Navigating Education Savings Accounts: Choices and Challenges

Mike Goldstein joined me to talk about the evolving landscape of education savings accounts (ESAs) and the experiences of families utilizing them. Goldstein, who has been researching the reality for families on the ground in states like Florida and West Virginia, shares insights into how different types of families—those in reactive situations looking to escape traditional schooling and proactive families seeking enrichment opportunities—are navigating this space. The discussion highlights the challenges these families face, such as navigating systems with varying levels of friction and finding appropriate educational resources, and touches on the potential for future innovations in guidance and AI to assist parents in making more informed educational choices for their children.

Michael Horn

Welcome to the Future of Education. I'm Michael Horn. And you are joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. And to help us think through that, today we've got one of my favorite folks in the world of education, if we can call it that, none other than Mike Goldstein. He's a repeat guest now on the podcast. Mike, as many of you may know, founder of MATCH Charter Schools back in the day, did some really interesting work overseas, helping stand up a network of schools in Africa. And we may get into all sorts of things, but in the last several years has really been, Mike, I'm going to say, tinkering with a lot of innovations on the ground around what schooling could look like. And in different realms of the equation of K12 into this thing we think of as college or launching into careers and so forth.

Like, you've been playing a lot in the design and innovation space and thinking about what's the reality on the ground. And then most recently, he's been a fellow at the Pioneer Institute here in Massachusetts. And you got to do a bunch of work, Mike, I guess looking at, let's put it this way, like educational choice, not just even school choice, by a lot of measures, it's growing quite a bit. Education Savings Accounts, universal in many states. Now we can talk about what that means or doesn't mean. You've been looking at, like, what's the reality on the ground for a family trying to figure out, hey, I have $8,000 in a bank account earmarked for education. Where do I spend it? What do I want to use it on? Am I homeschooling, microschooling, unbundling, all these terms we use in education wonk land.

What have you been learning on the ground? Maybe let's start there and we'll see where it takes us.

Mike Goldstein

Yeah, great to be here. Six miles south of you in Watertown, Mass. The weather's unbelievable down here.

Michael Horn

I'm just jealous.

Mike Goldstein

Yes. So listen, great to be here. And yeah, Jim at Pioneer said, hey, we're interested in, like, what are the stories underneath this very fast expanding education savings account. And so I was looking at states like Florida, you know, $8,000 per year per kid. West Virginia, $5,000 per year per kid. And as you know, and probably many of your listeners, your podcast listeners know, the typical family with an education savings account just takes that eight grand and gives it to their local private school. That's how they're using that money. So 90% of the families have a very conventional and easy to understand expenditure here.

It's like, all right, it's either paying my tuition or cross subsidizing my tuition. What's more interesting and wildly varied is if you are a homeschool family and you can take the eight grand or the five grand and spend it without any underlying private school tuition that you have to pay. Right. And so those were some of the stories that I was trying to capture for Pioneer, finding these people, talking to them, how do you blow the money? How's it going for your kid?

Michael Horn

So like these are almost the blank slate families, right? They're not enrolled already in a previous tuition driven school of some sort. It sounds right. Like they're sort of coming into this with a much more blue sky. What do we use this on? And perhaps intentionality of why they want to use it or what they're trying to escape from or whatever else. Is that fair?

Mike Goldstein

I'll give you, I'll share two kind of concrete stories that will resonate, I'm sure with you and your listeners. So you know Daniella in Arizona, Katie and Tiffany in West Virginia. These are classic aspirin, meaning we feel pain as moms. Our kids were enrolled in the public schools and it wasn't going well. I had this mama bear moment. I pulled them out. And so in that case, they're responding to I'm a homeschooler, not for a religious reason, but because I don't feel my kids needs were being met. And sometimes the critique is more social, like kids being bullied, doesn't have friends, doesn't like to go to school.

