Education Savings Accounts for Military Families Act of 2021
Bill: S.2165 | Sponsor: Sen. Sasse, Ben (R-NE)
Policy area: Education

Summary:
Education Savings Accounts for Military Families Act of 2021
This bill directs the Department of Education (ED) to establish a program to provide children with parents on active duty in the uniformed services with funds to pay educational expenses.
Specifically, ED must establish a tax-exempt Military Education Savings Account for dependent children of parents in the uniformed services for the payment of the children's educational expenses. Funds in the savings account may be used for specified purposes, including the cost of attendance at a private elementary or secondary school or institution of higher education, private tutoring, or costs associated with an apprenticeship or other vocational training program.

To amend the Elementary and Secondary Education Act of 1965 to allow 
 parents of eligible military dependent children to establish Military 
          Education Savings Accounts, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Education Savings Accounts for 
Military Families Act of 2021''.

SEC. 2. MILITARY EDUCATION SAVINGS ACCOUNTS.

    (a) In General.--Title VII of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 7701 et seq.) is amended by inserting 
after section 7012 the following:

``SEC. 7012A. MILITARY EDUCATION SAVINGS ACCOUNTS.

    ``(a) In General.--The Secretary of Education, in consultation with 
the Secretary of Defense, shall carry out a program under which the 
Secretary of Education shall--
            ``(1) at the request of a parent of an eligible military 
        dependent child, establish an account on behalf of such child 
        (to be known as a `Military Education Savings Account') into 
        which the Secretary shall deposit funds in an amount determined 
        under subsection (d); and
            ``(2) establish a procedure under which the parent of the 
        child may use funds in the account to pay for the educational 
        expenses of the child in accordance with this section.
    ``(b) Application.--
            ``(1) In general.--To be eligible to participate in the 
        program under this section for a school year, a parent of an 
        eligible military dependent child shall submit an application 
        to the Secretary in accordance with this subsection.
            ``(2) Application process.--In carrying out paragraph (1), 
        the Secretary shall--
                    ``(A) accept applications on a year-round basis and 
                establish procedures for approving applications in an 
                expeditious manner; and
                    ``(B) create a standardized form that parents can 
                use to apply for the program and ensure that such form 
                is readily available in written and electronic formats, 
                including on a publicly accessible website.
            ``(3) Approval.--Subject to the availability of funds to 
        carry out this section, the Secretary shall approve the 
        application of a parent to establish a Military Education 
        Savings Account if--
                    ``(A) the application is submitted in accordance 
                with the application process established by the 
                Secretary pursuant to this subsection;
                    ``(B) the application demonstrates that the child 
                on whose behalf the Military Education Savings Account 
                is to be established is an eligible military dependent 
                child; and
                    ``(C) the parent who submits the application enters 
                into a written agreement with the Secretary under which 
                the parent agrees--
                            ``(i) to provide the child with instruction 
                        in, at minimum, the fields of reading, 
                        language, mathematics, science, and social 
                        studies;
                            ``(ii) to not enroll the child in a public 
                        elementary school or a public secondary school, 
                        on a full-time basis while participating in the 
                        program;
                            ``(iii) to use funds in the Military 
                        Education Savings Account only for the purposes 
                        authorized under this section; and
                            ``(iv) to comply with all other 
                        requirements of this section.
            ``(4) Renewals.--The Secretary shall establish a process 
        for the automatic renewal of a previously established Military 
        Education Savings Account except in cases in which--
                    ``(A) the parents of the child on whose behalf the 
                account was established choose not to renew the 
                account; or
                    ``(B) the account was used to commit fraud or was 
                otherwise not used in accordance with the requirements 
                of this section.
    ``(c) Priority in the Event of Insufficient Funds.--
            ``(1) In general.--If the funds appropriated to carry out 
        this section are insufficient to enable the Secretary to 
        establish and fully fund a Military Education Savings Account 
        for each eligible military dependent child whose parent has an 
        application approved under subsection (b) for a school year, 
        the Secretary shall--
                    ``(A) first renew and fully fund previously 
                established Military Education Savings Accounts; and
                    ``(B) if funds remain available after renewing all 
                accounts under subparagraph (A), conduct the lottery 
                described in paragraph (3) to select the children on 
                whose behalf accounts will be established using the 
                remaining funds.
            ``(2) Transfer authority.--Notwithstanding any other 
        provision of law, the Secretary may transfer amounts from any 
        account of the Department of Education to renew and fully fund 
        previously established Military Education Savings Accounts 
        under paragraph (1)(A). The authority to transfer amounts under 
        the preceding sentence shall not be subject to any transfer or 
        reprogramming requirements under any other provision of law.
