The Unbundled Truth: Why Words Matter in the ESTF Debate
After incredible positive momentum over the last four years in South Carolina, suddenly school choice—real parent-empowering school choice— is on the hotseat.
How did this happen, and so quickly?
It all started just a few weeks ago when Senate Education Chair Senator Greg Hembree filed S.692, intending to eliminate “unbundlers” from the new Education Scholarship Trust Fund (ESTF) program, the Palmetto State’s education scholarship account (ESA) program.
“Unbundlers” are ESTF students who are not attending any brick-and-mortar school but are taking full advantage of the basic structure of the ESTF program—a cafeteria menu of a la carte educational options that allows parents to fully customize their child’s education.
Even though they are not educated in school buildings, “unbundlers” are not homeschoolers – they do not fall into any of the Options 1, 2 or 3 Homeschool programs currently available in South Carolina. They are a unique category of students that exists because of how ESAs function.
Unfortunately, the issue at hand arose because supporters of S.692 are conflating “unbundlers” with homeschoolers. During the debate on S.62, the authorizing legislation for the ESTF program, Options 1-3 homeschoolers explicitly asked to be excluded from the program due to concerns about creeping government regulation (a concern that we have readily debunked). Their request was granted, and now the appearance is that the Department of Education has chosen to award ESTF funds to Homeschoolers despite the legislature’s clear prohibition.
We have testified at the General Assembly and have written extensively on this issue (see posts here and here), and we will not rehash those arguments here—our position is clear. Instead, we want to highlight two common misconceptions about the ESTF program that have arisen during this debate:
Myth: The ESTF is a voucher program.
Fact: The ESTF is an education scholarship account (ESA) program.
If we want to have effective debate in the legislature and in society about school choice programs, we must be precise with our terminology.
Although it seems like a minor issue that can be chalked up to colloquialism, vouchers and ESAs are fundamentally different in their structure and intent.
Vouchers are primarily controlled by the government and are intended for use almost exclusively in private schools. In this model, the government sets aside the per-pupil funding that would have been spent on the student if they attended a traditional public school, and then disburses the money to a private school of that family’s choosing.
Take, for example, Ohio’s Educational Choice Expansion Scholarship Program. It benefits from universal eligibility and funding that scales based on a means test (i.e. every student can receive this funding, but the amount goes down for wealthier families). The maximum voucher amount for high school students was $8,408 for this year, but that funding can only be used for tuition and fees at a state-approved nonpublic school.
Similarly, the Indiana Choice Scholarship Program has universal eligibility and funding, and maximum voucher amounts are capped at 90% of the state per-pupil funding for the student’s resident school district. Again, the funds can only be used for tuition and fees for state-approved schools.
Vouchers are a valuable, legitimate form of school choice that many states are taking advantage of, but they do not offer the same flexibility for parents as ESAs.
ESAs are famous for their flexibility—in this model, parents are allocated a certain amount of funding in a dedicated account and provided with a list of state-approved eligible expenses that they can choose from to customize their child’s education.
Iowa’s Students First Education Savings Account Program gave an average of just under $8,000 to nearly 28,000 students in the 2024-25 school year. Recipients must use these funds to pay any relevant tuition and fees first, but then can spend the remaining funds on things like textbooks, tutors, curriculum, software, vocational training, and AP exams.
West Virginia’s Hope Scholarship Program awarded an average of $5,267 to more than 14,000 students for this school year, which can be spent on “…classes and extracurriculars at a public school district, tuition and fees, tutoring, testing, programs of study/curriculum of courses that lead to an industry-recognized credential satisfying a workforce need, online learning programs, alternative education programs, after-school/summer programs, therapies, instruments required by music education courses, transportation, and other qualifying expenses approved by the board.”
Alabama’s Creating Hope and Opportunity for Our Students’ Education (CHOOSE) Program awarded $5,400 to more than 18,000 students this year, and has an equally long list of eligible expenses.
South Carolina’s ESTF is no different from these other ESA programs. This year, we awarded 10,000 scholarships of about $7,600 to students across the state who could use the funds for 14 distinct categories of expenses, ranging from tuition and fees to curriculum to school transportation and uniforms.
At the end of the day, flexibility is the defining feature of ESAs—using the term “voucher” to describe an ESA program is like using the term “jail” to describe a hotel just because both have beds.
One is very strict and has a very short list of “things to do,” while the other allows you to customize your experience however you see fit. If we want to have an honest conversation about what school choice options will be offered in the state and how they will be run, we must be precise with our terminology.
Myth: Fraud is rampant in the ESTF program, and no one knows how much these kids are learning.
Fact: The same accountability metrics and standards apply to “unbundlers” as they do to every other ESTF recipient.
