House Bill 3398: Education Savings Account for Private Schools


Last Updated: January 29, 2014
House Bill 3398: Education Savings Account for Private Schools
Representative Nelson, Representative Newell

House Bill 3398 would create education savings accounts from state education funds for eligible parents to then use to privately educate their children. Parents educating their children at home by providing other means of education would not be eligible.

Under House Bill 3398 Oklahoma would take between 30-90% of the state aid generated by a student enrolling in public school and place the funds in an education savings account for use by parents to educate their child in a private school.

In order to be eligible the student must be within two times of the federal reduced or free lunch program income bracket (for 2013-2014 school year two times of the reduced lunch program would be $87,136 for a family of four) and either enrolled in the public school or be eligible to enroll in kindergarten/pre-kindergarten. Under the bill the parents’ income level will determine how much is deposited in to the education savings account for their child.

The education savings account under House Bill 3398 could be used for things like tuition and fees at a participating private school or post-secondary school, textbooks and other learning materials, educational therapies or services from a licensed or accredited provider, tutoring services (tutor must be register with the state education department), services provided by public school (including extracurricular programs), nationally normed achievement testing, and contributions to a Coverdell Savings Account.

As currently written HB 3398 does not allow homeschoolers to be eligible for these education savings accounts. There are several reasons why we believe that this prohibition is good for parents providing other means of education to their children.

The main reason is that these education savings accounts are regulated and controlled by the state. This is as it should be when state money is being used. While these types of bills allow for greater educational choice, which HSLDA strongly supports, we believe the use of state educational funds and the supervision that comes with it is too great a burden on freedom for private home education. This is particularly true in Oklahoma where homeschool participation in such a program could lead to regulation for all. However, as it is currently written, House Bill 3398 would not create a danger to homeschooling families as the bill explicitly prohibits the increase of regulation where other means of education is being provided.

House Bill 3398 prohibits the education savings account money from being used for purchasing computer hardware and electronic equipment, educational equipment or instruments, transportation, or any consumable educational supplies, including but not limited to, paper and pens.

Finally, House Bill 3398 allows the state to suspend and terminate any education savings account that makes expenditures beyond the scope permitted by state law. In addition, the parent could be referred for investigation by the Oklahoma attorney general for any violation, including failing to deposit the sales price of any items originally purchased with education saving account funds.

HSLDA's Position:

HSLDA is neutral on House Bill 3398. However, we do not believe this bill is a danger to the homeschooling community as parents teaching their children at home are not eligible to participate in the education savings accounts.

Action Requested:
None at this time

02/03/2014    &nbsp(Senate)     Introduced; first reading.
02/04/2014    &nbsp(Senate)     Second Reading, referred to Appropriations and Budget.


Education Savings Accounts (ESAs) allow parents to save for a child’s elementary, secondary, or college education without being taxed on interest income. The concept is similar to that of the increasingly popular “Roth” IRA. The government creates a tax incentive for parents to save for their children’s K–12 education. As with the Roth IRA, parents pay taxes up front on the starting deposit, but any interest or capital that accumulates is tax-free.

Two commonly used ESAs are: 1) the Coverdell ESA, which can be used for education expenses from preschool-college, and 2) a Qualified Tuition Program (QTP), also known as a “529” plan, the funds of which can only be used for higher education expenses at an eligible educational institution.

Public school, private school, and homeschool families alike can use Coverdell ESAs and QTPs to save for college expenses. However, current federal law only allows Coverdell Education Savings Account funds to be used for K–12 public and private schools. Consequently, Coverdell funds can only be used for homeschooling expenses where state law either considers homeschools to be private schools or provides an option for homeschools to register as private schools. To find out what type of law your state has, see HSLDA's state laws page.

For a more in-depth article on HSLDA's efforts at both the state and federal level, read this article.

 Other Resources

Bill Text

Bill History