The Skillman Foundation

On July 4, 2025, President Trump signed a massive act of legislation that he dubbed the “Big Beautiful Bill.” Approximately 900 pages long, it will impact many public systems and sectors and every person in the United States.

Below is a breakdown of what the bill means for K-12 students and schools.

A federal education scholarship program begins in 2026. States choose whether to opt in.

In a nutshell

This is essentially a private school voucher program, but funds can be accessed by K-12 students regardless of the kind of school they attend, including public school and homeschool, to pay for things like tutoring, technology, and transportation. States will choose whether to opt into this program. In states that choose to opt in, individuals can donate to an education scholarship fund and receive a full tax credit.

What it means for taxpayers

Individuals will be able to receive up to $1,700 in tax credits for donations they make to organizations that award K-12 education scholarships. This is a dollar-for-dollar tax credit, whereas other charitable donations only provide a tax deduction, which reduces the amount of income that is subject to being taxed. For example, a taxpayer in the 22% tax bracket who donates $1,000 to charity would only have their tax liability reduced by $220.

Some critics are calling this a tax loophole for the wealthy. In addition to this being a unique dollar-for-dollar tax credit that no other charitable category receives, it will allow stockholders to avoid $1,700 in capital gains taxes by donating their holdings rather than selling them, getting a dollar-for-dollar return from the federal government.

What it means for students and families

Students whose families’ income does not exceed 300% of their area’s median gross income are eligible to receive the scholarship funds. The bill doesn’t stipulate how much money they could receive. For context, the average private school tuition in Michigan is over $10,000 per year.

Notably, but largely ignored in other coverage so far on this topic, the funds are not limited to private school tuition. They can also be used by any K-12 student—public, private, or homeschool— to pay for things like tutoring, educational therapies, transportation, and technology.

What it means for state government and education advocates

States, through the governor or another official, must opt in; they have the option to not participate. If a state decides to participate, they control regulatory oversight, including vetting the scholarship-granting organization(s) that receive the donations and distribute the scholarships. It is unclear if states would have the authority to change the income restrictions—for example, making the scholarships available only to children from low-income areas or households.

State control over the program means political battles over school choice will ramp up. Outcomes are expected to fall along party lines, with red states opting in and blue states opting out—though the possibility of structuring the scholarship in palatable ways to purple and blue states, combined with the idea that this is “free money” to support students, could prove to be a tempting opportunity. It remains to be seen how flexible the federal government will be with states altering the guidelines of this program; skepticism to this end is warranted.

Pell Grants are now available for workforce training

Starting in the 2026-2027 school year, students from low-income backgrounds who’d normally qualify for a federal Pell Grant to pay for college can now also use the funds for workforce training. Eligible programs must last 8-15 weeks, lead to a credential or credit toward a degree or certificate program, and prepare students for jobs or industries that are high-skill, high-wage, or in-demand, in line with the Perkins Career and Technical Education Act. While the current Pell Grant maximum is $7,395, the Workforce Pell Grant amount will be less, prorated based on the number of clock hours, credits, or weeks. Governors and state school boards would decide which programs qualify.

Like Pell Grants for college, students who are interested in a Workforce Pell Grant will need to fill out a FAFSA (Free Application for Federal Student Aid) form.

Renewed Medicaid work/study/volunteer requirements will impact school budgets

This impacts 40 states (including Michigan) and Washington, D.C., which expanded Medicaid to nondisabled adults under the Affordable Care Act. Adults will now have to regularly submit paperwork showing that they are working, enrolled in school, and/or volunteering for a combined 80 hours a month—or that they qualify for an exemption, such as being pregnant, disabled, or caring for a young child or disabled person. Children will still be covered.

How does this impact schools?

When a student qualifies for Medicaid, their school district can bill the federal program for the services they need during the school day. This adds up—big time. Medicaid is the fourth-largest federal funding source for K-12 schools, supporting over $7.5 billion of school-based health services every year. It is used to staff school nurses, occupational and physical therapists, and speech-language pathologists, provide mental and behavioral health services, offer vision and hearing screening, and more.

Under the new legislation, states that use Medicaid to pay for programs that go beyond personal medical care to cover in-school services like these will have to foot a greater portion of the bill, which could reduce or cut such services for students.

New SNAP eligibility requirements could limit free school meals

The bill makes a series of changes to the SNAP program, including requiring more parents of school-aged children and teens aging out of foster care to work or be enrolled in school or job training; ending eligibility for refugees and people who’ve been granted asylum; and raising how much states have to kick in.

How does this impact school meals?

Children in households receiving SNAP benefits are automatically certified to receive free school meals. If SNAP eligibility is limited, more families will have to apply for school meals through an application process. Additionally, this could then lead to a decrease in the number of schools eligible for a high-poverty provision that covers free school meals for an entire school population based on high need.

Since 2023, Michigan has made free school meals available to all public school students, regardless of household income. A recent proposal from the Michigan House Republicans would boost K-12 student funding by nearly 25%, in part by eliminating this state-level program.

Increased immigration enforcement is likely to affect schools & students

The bill includes $31 billion in additional funding to hire more agents and cover the cost of deportation, as well as $13 billion in grants for states and local communities to assist with immigration enforcement. Increased immigration enforcement means schools will spend more time and resources tending to students whose family members were arrested, advocating on behalf of students who were detained, and adding transportation and safety measures to ease the fears of immigrant families. Research shows that immigration raids, or the threat of, decrease school attendance for immigrant youth and negatively impact their mental health, and take a toll on the broader school climate and student population as well.

Child tax credit renewed and increased

A 2018 child tax credit was renewed and increased to $2,200.

It’s a win overall, but the increase does not keep up with inflation. This criticism has particularly percolated among conservatives who want the federal government to pass pro-family policies and saw this as an easy opportunity to do so.

$1,000 accounts given to newborns

This piece of the legislation is a solid win for kids. Every baby born in the U.S. between January 1, 2025 and December 31, 2028 (to a parent/guardian with a social security number and authorization to work in the US) will be given a $1,000 contribution into an account invested in a US stock index. Parents and families can also contribute up to $5,000 annually to each account. Funds can be used by youth once they turn 18 for education, vocational studies, buying a home, or starting a business. There is a timetable for what percentage of the dollars can be spent and when.

A $1,000 investment in a broad equity index fund is estimated to grow to an average of $8,300 over 20 years. Any other contributions made to the account by family members and parents’ employers could greatly increase that account balance.