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Committee hears bill to align Indiana with new federal scholarship tax-credit program; opponents call passage premature
Summary
SB161 would opt Indiana into the new federal scholarship tax-credit program and align state rules with federal limits on low-earning degree eligibility for federal student loans and workforce Pell. Supporters said the change would expand options without cost to state taxpayers; opponents urged waiting for federal guidance and warned about shifting public funds to private programs.
Christian Bernard of FGA Action told the Senate Education and Career Development Committee that Senate Bill 161 would let Indiana participate in the federal scholarship tax-credit program created by the "Big Beautiful Bill," allow scholarship-granting organizations to accept federal tax-credit donations under federal rules, and align state student-aid policy with new federal standards that can remove federal loan eligibility from programs whose graduates earn less than workers with a high-school diploma.
Bernard argued the changes would expand scholarships and permit workforce Pell access to eligible short-term training programs without additional cost to the state, saying donors could receive a federal tax credit of up to $1,700 per year. He said the measure would enable Hoosier students to access federal reforms on Indiana's terms.
Opponents, including Joel Hand of the American Federation of Teachers of Indiana, said it is premature to move before the U.S. Treasury and IRS finish rulemaking and guidance for the federal program; Hand cited an open federal comment period and urged delay until federal administrative rules clarify how states should implement the program. Speakers representing rural districts pressed for mechanisms to ensure rural families can access scholarship resources, and advocates urged care around expanding tax-credit scholarships that could shift dollars away from public schools.
The committee heard technical questions about how state-level SGOs would interact with federal rules and whether pre-K access could be included under state tax-credit programs; sponsors noted federal law does not permit pre-K in the new program but that state-level provisions can differ.
Committee members said the bill would be sent to Tax and Fiscal for further review and that staff would watch federal rulemaking closely.
