Education Scholarship Program

Children are eligible to receive scholarships if their family household income does not exceed 250% of the Federal Poverty Level ($78,000 for a family of four in 2024–2025). Also, qualifying students must be younger than 19 years of age. Once a student receives a scholarship, the family’s income may not exceed 350% of the Federal Poverty Level or FPL ($109,200 for a family of four in 2024–2025). Public and private school students assigned to priority schools receive scholarships first. Alabama defines a public school as priority if it meets one or more of the following requirements: (1) The school is designated as a priority school by the state Superintendent of Education, or (2) the school does not exclusively serve a special population of students and has received a D or an F on the most recent state report card. If an SGO has scholarship funds unaccounted for on July 31 of each year, scholarships may be made available to eligible students in public school, regardless of whether their assigned public school is considered priority. No more than a quarter of first-time recipients may have already been enrolled in a private school the previous year. Students with unique needs are also eligible if they have an Individualized Education Plan (IEP) or 504 plan and attended a primary or secondary school within Alabama during the preceding school year. Just over half of Alabama students are eligible for a scholarship, and fewer than 1% of students statewide actually use a scholarship. _(Last updated July 15, 2024)_

Scholarship recipients may choose to attend a qualifying school, which includes a (nonpriority) public school outside their resident school district or an accredited private school. Qualifying expenses for students with unique needs include: tuition and fees at a qualifying school; textbooks required by a qualifying school; payment to a licensed or accredited tutor; payment for the purchase of curriculum or instructional material; tuition and fees for an approved nonpublic online learning program; educational services for an eligible student with unique needs from a licensed or accredited practitioner or provider; or contracted services from a public school district, including individual classes. _(Last updated July 15, 2024)_

Private donors fund this program by donating to SGOs and receiving tax credits for their donation, up to certain limits. Scholarship amounts are determined by SGOs. Scholarships are capped at the lesser of the qualifying school tuition and fees or $10,000 per student. Total credits claimed cannot exceed $40 million, meaning roughly 4,400 AL students can participate, or less than 1% of Alabama’s K–12 student population. Because of the cap, no more than 4,400 students will be able to participate, or less than 1% of Alabama’s K–12 student population. Legislators added an automatic escalator in 2023, which increases the budget cap by $10 million per year if 90% of available credits are issued in three out of four consecutive years, up to a maximum cap of $60 million. _(Last updated July 15, 2024)_

Both state and federal challenges to this program were successfully defeated. On April 8, 2014, a U.S. District Court judge dismissed a claim brought by the Southern Poverty Law Center challenging the Alabama Accountability Act on grounds the school choice program violated equal protection. _C.M. et al., v. Robert J. Bentley, M.D. et al_., 13 F.Supp.3d 1188 (N.D. Ala. 2014). On March 2, 2015, the Alabama Supreme Court ruled, in an 8-1 decision, that the Alabama Accountability Act which includes Alabama’s refundable tax credit and tax-credit scholarship program, is constitutional. The high court overturned a May 2014 lower court ruling by the Montgomery County Circuit court which initially struck down the Alabama Accountability Act. _Magee v. Boyd,_ 175 So.3d 79 (Ala. 2015). _(Last updated July 15, 2024)_