Indiana lawmakers remove school choice income restrictions in new state budget

In a tight budget year, Hoosier State lawmakers still met their goal of making the state’s school choice program fully universal.

Legislators removed any remaining income restrictions for the Choice Scholarship Program in the biennial state budget that passed early Friday. The spending plan appropriates $622 million for the program in 2025-2026, and $674 million for the 2026-2027 school year, the first year it will be fully universal.

The budget “continues the trend of empowering parents and students to make the best educational choices for themselves,” said Betsy Wiley, President and CEO of the Institute for Quality Education, in a release celebrating the move toward universal school choice.

The funds were approved even though the state is facing an expected decrease of about $2 billion in revenue over the next two years. Gov. Mike Braun, a Republican who is expected to sign the budget, made expanding school choice one of his priorities.

The scholarship program currently serves more than 70,000 students, and it cost the state about $439 million in 2023-2024, although the program has continued to grow. Participants typically receive between $6,000 and $8,000 for educational expenses, or 90% of what the state spends per pupil in their local school district.

The state removed most eligibility requirements in 2023, including prior enrollment in public school, making the program nearly universal. Now, starting in mid-2026, all income requirements will be gone, meaning families of all types can use the scholarship to fund their child’s education, including at private schools. 

The budget also boosts public education spending by 2% annually, from $9.4 billion in the first year to $9.6 billion in the budget’s second year. 

Indiana is one of 16 states with universal school choice, including Texas, which just approved a $1 billion plan the Gov. Greg Abbott is expected to sign. Nationally, more than 30 states and the District of Columbia have some form of school choice.