Sometimes the critique is more academic. My kids are struggling to learn stuff where I don't even think the school is serving even their median kid well. And so then they're like, I gotta figure out how to do this on my own. That's one type. So that was one part of the story. The other was what I would more say are vitamin parents, meaning their kids. So Mariana and Andrena are twins. They came to the US from Venezuela.

They're moms, they live near each other, they each have a few kids. Their kids were doing fine in public school in Florida. It's just that they're like, our kids are little. I think we could do better. Like what if we homeschool our kids and then we can use these education savings accounts much more for enrichment, you know, like, let's get them some bass guitar lessons. Like, my kid wants to do the rock climbing gym, and my other kid's really into soccer at an elite level. Like, we could send them to the academy with some of this cash. And so those are, like, the two types of stories that I think are likely to increase those choosing homeschool over time.

Because it's not like a moral or religious driver of homeschool attendance. It's much more of a vitamin or aspirin to a secular education experience.

Parental Decision-Making Shift

Michael Horn

So both of those are interesting. I think the first is probably more. I don't know, familiar is the right word, but what people might expect, right? Like, my kid's in trouble. This is going nowhere fast. I gotta get out, put an array of services around them. The second one sounds like maybe I'm gonna stereotype in a different way, but like a complacent, previously complacent family that all of a sudden says, hey, we could do something different here and get a lot more for our kids. Maybe let's tackle that one first and, like, tell us what that decision making looks like. What did you learn about how they're making choices? You just said they can spend money on soccer academies and bass guitar lessons.

I mean, those sound fun. I'd like public funding for that for me. What does that look like? What's the conversation at the dining room table like for them?

Mike Goldstein

So I think they were kind of. It's like two sisters evangelized a little by the third sister, this kind of like, hey, we can do this. And I think they're both professional. They're themselves well educated. And some of the vibe here, Michael, was, hey, I'm already, like, working from home, and my Saturdays and Sundays with my kids are pretty pleasant. These are kids with, like, pretty high executive function overall. If you kind of get them started, you know, they're age appropriate.

I mean, these were younger kids, but, like, you know, they get started with their book, and they can read for a while, and they get started with the math, and they can, you know, take a run at it or, you know, just kind of go to mom or dad with like, I need a little help here or there. So not sort of saying it's, like, easy per se,

Michael Horn

but it's not like an all hands on deck. I have to be babysitting my kid.

Mike Goldstein

Yes.

Michael Horn

Eight hours. Right. Totally pulling them tooth and nail through this.

Mike Goldstein

Right. And I think that Covid, of course, sort of woke people up a little bit. This what you were calling, like, a complacent family. It's like the kids are doing fine in school, we got no complaints. They're like reasonably happy to go to school and they have high grades on their report cards. They're liked, they have friends. But it's like, huh, this is like a big chunk of childhood that's pretty boring. It's like, why does this need to go from 8 to 2:30 when I feel like we're getting this roughly done from 9 to 11 am and sort of like they're actually learning a little more, you know, much more compressed time and therefore whether the kid is converting the afternoon just into like let's ride our bike and play outside with our friends, parents are

Michael Horn

Like that's good. Or let's kind of go deeper on more structured kind of enrichment type things. That's good too.

How do they make choices with the money? Right? Like I'm really interested in how social networks play a role in helping them inform. Are there tools though also in the ESA, you know, world that is helping inform them? Like how are they deciding and choosing where they're spending the dollars versus using their own expertise perhaps and so forth. What does that look like?

Mike Goldstein

It's an interesting kind of mess that varies a lot state by state. So this is, it's a pretty fraught area. So each state as you know, has a different software vendor who's running the back end of this education savings account. And I think that overall they're pretty good at the first job, which is make sure that you're not spending state monies on crazy things that are going to become front page of the paper type scheme scandal.

Michael Horn

Let me, let me pause you there for one second. Like what counts as crazy? Because I suspect some people are like, wow, bass guitar lessons. I get it, it's educational. But for some people, that's crazy. Some people, they're like, yeah, amen. Like where's the line on that?