            ``(3) Lottery.--The lottery described in this paragraph is 
        a lottery in which--
                    ``(A) siblings of children on whose behalf Military 
                Education Savings Accounts have previously been 
                established have the highest probability of selection;
                    ``(B) children of enlisted members have the next-
                highest probability of selection after the children 
                described in subparagraph (A);
                    ``(C) children of warrant officers have the next-
                highest probability of selection after the children 
                described in subparagraph (B); and
                    ``(D) children of commissioned officers have the 
                lowest probability of selection.
    ``(d) Amount of Deposits.--
            ``(1) First year of program.--The amount of funds deposited 
        into each Military Education Savings Account for the first 
        school year for which such accounts are established under this 
        section shall be $6,000 for each eligible military dependant 
        child covered by the account.
            ``(2) Subsequent years.--The amount of funds deposited into 
        each Military Education Savings Account for any school year 
        after the year described in paragraph (1), shall be the amount 
        determined under this subsection for the previous school year 
        increased by a percentage equal to the percentage increase in 
        the Chained Consumer Price Index for All Urban Consumers (as 
        published by the Bureau of Labor Statistics of the Department 
        of Labor) over the period of such previous school year.
    ``(e) Use of Funds.--Funds deposited into a Military Education 
Savings Account for a school year may be used by the parent of an 
eligible military dependent child to make payments to a qualified 
educational service provider that is approved by the Secretary under 
subsection (f)(1) for--
            ``(1) costs of attendance at a private elementary school or 
        secondary school recognized by the State, which may include a 
        private school that has a religious mission;
            ``(2) private online learning programs;
            ``(3) private tutoring;
            ``(4) services provided by a public elementary school or 
        secondary school attended by the child on a less than full-time 
        basis, including individual classes and extracurricular 
        activities and programs;
            ``(5) textbooks, curriculum programs, or other 
        instructional materials, including any supplemental materials 
        required by a curriculum program, private school, private 
        online learning program, or a public school, or any parent 
        directed curriculum associated with K-12 education;
            ``(6) computer hardware or other technological devices that 
        are used to help meet a child's educational needs, except that 
        such hardware or devices may not be purchased by a parent more 
        than once in an 18-month period;
            ``(7) educational software and applications;
            ``(8) uniforms purchased from or through a private school 
        recognized by the State;
            ``(9) fees for nationally standardized assessment exams, 
        advanced placement exams, any exams related to college or 
        university admission, or tuition or fees for preparatory 
        courses for such exams;
            ``(10) fees for summer education programs and specialized 
        after-school education programs (but not including after-school 
        childcare);
            ``(11) educational services and therapies, including 
        occupational, behavioral, physical, speech-language, and 
        audiology therapies;
            ``(12) fees for transportation paid to a fee-for-service 
        transportation provider for the child to travel to and from the 
        facilities of a qualified educational service provider;
            ``(13) costs of attendance at an institution of higher 
        education;
            ``(14) costs associated with an apprenticeship or other 
        vocational training program;
            ``(15) fees for state-recognized industry certification 
        exams, and tuition or fees for preparatory courses for such 
        exams;
            ``(16) contributions to a college savings account, which 
        may include contributions to a qualified tuition program (as 
        defined in section 529(b)(1)(A) of the Internal Revenue Code of 
        1986) or other prepaid tuition plan offered by a State; or
            ``(17) any other educational expenses approved by the 
        Secretary.
    ``(f) Requirements for Qualified Educational Service Providers.--
            ``(1) Registration and approval.--The Secretary shall 
        establish and maintain a registry of qualified educational 
        service providers that are approved to receive payments from a 
        Military Education Savings Account. The Secretary shall approve 
        a qualified educational service provider to receive such 
        payments if the provider demonstrates to the Secretary that it 
        is licensed in the State in which it operates to provide one or 
        more of the services for which funds may be expended under 
        subsection (e).
            ``(2) Participation in online marketplace.--As a condition 
        of receiving funds from a Military Education Savings Account, a 
        qualified educational service provider shall make its services 
        available for purchase through the online marketplace described 
        in subsection (g).
            ``(3) Surety bond.--
                    ``(A) In general.--The Secretary shall require each 
                qualified educational service provider that receives 
                $100,000 or more in funds from Military Education 
                Savings Accounts in a school year to post a surety 
                bond, in an amount determined by the Secretary, for 
                such school year.
