESA funds are managed through a secure digital platform. The two most common methods are:
- Direct Payment Portals: Most states partner with a third-party financial services vendor like ClassWallet or Odyssey. Through an online portal, you can pay approved schools and vendors directly from your ESA.
- Reimbursement: Some states or specific expense types operate on a reimbursement model. You pay for the expense out-of-pocket, then submit receipts to the program administrator to be reimbursed from your ESA funds. This model is less common as it can be a barrier for some families.
Regardless of the system, it's crucial to keep detailed records and receipts for all your ESA expenditures, as states have auditing procedures in place to prevent the misuse of funds.