Preventing Misuse of Public Funds

Mike Goldstein

Okay, so you're right and I'm going to try to organize it this way. Would, would everybody, including the most advocate oriented type purse. It is, you can't be spending it on buying laptop computers and then reselling them out of a van so that you know, your home is making money. You can't hire grandma for $8,000 and put her on the payroll. Like there's certain types of use that is much more, I think more like borderline fraud or actual fraud that we see in some other public, you know, like housing vouchers, other things. So job one is like the unquestionable 99 out of 100 people would agree this isn't okay. Then there's this next level of turf where you and I might, for the sake of discussion, have a healthy disagreement. So I might be more on the side of like, well, schools offer music, public schools offer music lessons, public schools do trips to D.C., public schools do a bunch of enrichment type things where they're using public monies to pay adults to do stuff to give lessons to kids. And I would say, why couldn't the homeschool, in my opinion homeschool family use that? Each state calibrates that tightness a little bit differently. Like how much enrichment versus not Mike G. might have a very wide latitude. If you can show it happens in any public school, you should have the right to do it as a homeschool parent would be sort of my rough rule of thumb. Other people are like, no, we want narrower scope of activities and there's a reasonable level of policy disagreement we could have there. So okay, so that's like the starting point.

But the next level is that these software providers and the state treasury department that runs this, have different skills in how much friction they're going to set up for the basic ability to buy and the basic ability to get reimbursed. And so in West Virginia, if you look at these homeschool moms that are on Facebook, nice people literally just trying to get like $300 reimbursement for a science kit they bought. It's a friggin nightmare, like page after page after page just every day. So I'm on these Facebook groups. And by the way, that's probably the number one source of information for these families is peer to peer on Facebook. I think that's probably the top platform. How are you doing this? Other mom chimes in 'here's what we did' in the comment section. So there's a lot of that and these states vary quite a bit in their ability to execute this.

That wouldn't drive a parent crazy. And you know, so unfortunately sometimes like the school choice people, I would say you should get a lot more, if you're an advocate of school choice and an advocate of these kinds of education savings accounts and homeschooling, you should probably flex a lot harder on making this friction a lot lower without losing like, without drifting into scandal world where you lose the productive friction.

Michael Horn

Sure, sure. No, that makes sense. Okay, so they're using Facebook. They are a variety means to find out the funding. What did you like, what was surprising to you? Or insights about their experience. Before we go to the first archetype that you, you laid out that you think other people are not getting about their stories about how they're navigating this world or sort of things that surprised you. Aha's that you had as you dug into these stories.

Mike Goldstein

So you mean for like the vitamin parents?

Michael Horn

Yeah, for the vitamin parents. Before we go to the trouble, get me out of trouble parents.

Enrichment vs. Academic Market Challenges

Mike Goldstein

I feel like the people that were more vitamin parents. It's the market for experiences for your kid, the general market, however you educate your kid, you and me, anybody in greater Boston, if you want to buy music lessons, got a lot of good choices. You want to buy certain sports type opportunities, you got a lot of good choices. I think that's a healthy, well developed market because it's so used by the private sector that it's not that hard to find good bass guitar lessons for your kid. And so I think you can navigate the enrichment side pretty well. And these parents are less likely to need the academic enrichment stuff, which I think is a harder market to navigate because here's why. Most of the tutoring, in my opinion, that's available, let's say, for math, is geared more for tiger parents whose kiddos are at the, you know, and as you know, as a provider in this space, like kids at the 80th percentile whose parents want them to be at the 90th percentile. The skill of those math providers in helping a kid who's at the 20th percentile is very low.

It's not their target customer. Whereas everybody has sort of the same, like, your kid's new to bass guitar. We start with that kid. You know, like, it all sort of starts at the same place. Whereas they're not starting with a kid who took guitar for four years, hasn't made any progress, is super frustrated, like you might have with a reading or math skill type thing. And so that's why I think the vitamin parents, they have a pretty good experience with these education savings accounts.