                    ``(B) Retention.--The Secretary shall prescribe the 
                circumstances under which a surety bond under 
                subparagraph (A) may be retained by the Secretary.
    ``(g) Online Marketplace.--
            ``(1) In general.--The Secretary shall seek to enter into a 
        contract with a private-sector entity under which the entity 
        shall--
                    ``(A) establish and operate an online marketplace 
                that enables the holder of a Military Education Savings 
                Account to make direct purchases from qualified 
                educational service providers using funds from such 
                account;
                    ``(B) ensure that each qualified educational 
                service provider on the registry maintained by the 
                Secretary under subsection (f)(1) has made its services 
                available for purchase through the online marketplace;
                    ``(C) ensure that all purchases made through the 
                online marketplace are for services that are allowable 
                uses of funds under subsection (e); and
                    ``(D) develop and make available a standardized 
                expense report form, in electronic and hard copy 
                formats, to be used by parents for reporting expenses 
                in accordance with subsection (h)(3).
            ``(2) Rule of construction.--Nothing in this subsection 
        shall be construed to require the holder of a Military 
        Education Savings Account to make purchases using the online 
        marketplace described in paragraph (1).
    ``(h) Transfer Schedule.--
            ``(1) In general.--Subject to paragraph (2), the Secretary 
        shall make quarterly transfers of the amount calculated 
        pursuant to subsection (d) for deposit into the account of each 
        eligible military dependent child, except that the Secretary 
        may make transfers according to another transfer schedule if 
        the Secretary determines that a transfer schedule other than 
        quarterly transfers is necessary for the operation of the 
        education savings account.
            ``(2) Choice of schedule.--The Secretary shall establish a 
        process under which the parent of a child on whose behalf a 
        Military Education Savings Account is established may choose a 
        transfer schedule other than a transfer schedule determined 
        under paragraph (1).
            ``(3) Expense reports.--
                    ``(A) Submission required.--Before receiving a 
                transfer under paragraph (1) or (2), the parent of an 
                eligible military dependent child on whose behalf a 
                Military Education Savings Account is established shall 
                submit to the Secretary an expense report demonstrating 
                how funds from the most recent transfer were expended.
                    ``(B) Format.--Each such expense report shall be 
                submitted using the standardized expense report form 
                developed under subsection (g)(1)(D).
    ``(i) Rollover.--Amounts remaining in the Military Education 
Savings Account of an eligible military dependent child at the end of a 
school year shall remain available for use in accordance with 
subsection (e) until the date on which such account terminates under 
subsection (j).
    ``(j) Termination and Return of Funds.--
            ``(1) Termination.--The Military Education Savings Account 
        of an eligible military dependent child shall terminate on--
                    ``(A) the date on which the child enrolls in a 
                public elementary school or secondary school on a full-
                time basis;
                    ``(B) in the case of a child who is pursuing 
                postsecondary education, the earlier of--
                            ``(i) the date on which the child completes 
                        postsecondary education; or
                            ``(ii) the date on which the child attains 
                        the age of 22 years;
                    ``(C) in the case of a child who is an individual 
                with a disability, the date on which the child attains 
                the age of 26 years; or
                    ``(D) in the case of an individual not described in 
                subparagraphs (B) or (C), the earlier of--
                            ``(i) the date on which the child attains 
                        the age of 22 years; or
                            ``(ii) the expiration of any 2-year period 
                        during which funds in the account are not used 
                        in accordance with this section.
            ``(2) Return of funds.--Any funds remaining in a Military 
        Education Savings Account on the date such account terminates 
        under paragraph (1) shall be returned to the Treasury of the 
        United States and shall be used to carry out the program under 
        this section.
    ``(k) Compulsory Attendance Requirements.--A State that receives 
funds under this title shall consider a child with a Military Education 
Savings Account for a school year as meeting the State's compulsory 
school attendance requirements for such school year.
    ``(l) Special Rule.--In the case of a child with a Military 
Education Savings Account who attends a public school on a less than 
full-time basis in a school year--
            ``(1) the child may not attend the public school free of 
        charge; and
            ``(2) funds in the account, in an amount determined 
        pursuant to an agreement between the parent of the child and 
        the local educational agency concerned, shall be used to pay 
        for the child's costs of attendance at such school.
    ``(m) Tax Treatment of Accounts.--
            ``(1) In general.--A Military Education Savings Account is 
        exempt from taxation under subtitle A of the Internal Revenue 
        Code of 1986.
