Navigating Iowa's Student First Act: Understanding Education Savings Accounts (ESAs)

Iowa's Students First Act, signed into law on January 24, 2023, by Governor Reynolds, aims to provide state funding to support K-12 students in Iowa. A key component of this act is the creation of Education Savings Accounts (ESAs) for eligible students attending accredited nonpublic schools in Iowa. This article provides a comprehensive overview of the ESA program, focusing on application requirements, eligibility criteria, funding details, and other important aspects for the 2025-2026 school year.

The Students First Act and Education Savings Accounts

The Students First Act makes state funding available to support the success of every K-12 student in Iowa. Parents who choose to enroll their eligible children in one of Iowa’s accredited nonpublic schools will receive an amount equal to the per pupil funding allocated to public school districts for the same budget school year. For the 2025-26 school year, the amount will be $7,988. Funds are held in an education savings account (ESA) to be used for tuition, fees, and other eligible qualified education expenses. The state contracted with Odyssey for ESA program administration, including applications, financial transactions, compliance, fraud prevention, and customer service.

Application Process for ESAs

Application Availability and Deadline

The Students First ESA Application will be available in English and Spanish on June 30, 2025. Annual ESA applications are required for all prospective ESA participants.

How to Apply

After parents/guardians select 'Create Account' on the sign-up page, the parents/guardians will enter the ESA portal. Only one application per family is needed. Parents/guardians can add multiple students from their household onto their application.

Information Visibility

Application information will only be viewed by parties necessary to complete the application verification and approval process, which includes the Iowa Department of Education, the Iowa Department of Revenue, and Odyssey.

Application Approval Timeline

Applications that are able to be verified through the automatic review processes (i.e., verify through information available in a 2024 Iowa State Tax Return) should receive a response within 30 minutes of completion. Applications that require additional documentation to verify through a manual review will take additional processing time.

School Enrollment

Applying for enrollment to an Iowa accredited nonpublic school is a separate process from applying for an ESA through the ESA portal. Identifying the school that the student plans to attend in the ESA portal has no bearing on whether the student will be admitted to that school.

Residency Verification

If the parent/guardian did not complete a 2024 Iowa State Tax Return, additional documentation will be required.Approved Residency Verification Documents:

Option 1: Current Iowa Driver's License
Option 2: Proof of Residence (current mortgage, lease, utility bill) and one of the following:
- Iowa Voter Registration Card
- Claim of Homestead Credit or Military Tax Exemption on a home in Iowa
- Active checking or savings account with an Iowa address
- Other documents and correspondence initiated during tax periods with an Iowa address
Option 3: Other written and signed narrative from parent/guardian explaining the situation including a stated claim of Iowa residency, and other related documentation reflecting residency.

Eligibility Requirements for ESA Participation

Eligible students are those who:

Have an approved application.
Attend an Iowa accredited nonpublic school.
Pay fall tuition and fees by September 30 deadline.

Income Requirements

Beginning with the 2025-26 school year, there is no income eligibility requirement for an ESA. The tax return is used solely to verify Iowa residency through an automated process. It is not used to assess income. If the parent/guardian did not file a 2024 Iowa State Tax Return, additional documentation will be required to establish eligibility.

Enrollment Status

Students must be enrolled full time at an accredited nonpublic school and attend classes for at least 75 percent of the full-time schedule.

Grade Levels

ESA funds can only be used for students in kindergarten through 12th grade.

Prior Schooling

Applications from an Iowa resident student that participated in homeschooling in the 2024-25 school year are eligible to apply for an ESA as long as they are enrolled as a full-time student at an Iowa accredited nonpublic school.

Residency Requirements

Iowa residency is required to be established each year through the annual application process. For the 2025-26 school year, residency must be established prior to the application deadline of June 30, 2025.

Eligibility for the ESA program is limited to Iowa residents attending an Iowa accredited nonpublic school.

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Moving within Iowa does not affect eligibility. The same program eligibility requirements apply.

Special Circumstances

Split Households

It is the responsibility of the parents/guardians to determine the correct person to complete the application and manage the ESA funds. The first parent/guardian to apply who meets the eligibility requirements will be the parent/guardian under which the ESA is established. For an application to be contested, court documents supporting the contesting person’s position as the parent/guardian that has education making authority are required for consideration. Note: The percent of custody or parenting time does not determine the parent/guardian who has the authority for educational decisions.

Students Switching Schools

If the student attended an Iowa accredited nonpublic school for part of the school year, then transfers to a public school, the unused funds will remain in the ESA and can be used in a future year when the student participates in the ESA program. If the student is transferring from one Iowa accredited nonpublic school to another Iowa accredited nonpublic school, available funds may continue to be used as long as the student remains enrolled in the new accredited nonpublic school.