Michael Horn

Okay, so it sounds like you're foreshadowing that the story might be different with the help me get out of trouble parents, but maybe I shouldn't jump to that conclusion. Tell me what you learned.

Mike Goldstein

Yeah, so I do think one. I remember Tiffany in West Virginia was telling me, you know, they're getting information from a wide variety of sources and they're trying to sort it out solo in a way that strikes me as challenging. Like if you're new to the space like, you're not from K12 World. And Tiffany herself had been like a teacher, public school teacher, an administrator for many years. So she wasn't even new to the space. And she was like, well, one thing I learned about my kid pretty quick that I did not know, is his phonics are pretty bad. And, like, I kind of knew, but he was kind of coping. And then I heard, you know, the podcast Sold a Story, right? The huge sort of mothership activator of a lot of phonics stuff.

She's like, oh, my God, this is what's going on. I'm a little embarrassed as a professional educator to be saying this is going on in my own home with my kid. She then was able to find in West Virginia a pretty skilled old school phonics, I know what I'm doing lady. And so her kid has been responding pretty well, and she's using the education savings account to pay for that. So at the time we recorded, that was like a pretty good purchase. And I think she had substituted away from what had originally sounded like a really cool class online, like Chronicles of Narnia, lLet's go deep. It's like, wait a minute, I don't think that's what my boy needs right now.

And sort of made a good adjustment and made what sounded to me like a smart purchase. But if you look again at these Facebook threads, you see a lot of sort of desperate, these are invariably moms, it's like 95% of the communicators about homeschool are moms saying, kiddo has a problem. I tried X, it didn't work. Now what? And the thread is just a whole. It's like 20 different random ideas. There's nobody who's able to.

Navigating Education Savings Uncertainty

Mike Goldstein

It's not like, yeah, you have your pediatrician to take a whole bunch of different competing ideas and synthesize it in an expert way. What is not yet well developed in this market, it could appear, because Education Savings account, like, who knows? The guidance that's available is not particularly strong. And the mindset of the moms is mostly like, I'm supposed to be able to figure it out by myself in a way that you would never do with medicine or law. Like, in theory, you could represent yourself and you can like, oh, we got into a fender bender and now there's a letter and we're being sued. I guess I could read it all online and figure it out, but who would ever do that? You got to call the guy and be like, we're being sued, it's fender bender. I don't understand my insurance. What do I do? And then somebody sorts you out.

There's very little of that , remember, the ethic of homeschool that you've covered for so long is not that it's much more like we're the pioneers here. We figure it out and we ask each other. But really, you're asking people who themselves, as homeschool moms, they have like a sample size of like two or three kids. It's not like they have a hundred use cases. And they know what works well in what situation. They extrapolate from their own kid.

Michael Horn

Yeah. So I want to stay on that for a moment because I'm curious how you see the market evolving or what your prediction is around how the market will evolve or maybe should evolve. You can choose which one you want to do there. One of my hypotheses is that the back end systems actually need to start helping people navigate this more meaning not Yelp, but more prescriptive recommendation engines to help point you in the right direction if-this- then- that sort of things. And my instinct has been, yes, certain states have tried to legislate guidance into it, but I think more likely there's a market that gets borne out over time. If the volume actually gets high enough where you actually might pay for folks to help you navigate or even diagnose where you are, you may think both of those are really dumb. And so I want to know what you think.

Mike Goldstein

So I agree with you in the long term. And the question is how to build the bridge. So an interesting thing that came across in West Virginia, for example, they had just changed vendors from vendor A, which was doing fine, to vendor B in this kind of way, where the vendor B promise was to build what you said with AI, not only have they been totally unable to build that, they broke the whole basic reimbursement system. Right. In other words, if you look 12 months ago, you don't see the Facebook thread of West Virginia homeschoolers filled with like, how do I get my Hope Scholarship thing? So they sort of shot for the moon and came up super short and sort of broke the underlying almost functionality. I would say the following. Yes. In the long run.

