Pick Private School on the New Scholarship, and the IEP Stays Behind

What is the new federal scholarship?

It was part of the One Big Beautiful Bill Act, signed July 4, 2025. Its formal name is the Educational Choice for Children Act. It is now section 25F of the tax code. Treasury and the IRS call it the Education Freedom Tax Credit. It starts on January 1, 2027.

Here is how the money moves. People give cash to approved nonprofits called Scholarship Granting Organizations. Each donor gets a federal tax credit of up to $1,700 a year. A married couple filing jointly gets up to $3,400.

The IRS list of what a scholarship pays for is long. It includes private school tuition, tutoring, books, supplies and computers. It also names “special-needs services.” The proposed rules would stop states from narrowing which schools or costs count. The American Press reported that in a story on Louisiana.

States choose whether to join. As of the IRS announcement on October 1, 2026, 30 states had opted in. Colorado is one of them. The Colorado Sun reports the state is locked in for at least a year. Federal rules give a state no way to pull out mid-cycle, said Madi Ashour. She leads K-12 policy work at the Colorado Children’s Campaign. Even Colorado public school foundations plan to use the program, Chalkbeat reports. They want to fund tutoring and after-school help.

What happens to an IEP in private school?

An IEP is a public school plan. The law behind it is IDEA, the Individuals with Disabilities Education Act. One of its rules covers any child whose parents place them in private school. It is 34 CFR 300.137(a), and it says this:

“No parentally-placed private school child with a disability has an individual right to receive some or all of the special education and related services that the child would receive if enrolled in a public school.”

In plain words, the IEP’s promise stays at the public school. Some children get a smaller set of help from the district, called equitable services. The rule says the district “must make the final decisions” on those. The family does not.

Look at what the rule asks. It does not ask who paid the tuition. It asks who chose the school. Paying with a scholarship or your own savings gets the same answer.

One right does go with your child. It is called Child Find, and it is in 34 CFR 300.131(a). It covers private school children who might need special education. The district where the school sits must find and evaluate them. Being found is not the same as being served. Our guide to parent rights under IDEA explains how to ask for an evaluation.

The new credit does not change any of this. Treasury’s proposed rules say so in their preamble. Two explainers quote it. One is eftccredit.com, an independent site. The other is the Autism Innovation Community Foundation. Section 25F, they report, would not:

“alter States’ obligations to comply with all other applicable Federal and State law, for example, the requirements under the Individuals with Disabilities Education Act.”

We have not read that preamble ourselves. We are going by their quotes.

So what about “special-needs services” on the IRS list? Scholarship money pays for things like therapy or tutoring. That is something you buy. In public school, the IEP makes the district provide those services. Once you place your child in private school, the district no longer owes them. The money comes with the scholarship. The right does not.

What should you ask before you move your child?

This is your call. For some families, a private school will be worth the trade. For others, the IEP services matter more. Either way, know the trade before you make it.

There is a middle path, too. The scholarship also pays for tutoring for public school students, the eftccredit.com explainer says. Keep your child in public school, and the IEP stays in force. The same explainer says IEP and IDEA rights then “remain fully intact.” Your state has to take part. A group has to offer that kind of scholarship.

If you are weighing a move, ask these questions first:

• Ask the private school: will you enroll my child, and what help do you offer?
• Ask the district where that school sits: what do you offer private school children?
• Ask the district: how would that compare with my child’s IEP today?
• Ask the scholarship group: which of my child’s costs will you cover?

The rules are still being written. Comments on Treasury’s proposed rules are due December 1, 2026. That date and the docket number, REG-117199-25, come from the Autism Innovation piece. The docket is at regulations.gov. The American Press reports a public hearing on December 15. If this matters to your family, say so there. Families of children with IEPs belong in that record.