WASHINGTON (AP) — A Republican plan to expand private school vouchers nationwide was dealt a major setback Friday when the Senate parliamentarian said the proposal would run afoul of procedural rules.
The years-in-the-making plan would have created a federal tax credit supporting scholarships to help families send their children to private schools or other options beyond their local public schools. But in an overnight announcement, the Senate parliamentarian advised against including the proposal in President Donald Trump’s tax cut and spending bill.
It added to mounting problems for Republicans as key proposals were deemed ineligible for the filibuster-proof reconciliation package. The parliamentarian’s rulings are advisory but are rarely, if ever, ignored. It’s unclear if Republicans will try to rewrite the provisions or simply drop them from the bill.
Another education plan deemed ineligible for reconciliation would have exempted religious colleges from a federal endowment tax. The proposal sought to raise the tax rate on wealthier colleges’ endowments while carving out religious institutions like Hillsdale College, a conservative, Christian school in Michigan and an ally of the Trump administration.
Oregon Sen. Jeff Merkley, the top Democrat on the Senate Budget Committee, said, “We have been successful in removing parts of this bill that hurt families and workers, but the process is not over, and Democrats are continuing to make the case against every provision in this Big, Beautiful Betrayal of a bill that violates Senate rules.”
School voucher provision had been seen as a win for supporters
The school voucher provision was seen as a breakthrough victory for proponents who have been pushing the idea for years. A similar plan failed to gain support from Congress in 2019 when it was championed by Betsy DeVos, the education secretary during Trump’s first term. Campaigning for his second term, Trump again promised to deliver some form of “universal school choice.”
Under the reconciliation plan, donors who gave money or stock to K-12 scholarship programs would receive 100% of the contribution back in the form of a discount on their tax bills. It would allow stock holders to avoid paying taxes they would usually face if they donated or transferred their stock.
Nearly all families would qualify to receive scholarships except those making more than three times their area’s median income.
A House version of the bill allowed up to $5 billion in tax credits a year, running through 2029. The Senate version reduced it to $4 billion but included no end date.
Supporters said the proposal would expand education options for families across the country, offering alternatives to students in areas with lower-performing public schools. Opponents said it would siphon money from public schools and open the door for fraud and abuse.
Republican-led states have similar programs
Similar scholarship and voucher programs have proliferated in Republican-led states such as Texas, which recently passed a $1 billion program. States have increasingly offered vouchers to families beyond only the neediest ones, contributing to budget concerns as expenses rapidly pile up.
The Senate’s college endowment proposal sought to raise a tax on schools’ investment income, from 1.4% now to 4% or 8% depending on their wealth. It would apply only to colleges with endowments of at least $500,000 per student, and it excluded all religious institutions. It would have exempted a small number of colleges, including Hillsdale, which lobbied against it.
Some small colleges that would have been hit hard by the proposal are now hopeful that Republicans will carve out an exemption for all smaller schools.
“The religious schools exemption showed senators were concerned about the endowment tax hike’s impact on small colleges,” said Lori White, president of DePauw University, a private liberal arts school in Indiana. “After the parliamentarian’s rulings, the best way to protect those and other small institutions from that impact is now to exempt all colleges with fewer than 5,000 undergraduate students.”
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