Nebraska’s “Opportunity Scholarships Act” creates state’s first private school scholarship

It’s a historic year for K-12 education in Nebraska. Lawmakers just passed the Opportunity Scholarships Act, the first state-run K-12 private school choice program in the Cornhusker State. This new scholarship aims to make private schooling an affordable choice for all Nebraska families in need. 

What is the Opportunity Scholarships Act?

The Opportunity Scholarships Act is a bill recently signed into law by Governor Pillen. The bill creates a scholarship program to support low-income families in Nebraska who wish to send their children to nonpublic schools. 

How will the program work? The bill sets aside $25 million per year in tax credits for taxpayers who donate to non-profit Scholarship Granting Organizations. In other words, taxpayers who give to a Scholarship Granting Organization can receive a reduction on their tax bill. The Scholarship Granting Organizations will then use the donations to give private school scholarships to eligible families in need. In short, this is a “tax-credit scholarship program,” similar to ones already in places in Nebraska’s neighbors Kansas and Iowa. The tax credits will be available beginning in 2024.

While other states have tax-credit scholarships, this program is the first of its kind in Nebraska. 

Who can apply to the Nebraska Opportunity Scholarships program?

The goal of Nebraska’s new scholarship program is to offer low-income and middle-income families a school choice they otherwise couldn’t afford. Lawmakers estimate that the new scholarship program will allow about 5,000 additional students to choose private schools in Nebraska. 

The Opportunity Scholarships program is designed to serve families in need. Once the program is up and running, it will prioritize serving students already receiving scholarships, as well as their siblings.

Next, the program gives priority to children from the lowest-income families (students from families that earn up to 100% of the federal poverty level), as well as eligible students with special needs, experiencing bullying, in foster care, denied option enrollment, or with a parent or guardian actively serving in the armed forces or National Guard.

After these applicants receive scholarships, organizations will continue to prioritize applicants according to income. Scholarship organizations will give final priority to students from families earning up to 300% of the federal Free and Reduced Lunch rate.

In most cases, a student must either 1) be transferring from a public school, or 2) be entering kindergarten or ninth grade in order to apply. However, in future years, students already receiving a scholarship, and siblings of students who are already receiving a scholarship, will not need to meet either of those requirements. 

To receive a scholarship, eligible families will apply to a Scholarship Granting Organization. These non-profit organizations will manage the distribution of scholarships and help walk families through the application process. Multiple Scholarship Granting Organizations may launch in Nebraska in coming months as the program gets up and running!

How much is the Opportunity Scholarships amount and where can families use their scholarship?

Opportunity Scholarships will provide families up to about $9,200, which is about 75% of state per-pupil funding in Nebraska.

Families can use their scholarship at any qualified private school in Nebraska. This means a nonpublic elementary or secondary school in the state that meets all health and safety codes and anti-discrimination provisions, and that fulfills the approval requirements of Nebraska’s State Board of Education.

Nebraska offers many private school options. While Nebraska is a rural state, a 2023 analysis of students in grades K-12 found that 77% of all Nebraska students in grades K-12 live within a 10-minute drive of at least one private school, and 90% live within a 20-minute drive of at least one private school. 

When can families apply for the scholarship?

The state is currently working on setting up regulations and details for the program. According to the Nebraska Catholic Conference, the scholarship program will likely be open for families for the 2024-2025 school year. 

How much can taxpayers donate to the scholarship?

Nebraska community members, estates, trusts, and corporations can claim an income tax credit of up to half of their state income tax liability on donations to Scholarship Granting Organizations. Donations from individuals and corporations are capped at $100,000. 

When someone donates to a scholarship granting organization, they cannot designate that funds go to any particular student. Scholarship organizations will use the funds according to the prioritization guidelines outlined above. 

Where to learn more

Nebraska’s new Opportunity Scholarships program acknowledges that public schooling and homeschooling won’t be the best fits for every child. Some children need a private school classroom to thrive, whether that’s because they learn better with smaller class sizes or because a private school offers the learning experience most in line with their family’s values.

If you’d like to learn more about Opportunity Scholarships, you can keep an eye out for updates at the Nebraska Department of Education or reach out to American Federation for Children – Nebraska for more information. 

*October 2023 Legal Update: Note that a petition has gathered enough signatures to put this bill to a vote in the November 2024 general election ballot. So, a repeal of the Opportunity Scholarships, while unlikely, is possible. Check back for updates!