Almost Every American Child Qualifies. The Harder Question Is Who Will Fund Them

Ask a family earning $150,000 a year whether their child could qualify for a scholarship, and most will say no. New estimates suggest they would be wrong.

On July 28, 2026, the American Federation for Children published the first state-by-state look at who can receive a scholarship under the Education Freedom Tax Credit (EFTC), the federal tax credit for donations to scholarship organizations that became law on July 4, 2025. The finding: 51.7 million K-12 students, or 91.7% of the country’s school-age children, fall within the eligibility limit.

That is not generosity. It is arithmetic. The law sets the income test at 300% of area median income, and three times the middle income in most American metro areas is a larger number than the word “scholarship” usually suggests.

What the New Analysis Measured

Until now, anyone planning around this program has been working without a basic figure: how many children could actually receive one of these scholarships. The statute has always contained the test. Nobody had run it against real population data, state by state.

The estimates, combine Census population estimates, the American Community Survey, HUD income limits and 2026 Household Pulse data.

The state-level results cluster tightly. The share of school-age children who qualify ranges from 85.9% in the District of Columbia to 96.2% in Maine. Expensive coastal metros sit at the low end, and even there, the great majority of children clear the test.

Why 300% of Area Median Income Reaches So Far

Area median income is a figure the federal government already publishes for every metro area and county, mostly to run housing programs. It is the midpoint: half of local households earn more, half earn less.

Multiply that midpoint by three and you get the ceiling Congress wrote into the scholarship credit. For a family of four, the analysis puts the resulting limit somewhere between roughly $234,000 and nearly $500,000, depending on where that family lives.

The practical effect is worth stating plainly. This income test excludes the top slice of earners in high-cost metros and very few families beyond that.

One distinction matters here. The law sets a ceiling, not a target. A nonprofit that awards these scholarships, known formally as a Scholarship Granting Organization, can choose to concentrate its awards on families far below the federal limit, and many state programs with similar structures have done exactly that. Our explainer on who is eligible for the Education Freedom Tax Credit walks through how the test applies to a single household.

The Part of the Report That Is About Maps, Not Money

The second half of the analysis is where eligibility meets politics. Eligible children are spread across all 50 states. The program is not.

The analysis counts 31 states as in or committed as of July 2026, home to 30.9 million eligible students, or 59.8% of the national total. That leaves 20.8 million eligible children in states that have not joined, plus the District of Columbia.

The count depends on how you treat one state. Thirty states have completed the formal federal election and appear on the IRS roster of participating states for 2027 (citation needed). New York has announced its intent without filing, which is a commitment, not yet a completed step. You can see where each state stands on our 2026 state opt-in map.

Here is why that gap matters more than it looks. A large eligible population in a state that has not opted in is not a group of scholarship recipients. It is a group of children whose access depends on a decision in their own state capitol.

For 20.5 Million Students, This Would Be a First

The analysis flags one number that gets less attention than the headline and may say more about what changes. For 20.5 million eligible students, the federal credit would be the first private school choice program their state has ever offered.

That is because 18 states run no Education Savings Account, no state tax-credit scholarship and no comparable program of their own.

In states with long-running scholarship programs, the federal credit adds capacity to something families already understand. In those 18 states, it would introduce the idea itself, which means the work is not only fundraising. It is explaining.

Eligible Is Not the Same as Funded

This is the caveat the report itself raises first, and it deserves the same emphasis as the headline.

The number of children who qualify is not the number of children who will receive a scholarship. Under the law, each taxpayer’s credit is capped at $1,700 per year, so the binding limit is donor dollars raised, not how many families clear the income screen.

The sequence also matters, because it is easy to describe backward. A donor makes a charitable contribution to a qualified Scholarship Granting Organization (SGO) first. The dollar-for-dollar federal credit is claimed later, when that donor files a federal return. It is a tax credit rather than a deduction, which means it reduces federal income tax liability dollar for dollar rather than reducing taxable income.

At $1,700 per taxpayer, a scholarship large enough to cover a meaningful share of a year’s tuition will usually require gifts from more than one person. That is the real constraint. An eligibility ceiling this high tells you outreach will not be limited by an income screen. It does not tell you the money is there.

The Homeschool Question Nobody Has Settled

One assumption inside the estimates is doing quiet work. The counts assume federal rules will defer to each state’s own law on the legal status of homeschool students.

That assumption is not settled. Treasury has not published final regulations, and until it does, the homeschool share of any state’s figure should be treated as provisional. We walk through the open questions in our homeschool eligibility explainer.

This is the kind of detail that separates a useful estimate from a firm one. The analysis is transparent about it, which is a reason to trust the rest of the arithmetic.

What This Means for Families, Schools and Donors

If you are a parent, the useful takeaway is narrow and personal: you should not assume your income disqualifies your child. Whether a scholarship exists in your community depends more on whether your state has joined and whether local donors give than on your household earnings.

If you run or advise a school, the number changes who you can credibly tell about the program. Eligibility conversations that once started with an income screen can now start with a state map and a calendar.

If you are a taxpayer considering a future gift, the analysis reframes the ask. Demand is not the uncertainty. Participation and funding are.

Where AFC Scholarship Fund Fits

A wide eligibility ceiling makes outreach easier and selection harder. When nearly everyone qualifies, an SGO’s published priorities, its award process and its financial discipline become the things families and donors should examine most closely.

We are preparing to serve donors and families in participating states when the credit takes effect on January 1, 2027. Between now and then, our job is to explain the rules as they are written, and to say clearly when something is still unresolved.

What to Watch Next

Three things will move this picture. Treasury’s final regulations, which are expected to address homeschool status and the mechanics of qualified contributions. The IRS roster of participating states, which can still grow before the credit takes effect. And donor participation in the first filing year, which no analysis can estimate in advance.

Watch your own state first. An eligibility figure only becomes a scholarship where a state has opted in and a qualified organization is ready to award funds.

If you want to follow that as it develops, sign up for updates and find out where your state stands. There is no donation to make yet, and no deadline to meet. There is time to understand this well before anyone is asked to act.