Private equity-owned schools stand to profit from school vouchers through Big Beautiful Bill

In July, President Trump signed the One Big Beautiful Bill, tax and spending legislation that includes several provisions that will benefit private equity firms. One such provision is a national school voucher program that funnels federal dollars into private schools, with some estimating the program cost at up to $101 billion. As private equity firms increasingly invest in private schools, they will certainly receive a large portion of this funding.

The program works through a tax credit – individuals can contribute up to $1,700 to a participating scholarship granting organization (SGO) and receive a 100% tax credit in return. According to an analysis by the Institute of Taxation and Economic Policy, there is no other federally-funded program that offers a full reimbursement to taxpayers. The program takes effect on January 1, 2027, but taxpayers can begin contributing to SGOs in late 2026.

SGOs include typical nonprofit organizations, as well as churches, universities, and public schools. The organizations will dole out scholarships for children whose families make 300% or less of the area median income, meaning that in some places, families making more than $350,000 will be eligible.

Not all states will opt in to the program, though 20 states already offer tax-credit scholarships. In New Mexico, Governor Michelle Lujan Grisham has already decided to not opt in. In a survey from EdWeek, a spokesperson for the Governor’s office said^[1]:

New Mexico will not be opting into this provision. Some of our concerns include:

• • No accountability measures in the legislation, so these tax dollars can be used on schools with no record of educating students effectively.
  • Public schools may lose funding.
  • Public school enrollment declines may be exacerbated.
  • Students with additional needs will be shut out, as private schools may discriminate against children.
  • Students attending schools with vouchers may not receive a high-quality education.

Democratic Governor JB Pritzker echoed some of the same sentiments, flagging concerns that this program will benefit “private schools, sometimes religious schools, and sometimes schools that would reject having an LGBTQ member as a teacher.” Scholarships could be used to send students to religious schools that have more room to discriminate, troubling advocates for the separation of church and state. In addition to New Mexico, Oregon has also decided not to opt into the program, with dozens of states still reviewing the legislation and the possibilities of how it could be administered. In North Carolina, the Republican-led legislature passed a bill opting in, which was then vetoedby Democratic governor Josh Stein, though he intends to opt in to the program after more guidance becomes available.

Supporters commend the voucher program for diverting resources to low-income students that may not otherwise have the opportunity to go to a private school. Though private schools tend to produce better educational outcomes for students overall, this may not be true when controlling for factors like class. A 2018 study found that:

“by simply controlling for the sociodemographic characteristics that selected children and families into these schools, all of the advantages of private school education were eliminated. There was also no evidence to suggest that low-income children or children enrolled in urban schools benefited more from private school enrollment.”

One of the study’s authors pushed back against privatization as a solution to educational disparities: “In order to enable more low-income students to succeed and close achievement gaps, we must support comprehensive education reform of our public school system.” Profits made by private equity firms that own for-profit education providers could be invested directly into public school systems. Voucher programs may increase the number of options available to students and families, but these options are not necessarily better, and come at the cost of public school education.

Furthermore, there is some evidence that voucher programs actually benefit wealthy families more than anyone else. A Brookings Institute analysis of Arizona’s billion dollar universal voucher program found that “families in the wealthiest, most advantaged communities are obtaining ESA funds at the highest rates. Families in the poorest communities are the least likely to obtain ESA funds. Nothing in the analysis above even remotely suggests that this program is addressing inequities in school access by students’ socioeconomic status.”

The new program does allow for public school students to use the scholarships for things such as transportation, services for children with disabilities, and books, computers, and other school supplies. While this may appear to benefit public schools, it still diverts funding to the private companies that districts contract with such as First Student, a school bus service provider owned by private equity firm EQT. As the largest student transportation company in the country, it is not in First Student’s best interest to fix the bus driver shortage through additional funding and opportunities for direct employees of the district – while school districts may hope that alternative services are only temporarily necessary, First Student wants to grow. In some districts, families actually pay for transportation to and from school. This bill subsidizes outsourced services, making it more difficult for districts to keep or bring services back in house.

Just how much could firms stand to benefit? Due to the lack of transparency around private companies, it is difficult to get data such as how many students would qualify for scholarships to be used at private schools. In the case of KinderCare, however, the company’s 2024 IPO means that it has to file quarterly and annual reports with the Securities and Exchange Commission despite still being majority-owned by private equity firm Partners Group.^[2] In its most recent filing, KinderCare reported that the Big Beautiful Bill included “restoration of favorable tax treatment for certain business-related provisions” that “are expected to be favorable to the Company.”

KinderCare already makes a significant portion of its revenue from government subsidies – in 2024, 35% of company revenue came from tuition subsidies.^[3] The company is on track to receive even more government funding this year, having received $499 million in government subsidies from January to June 2025. While the bulk of it was from block grant programs that have existed for decades, the company received some of its final COVID-19 provisions last year. As that money runs out, many centers across the country are closing. KinderCare only received $0.7 million in COVID-19 funding for the first six months of 2025, down from $39 million in the first six months of 2024.

Though KinderCare is most well-known for its early childhood education centers, the company operated before- and after-school programs at more than 1,000 locations in 27 states^[4] through its Champions brand as of June 2025. Champions, which considers the YMCA a competitor, contracts directly with public and charter schools to provide these programs. Under the new tax-credit program, families can use scholarships to pay for Champions programs, opening up significant opportunities for the company to profit. KinderCare is heavily investing in school-based care, with Champions revenue increasing 19.2% from 2023 to 2024 due to the company operating 77 additional sites and offering more day camps in fiscal year 2024.

Despite this potential windfall, it is likely that KinderCare will continue to increase tuition, as it is a main strategy for increasing revenue. The company reported that “over the past three years, annual tuition price increases ranged from 4-7%,” outpacing inflation at the same time.

KinderCare worked with 800 government agencies in 2024, arguing that “frequent interactions and relationships with government institutions position us as a leading advocate for our industry to help build continued growing public funding support for our industry.” Though the company’s advocacy can be framed as a commitment to improving education through increased funding, it also aims to increase the company’s bottom line. Some in KinderCare ranks are profiting greatly: KinderCare CEO Paul Thomas received an executive compensation package of $21 million in 2024, while Chairman Tom Wyatt took home $58 million.^[5]

The transfer of federal dollars to private equity firms invested in K-12 education is difficult to track, but likely to increase after the Big Beautiful Bill goes into full effect. School districts, other government agencies, families, and investors should monitor these trends and implement guardrails where necessary.

^[1] See table at bottom of article for full quote.

^[2] See page 31.

^[3] Calculation using numbers on page 80

^[4] See 10-Q link in word “operated” earlier in the sentence, page 7.

^[5] See page 34