In order to be eligible to receive ESTF funds, a parent must annually attest that they will ensure that their student takes standardized assessments as required by law if their student is not attending school full-time (with the implication being that if the student were attending school full-time, that school would administer the same or similar assessments).
South Carolina Code Ann. § 59-8-150(C)(1) outlines the standardized testing requirements required of all full-time education service providers. Students in 3rd through 8th grade have to either take the same state summative assessment or alternative assessment as traditional public school students (i.e. SC READY or SC-Alt), a nationally norm-referenced summative assessment (the Iowa Assessment, the Stanford 10, or the Classic Learning Test), or three Department-approved formative assessments throughout the year.
Similarly, high school students must take “…a department-approved, nationally norm-referenced assessment, formative assessment, or assessment that demonstrates the student’s college or career readiness.” The Department then collects all of this test data annually and reports it to the Education Oversight Committee for analysis.
The ESTF law also establishes a robust financial accountability system which is bolstered further by the Department of Education’s implementation of the law.
Though the list of eligible expenses is (rightfully) extensive, it comes with the caveat that funds can only be spent with approved education service providers. Anyone, including schools and tutors, who wants to be eligible to receive funds from ESTF students must complete the Department’s application process and annually attest that they want to continue to be eligible to receive ESTF funds and still meet all program requirements.
To be approved as an eligible education service provider, they must agree to:
- Comply with all applicable health and safety laws or codes;
- Hold a valid occupancy permit (as needed);
- Not discriminate on the basis of race, color, or national origin;
- Conduct criminal background checks on all of their employees and exclude those who are disqualified from working in a school or may be a risk to students;
- Individuals (i.e. tutors) also need to pass a criminal background check
- Provide parents with receipts for qualifying expenses;
- File a surety bond with the Department if they are projected to receive at least $50,000 in ESTF funds in the upcoming school year; and
- If they are providing full-time academic instruction, they also need to:
- Ensure students take the relevant standardized assessments as required by law and provide those scores to their parents
- Collect high school graduation information of scholarship students; and
- Report both of the data points above to the Department annually, disaggregated by grade, gender, family income, race, and English learner status.
Clearly, this is quite a commitment, and not one that a potential education service provider would enter into with the intent of defrauding the state.
To summarize: the legislature created a list of potential eligible expenses for the ESTF program, the South Carolina Department of Education approves the people, organizations, and schools that parents can buy these things from, and the Department and ClassWallet (the 3rd-party vendor that actually facilitates the receipt and spending of funds) work together to ensure that everything stays in check.
Parents cannot pay themselves to educate their child(ren) at home, and money can only be spent on pre-approved educational expenses. In short, the system works.
What little fraud there is has been dealt with accordingly. About 2,000 students have been removed from the program for noncompliance with program requirements since its inception for a variety of reasons—the most common violation so far is the requirement that they not attend their zoned public school. Others were caught buying ineligible items, such as AirPods or, as in the first case of actual charged fraud, “…Apple electronics, computer monitors and graphing calculators” with the intent to resell them. In this case, the total potential fraud is just over $6,500.
Compared to other public programs, this rate of fraud and abuse is incredibly low. In Arizona, from December 2024 to September 2025, just over 20% of ESA program expenses were deemed improper, and the state was able to recover about $1.2 million. This is a large number, but each individual improper payment was relatively small on average. Compare this to the three South Carolina women who were convicted of SNAP fraud last year totaling more than $100,000, or the former employee of the South Carolina Department of Employment and Workforce who collected more than $10,000 in fraudulent pandemic unemployment assistance.
We are not hearing the mass calls to shut down unemployment assistance or to shutter the SNAP program because of this fraud—they are legitimate programs that help those in need, so we will do our best to catch and prosecute fraud as it happens.
Just like our ESTF program.
Fraud is fraud. Full stop. It is never okay, and just because one program has less fraud than another does not justify it or mean that it should not be addressed. However, in the case of our ESTF program, the oversight system is working as intended, and those who are caught spending state money improperly are being brought to justice.
At the end of the day, some of those who are opposed to the ESTF program will do what they can to poke holes in it and try to show why it needs to be shut down. They will call the program “vouchers” to disguise the true flexibility inherent in our ESA program, and they will point to every improper payment and every case of fraud to try to shut down the program. Others, who are actually supportive of the ESTF concept, will unintentionally water down its transformational power by insisting on a brick-and-mortar school attendance requirement.
If we wish to debate the merits of school choice in South Carolina, we must be precise with our terminology, be honest with the program’s accountability measures (both academic and financial), and deal with each other respectfully. The end goal is the same—we all desire to improve academic outcomes for our students, we just disagree on the best way (or ways!) to get there.