And where you see, for example, AI work. Well, a good example is radiology readings. Right. We both know that. And it's like you had all these skilled, very well trained doctors for a while who created this base of expert knowledge. We've looked at 5 million x rays. We've pretty correctly diagnosed most of that, now the AI is going to vacuum all that pretty good content up, and now it can do that as well or better. Right? Now, nobody has done that.

Years of having the MD read the X ray and give expert opinion. So it's sort of like what the AI is trying to vacuum up is a whole bunch of random and hodgepodge moves like, oh, let's change curriculum. Like, you know what I mean? Like, there's, there's nothing. It's all noise. It's really, it's like, you know, so, you know, garbage in, garbage out situation. If you were the king of school choice and you wanted this in the long run, your intermediate step would be to manually inject and finance expertise into the system to help a lot of families build the loop. Like, how do I prove we're actually helping the families? Let's have competing groups.

Mike Goldstein

Look at satisfaction. Try to measure improvement, whatever those things are. You build that through the human thing. Before then you would say, okay, now I'm going to use the AI to replace the human, to make it more, you know, affordable, et cetera. We don't need it to always be that.

Michael Horn

Do you think then it'll be through mandates that mandate, that guidance function, or do you think it'll be its own organic market where people say it's actually worth spending, you know, 500, a thousand of dollars of the ESA for someone to help me navigate this world or come up with the bespoke package for my kid?

Mike Goldstein

I mean, I don't know, it's possible to me that in four years we'd be saying this is a broken market that nobody's been able to figure out because the barriers to entry are not high. But the barriers to like, providing good advice for 500 or $1,000 are high. Like, it's not a great, you know, unit level if you're going to really spend time with a family. And so usually when we see education services like that, it does go to, you know, like, you think about college admissions counseling, like, I don't know, either you go to the local high school counselor for nothing or you're paying, you know, $500 an hour for

Michael Horn

$ 8, 10, 12,000 by the time you're done with it.

Mike Goldstein

Yeah, totally, Right. So it would eclipse the whole amount of, so that's why there are places. And again, there's like false starts. So it's not like a open. Nobody's done anything. So for example, in Florida, there are already a whole bunch of people that are homeschool certifiers. So it's typically like a teacher and at the end of the year in Florida, you're supposed to send in some kind of proof that your kid learned something.

How do you do that? You pay 75 bucks to some nice teacher who set up shop as one of these certifiers. And, I don't know, they talk to your kid for 10 minutes and then they give you the letter. And so it's. That one is just meeting a weird function of the state. Right. Florida's getting no actual benefit from this, but they get to say, well, we certify that everybody does something reasonable. But what that means is there's all these latent people. So I asked one and I was like, I asked her, well, if somebody gave you a thousand bucks instead of 75, could you actually meaningfully evaluate the kid and then meaningfully help? She's like, oh, yeah, I would love to do that.

That's what I thought I would do. Nobody wants that. But so some of these are like, you know, it's like classic. How do you build a new category? You know, you watch Shark Tank. It's like, duh, you're trying to build a new category. That's a challenge because it creates a whole bunch of additional consumer education that might not be in the interest of financial interest of any one firm, because once you build the market, then everybody else can enter it. So it's more, I think it's more, it might be more of a philanthropy problem, possibly, than a market will solve it itself problem.

Michael Horn

Super interesting. Okay, let's switch gears on one to two other topics. One, I'm super curious. Like, we got folks like you, Kerry McDonald, others in Massachusetts who are really interested on these on the ground stories. In her case, she's often profiling the entrepreneurs behind the microschools here. You've gone to the families, right, Consuming all these different bespoke education solutions. We don't have any prospects in Massachusetts, of which I'm aware that move us in this direction. Maybe you'll tell me otherwise, like, you know, sort of what's driving this curiosity of pioneer others here in Massachusetts?