ESA Funding Details

Funding Amount

The ESA amount for the 2025-26 school year will be $7,988.

Fund Availability

ESA funds for the 2025-26 school year will be available beginning July 15, 2025, or 30 days after an ESA application is approved, whichever is later. Half of the ESA funds are made available beginning July 15 to use for fall tuition and fees.

Using ESA Funds

Funds are made available through the ESA portal. Nonpublic schools charge tuition and fee amounts through the ESA portal. After tuition and fees are paid each semester, remaining ESA funds of active ESA participants may be used in the marketplace to pay for eligible expenses. The marketplace is open year-round, but is not accessible each semester until tuition and fees are paid.

Eligible Expenses

After tuition and fees are paid each semester, remaining ESA funds of active ESA participants may be used in the marketplace to pay for eligible expenses.

Fund Usage Restrictions

ESA funds from one account may not be used to pay for costs related to another student, regardless if that student is also an ESA participant.

Unused Funds

Funds remaining in an ESA from a prior year are eligible to be used in another year the student is an ESA participant. After July 15 of a school year, the funds may be used for eligible expenses.

Withdrawal During the School Year

If the student paid tuition and fees, but did not actually attend, the amount paid from the ESA is required to be returned to the ESA. Whether the family still owes any tuition depends on the agreement the family signed with the school.

If the student paid tuition and fees from the ESA and attended only part of the year, the amount of any refund is determined by the school in accordance with the agreement between the school and the family. If a refund is due, the ESA is required to be refunded first, up to the amount paid from the ESA, before any amount is refunded directly to the family.

Additional Considerations

Relationship to Student Tuition Organizations (STOs)

ESA eligibility is not dependent upon STO eligibility.

Memorialized Questions from 2024-25 School Year

If a student attended an accredited nonpublic school in 2023-24, in any grade K-12, even for a single day or in a part-time program, the parent or guardian should say "Yes" to the question of whether or not the student attended an accredited nonpublic school in 2023-24. If the student is enrolling in kindergarten for the 2024-25 school year, regardless of the grade they attended in 2023-24, mark “No” to the same question.

As long as Iowa residency can be established, all incoming kindergarteners who are five years of age by September 15, 2024 are eligible for an ESA in the 2024-25 school year, regardless of income.

ESA applications from all Iowa resident students who attended a public school in the 2023-24 school year and choose to enroll in an accredited nonpublic school for the 2024-25 school year are eligible and not subject to income requirements.

Household Definition

Household is defined in Iowa Administrative Code 281-20(1) as the number of people who reside together and who are related by birth, marriage, adoption, legal guardianship, or by placement in the home through a state agency. “Household” includes parents, student applicants, and other children who share at least one parent by birth, by adoption, by a parent’s current marriage, or by placement in the home through a state agency. A parent on military duty is considered to be residing in the household. If “household” cannot be clearly determined through review of the submitted tax return, additional information may be requested to determine eligibility.

For married applicants, the SSN or ITIN of each spouse is required for the application. Both applicants will be required to electronically sign the application.

ESAs in Other States: A Brief Overview

While the focus of this article is on Iowa's ESA program, it's helpful to understand that similar programs exist in other states, although with varying structures and eligibility requirements.

North Carolina: North Carolina offers Education Savings Accounts for students with special needs. Students must have an Individualized Education Plan (IEP), and a local school district must identify them as having special needs under the Individuals with Disabilities Education Act (IDEA) definition of a “child with disabilities.” A variety of learning environments are available to participating families, including private schools, home schools, co-enrollment, and public schools. Education Savings Accounts can be used to pay for tuition and fees for private school, as well as certain services and products related to educating a child with disabilities, including curricula and textbooks. Students attending a non-public educational option will see accounts funded up to $9,000 per student. Additionally, students with certain disabilities such as autism, hearing impairment, moderate to severe intellectual developmental disability, orthopedic impairment, or visual impairment can qualify for aid up to $17,000 per student.

South Carolina: South Carolina also has an ESA program, initially funded at $6,000 per scholarship. Qualifying expenses for education savings accounts include textbooks, curriculum, or other instructional materials; tutoring services approved by the Department of Education; computer hardware or other technological devices; fees for nationally norm-referenced testing, advanced placement exams, or similar assessments; industry certification exams; examinations related to college or university admission; educational services and therapies for students with disabilities from a licensed or accredited practitioner or provider; unbundled courses, services, extracurricular activities, and tutoring from a public school district; contracted teaching services and education classes approved by the Department of Education; up to $750 for transportation associated with services from an eligible provider; fees for ESA account management; and any other educational expense approved by the Department of Education. The South Carolina Supreme Court ruled that parents may no longer use the program for private school tuition but may still use it for other educational services.

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