Education Savings Accounts for Military Families Act of 2025
The Education Savings Accounts for Military Families Act of 2025 creates a new federal program inside the Elementary and Secondary Education Act (ESEA) that allows parents of eligible military dependent children to establish Military Education Savings Accounts (MESAs). The U.S. Secretary of Education, in coordination with the Secretary of Defense, would establish these accounts for eligible children and deposit funds each school year (starting at $6,000 per child in the first year, with annual increases tied to inflation). Parents can use MESAs to pay for a wide range of educational services and materials—ranging from private or home-schooling options to tutoring, online programs, curricula, and even college savings contributions—subject to certain rules and provider requirements. The program includes a registration system for providers, audit and fraud controls, a quarterly transfer schedule (with an option for alternatives), and a termination/rollover framework. Federal tax treatment mirrors favorable treatment similar to other education accounts, and appropriations begin at $1.2 billion for FY2026, with annual CPI-based increases thereafter. In short, the bill would fund and govern a new federal program aimed at giving military families flexibility to pay for non-public educational options for eligible children, with a priority system if funds are limited and with protections against fraud and misuse.
Key Points
- 1What qualifies and how accounts are created
- 2- The Secretary of Education, in consultation with the Secretary of Defense, would establish MESAs for eligible military dependent children at a parent’s request.
- 3- Eligibility requires a parent on active duty in the uniformed services and (for first-time applicants) a child who was enrolled in a public elementary or secondary school for at least 100 consecutive days in the prior school year.
- 4- Parents must sign a written agreement committing to core education, not to enroll the child in full-time public school while participating, and to use funds only for approved purposes.
- 5How funds are deposited and renewed
- 6- The first year deposits are $6,000 per eligible child; future year deposits increase each year by the percentage change in the chained CPI (inflation measure).
- 7- Funds are transferred to MESAs on a quarterly basis (with an option to change the schedule) and must be reported as to how the prior transfer was spent.
- 8Use of funds and eligible providers
- 9- Funds can pay for a broad range of educational services, including private schools (including religiously affiliated schools), private online programs, tutoring, curricula, educational trips, camps, materials, computer hardware (limited to once every 18 months), higher education costs, and even contributions to college savings accounts (like 529 plans).
- 10- Providers must be registered and approved; those receiving $100,000+ in MESAs in a year must post a surety bond. Providers must be licensed where they operate, and the government limits federal/state control over private/home education providers.
- 11Oversight, fraud prevention, and administration
- 12- The Education Secretary must establish a provider registry, plus a fraud reporting system (website and hotline) and conduct audits as needed.
- 13- The Secretary may enter contracts to carry out its responsibilities and may refund payments to a provider if fraud or nonperformance is detected.
- 14- Administrative costs are capped at 5% of the funds available for the section.
- 15Termination, rollover, and state compliance
- 16- MESAs terminate when the child enrolls in full-time public school or, for postsecondary students, after completion or age 22; for individuals with disabilities, termination by age 26; or after a period of inactivity (typically a 2-year window).
- 17- Funds remaining at termination go back to the Treasury to support the program.
- 18- States that receive MESAs funding must consider a child with an MESAs account as meeting that school year’s compulsory attendance requirements.
- 19Tax treatment and legal provisions
- 20- MESAs are exempt from federal taxation; contributions and distributions related to the program are not includible in the recipient’s gross income.
- 21- The bill includes liability and legal-proceedings provisions to limit provider liability, preserve parental intervention rights in certain cases, and address administrative and construction rules that protect providers and participants.
- 22Funding authorization
- 23- The bill authorizes $1.2 billion for FY 2026 to carry out the MESAs program, with annual increases tied to the chained CPI thereafter.