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PRIVATE EQUITY’S NEW PLAYGROUND: AMERICA’S SCHOOLS  
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Brock Hrehor
September 29, 2025
The Lever
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_ Under the guise of championing “school choice,” the new school
voucher program will likely divert millions in taxpayer dollars to
private equity firms. _

, (AP Photo/Darron Cummings)

 

President Donald Trump
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is poised to accelerate the privatization of the nation’s school
systems — and private equity aims to cash in. By some estimates,
the law’s new school voucher provision
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help parents pay for private-school tuition — is expected to
transfer anywhere from $4 billion
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billion
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private schools and companies that contract with public school
districts. That includes companies owned by private equity firms. 

Thanks to the provision, starting in late 2026, individuals can
contribute up to $1,700 to qualifying “scholarship-granting
organizations” and receive a 100 percent tax credit in return,
entirely bankrolled by the federal government. The organizations
involved can award scholarships to families with incomes at or below
300 percent of the median area income (which in some places amounts to
more than $350,000 [[link removed]]) to cover
expenses such as tuition and school supplies. 

No other cause — including children’s hospitals or disaster relief
— provides such a reimbursement, awarding a tax credit
roughly triple
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taxpayers would receive from donating to other charitable
organizations. 

School voucher programs have been hotly debated since their inception
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emerged as a means to preserve Jim Crow-era race relations
after _Brown v. Board of Education_
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that separating public schools by race was unconstitutional. While
supporters argue that vouchers increase education opportunities
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families, opponents say that these programs drain funds from public
schools while delivering worse academic outcomes
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can promote religious indoctrination
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While the new school voucher program allows
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students to use the funds for things like transportation and school
supplies, some experts worry that it still ultimately diverts public
funds into private hands without significant upsides. 

“There’s a lot of energy from private companies convincing schools
that outsourcing will be cheaper, will make it so that schools have
less to manage,” Azani Creeks, senior research and campaign
coordinator at the Private Equity Stakeholder Project,
told _The_ _Lever. _“But there’s a lot of evidence that shows
that outsourcing often costs the same amount, if not more, than
keeping services in-house.”

Of the billions expected to be funneled into companies that own and
run private schools and contract with public school districts, a
substantial amount could go to private equity firms. 

One such firm is KinderCare, a for-profit child care and early
education company, which, despite going public last year, is
still majority-owned
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the Swiss-based private equity firm Partners Group. 

While it’s difficult to estimate the extent of the funding received
until the bill goes into full effect, the company expects to benefit
from the provision. In a June 28 filing with the Securities and
Exchange Commission, KinderCare reported
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the bill included the “restoration of favorable tax treatment for
certain business-related provisions” that is “expected to be
favorable to the Company.” 

Despite receiving significant federal funding, KinderCare has
increased tuition at a steep rate and delivered bloated pay packages
to its executives. In 2024, 35 percent
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the company’s revenue came from tuition subsidies, while its annual
tuition increases over the past three years vastly outpaced inflation
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KinderCare CEO Paul Thomas and Chairman Tom Wyatt earned $21 million
and $58 million, respectively, last year.

It’s not just firms involved with private schools that stand to
benefit. There are numerous companies that contract with public
schools to provide services such as food and transportation that will
likely win big from the voucher provision. 

One company is First Student, the country’s largest student
transportation service provider. In 2021, the company was acquired by
Swedish investment giant EQT
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second-largest private equity firm in the world. 

In a lawsuit against the company, the San Francisco Unified School
District alleged that First Student submitted false invoices to the
district, claiming that buses and drivers were on the road while
students were learning remotely. And in 2022, the company
charged double-digit rate increases
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Illinois’ Unit 5 school district. One consultant found
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the Illinois district could save anywhere from $5 million to $8.3
million over the next decade by insourcing transportation. 

Not all states are embracing the new school voucher program. New
Mexico Gov. Michelle Lujan Grisham (D) and Illinois Gov. JB Pritzker
(D) have chosen
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to opt in their states, while Wisconsin’s Gov. Tony Evers (D) was
recently lambasted
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a _Wall Street Journal_ editorial for his decision to opt out. 

As the debate over school vouchers wages on, Creeks suggests that Wall
Street is looking for other ways to profit from the upbringing of the
country’s youth. She argues that even well-meaning initiatives like
New Mexico’s universal child care program
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end up benefiting large companies more than the people they’re meant
to serve without sufficient boundaries in place. 

“Even when there might be all these good intentions behind this
legislation that opens up these huge pools of money, the ones that win
are going to be the larger companies that have all these resources,”
Creeks said. “These things are not being implemented with a lot of
guardrails around them about how the funds can be used and who ends up
benefiting.”

_Brock Hrehor is a California-based reporter and researcher covering
labor and corporate accountability. His work has appeared in The
American Prospect, Jacobin, and More Perfect Union, among others._

* Public Education
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* school vouchers
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* privatization
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* private equity
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