Education Choice: Red vs. Blue States

Michael Horn

And, and I don't know where the question leads, but I'm curious to hear you pontificate there. But I guess the other question is just to get political for a moment. It does seem like there's a red state strategy at the moment in this country of a lot of education choice and yes, a lot of progressive educators participating in those states. So it's not super political in the state, but the state right. Tends to have a political leaning. The blue state strategy at the moment, I'm not sure what it is in this country, but it's not this. So like, where does this go? Like we're going to have over 50% of students eligible for some form of universal choice pretty soon. Is it going to grow?

I don't know. I'd love to just hear you blank-spoken on this because I'm not quite sure what the question is, but it's something I'm curious about because I think it's interesting we're interested in it here.

Mike Goldstein

Yeah, I would say so. I agree with your basic read. I don't see, you know, a ton that's likely to happen in blue states, but at the margins, you know, there'll be some interesting stuff. Like I interviewed rather a guy in Denver, Colorado, sort of blue purple state without his embark microschool. But yeah, the path for a red state governor, table stakes is clearly now you have to have kind of a school choice strategy. And so if you're interested, like you and me, broadly speaking, I guess I'm like, oh, I happen to live in Massachusetts and I think there's a lot of kids, like my kids who go to the public school down the street are doing just fine. And in all the country there's a lot of kids in public schools who do just fine.

But there's a lot that are struggling. And unfortunately in our home state, nobody's going to do anything about that. In these other states they're going to try. Maybe they'll put some wins on the board. They'll probably put some losses on the board. I'm interested in that. So I sort of think like I happen to live in Massachusetts, but, you know, I can get to other places.

Michael Horn

Yeah. So let's understand this. Okay, last question as we wrap up. Big insights, things that people are missing, things that surprised you as you dug into these individual stories that you'd say people need to understand this. What would you list under that?

Mike Goldstein

Yeah. One of the things that you and I have talked about before is how do you measure learning? And should you try to measure learning for a homeschooler?

Michael Horn

Yeah. Or for bass guitar.

Measurement Challenges in Education

Mike Goldstein

For bass guitar. Right. For any of these, like public expenditures or an easy way to hold that at bay is like the measurement seems to have made things worse off in a number of ways sometimes. So we're both, you and I are measurement nerds. We love that. And yet we can acknowledge the other side of the argument that even if you could solve the technical issues around, for example, it'd be cool to know what is math and English achievement like if your kid went to public school in grades three and four so you got a sense of their annual progress and then happened to shift to homeschool for grades five and six, like, did the learning rate accelerate or decelerate? It'd be cool to know that. There's a bunch of technical issues with that that are probably solvable depending, asterisk, but who wants to know that? And it's sort of like since you and I are more interested in like, what's the kid side of this, what's the real life experience and how do we make that better. But a lot of the political decision making is much more tribal.

School Choice Debate Nuances

Mike Goldstein

So what you and I would expect is people that are in favor of school choice would be like, I'm not interested in that question unless I know it comes out on my side. And the blue tribe people would say the same thing in the other direction. And what Patrick Wolf, the scholar, you know, has sort of written even recently about school choice is, look, you know, it's pretty close. You're not going to see large gains in academics from this per se, if that's what you were hoping, like these breakthroughs where the kids make skyrocket in their literacy levels. But you're not going to see these big blow ups like perhaps school choice opponents would prefer to see because then it makes the case that we should just keep the system as it is. And so I think there's ways, interesting, challenging ways to go at that question. I'm sort of fascinated by that. I know you are too, but who would sort of organize that, fund that? What would be the purpose of it all? Kind of interesting questions here.

Michael Horn

Gotcha, gotcha. Super interesting. Mike, thanks for coming on and talking us through what you've been learning. And as you continue to go down this path and designing for these individuals, whatever you choose to do, come back on and keep us posted.

Mike Goldstein

Awesome. Great to be with you, Mike.

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