The FSTC: what it is, how it works, and why it matters.
WFIS wants school leaders to be fluent in their understanding of the FSTC and in their ability to answer questions and build financial strategies around it.
Is the Federal Scholarship Tax Credit a Big Deal for Washington Schools? Yes.
Should Washington private schools, including parents, staff, and supporters, be paying attention? Absolutely.
Most adults in Washington pay federal taxes. Under the FSTC, if Washington opts in, they can redirect up to $1,700 of those taxes to fund education programs, including tuition to private school, potentially benefiting your students and your school. If Washington doesn’t opt in, schools in other states can benefit from donations from our state’s taxpayers.
There is a good chance Washington will opt in. Right now, it’s the Governor’s choice. In other states, however, we are seeing the legislature getting involved.
Why would our Governor opt in?
Because the program also generates funding for public school students. Given the sheer number of families in the public system, the financial upside for the state is significant.
Now consider your own school:
How many of your students would qualify for tuition scholarships under this program?
Eligibility extends to students from families earning up to 300% of the median income. In Seattle, that means a family of four earning up to $422,000 annually would qualify.
That’s not a small pool. That’s a fundamental shift.
The FSTC isn’t just another policy proposal. It is the law, and if Washington opts in, it could reshape how education is funded across sectors.
There are four key players in the FSTC:
- Taxpayers
- Scholarship-Granting Organizations (SGOs)
- Students
- Schools
How does it work?
Taxpayers can choose to redirect a portion of their taxes to an SGO of their choice. They can designate a specific school, if they want. SGOs then set the guidelines—determining who is prioritized for scholarships and how much funding each student receives.
Students apply to SGOs for scholarships and separately apply to schools for acceptance.
Schools build relationships with SGOs to connect with available funding.
What about public schools?
The FSTC can benefit public school students. Taxpayers can direct their contributions to SGOs that support public school students. Given the larger number of public school families, this could translate into significant new funding—potentially millions of dollars—for public education.
A common question is whether the FSTC could negatively impact public school enrollment. While the program will give some families more flexibility in choosing private education, states with existing school choice programs have not seen large-scale shifts away from public schools.