            ``(2) Contributions and distributions.--For purposes of 
        subtitle A of the Internal Revenue Code of 1986--
                    ``(A) any contribution to a military education 
                savings account by the Secretary under this Act shall 
                not be includible in the gross income of the individual 
                for whose benefit such account is maintained or the 
                parent of such individual; and
                    ``(B) any distribution from a military education 
                savings account which is permitted under this Act shall 
                not be includible in the gross income of the individual 
                for whose benefit such account is maintained or the 
                parent of such individual.
    ``(n) Fraud Prevention and Reporting.--The Secretary shall 
establish a website and a telephone hotline that enable individuals to 
anonymously report suspected fraud in the program under this section. 
The Secretary also shall conduct or contract for random, quarterly, or 
annual audits of accounts as needed to ensure compliance with this 
section.
    ``(o) Contract Authority.--The Secretary may enter into one or more 
contracts for the purpose of carrying out the responsibilities of the 
Secretary under this section.
    ``(p) Refunds.--The Secretary shall establish a process under which 
payments from a Military Education Savings Accounts to a qualified 
educational service provider shall be refunded to the account in the 
event of fraud or nonperformance by the provider.
    ``(q) Rules of Construction.--
            ``(1) Nonagency.--A qualified educational service provider 
        that receives a payment from a Military Education Savings 
        Account pursuant to this section shall not be considered an 
        agent of the State or the Federal Government solely because the 
        provider received such payment.
            ``(2) Federal or state supervision.--Nothing in this 
        section shall be construed to allow any agency of a State or 
        the Federal Government to exercise control or supervision over 
        any qualified educational service provider.
            ``(3) Imposition of additional requirements.--No Federal 
        requirements shall apply to a qualified educational service 
        provider other than the requirements specifically set forth in 
        this section. Nothing in this section shall be construed to 
        require a qualified educational service provider to alter its 
        creed, practices, admissions policy, or curriculum in order to 
        be eligible to receive payments from a Military Education 
        Savings Account.
            ``(4) Treatment of assistance.--For purposes of any Federal 
        law, assistance provided under this section shall be considered 
        assistance to the eligible military dependent child or to the 
        parents of a child on whose behalf a Military Education Savings 
        Account is established and shall not be considered assistance 
        to the qualified educational service provider that uses or 
        receives funds from a Military Education Savings Account.
    ``(r) Legal Proceedings.--
            ``(1) Burden.--In any legal proceeding in which a qualified 
        educational service provider challenges a requirement imposed 
        by the Department of Education on the provider, the Department 
        shall have the burden of establishing that the requirement is 
        necessary and does not impose any undue burden on the provider.
            ``(2) Limitation on liability.--
                    ``(A) In general.--No liability shall arise on the 
                part of an entity described in subparagraph (B) solely 
                because such entity awards, uses, or receives funds 
                from a Military Education Savings Account.
                    ``(B) Entity described.--The entities described in 
                this subparagraph are the following:
                            ``(i) The Department of Education.
                            ``(ii) An entity that enters into a 
                        contract with the Secretary pursuant to 
                        subsection (g) or subsection (o).
                            ``(iii) A qualified educational service 
                        provider.
            ``(3) Intervention.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a parent of an eligible military 
                dependent child or a parent of a child on whose behalf 
                a Military Education Savings Account is established may 
                intervene in any legal proceeding in which the 
                constitutionality of the program under this section is 
                challenged under a State constitution or the United 
                States Constitution.
                    ``(B) Exception.--For purposes of judicial 
                administration, a court may--
                            ``(i) limit the number of parents allowed 
                        to intervene in a proceeding under subparagraph 
                        (A); or
                            ``(ii) require all parents who have 
                        intervened in a proceeding under subparagraph 
                        (A) to file a joint brief, except that no 
                        parent shall be required to join any brief 
                        filed on behalf of a State that is a defendant 
                        in the proceeding.
    ``(s) Administrative Expenses.--The Secretary may use not more than 
5 percent of the funds made available to carry out this section for the 
direct costs of administering Military Education Savings Accounts.
    ``(t) Definitions.--In this section:
            ``(1) The terms `commissioned officer', `enlisted member', 
        and `warrant officer' have the meanings given those terms in 
        section 101(b) of title 10, United States Code.
            ``(2) The term `eligible military dependent child' means a 
        child who--
                    ``(A) has a parent on active duty in the uniformed 
                services (as that term is defined in section 101 of 
                title 37, United States Code, except that such term 
                does not include an officer in the National Guard who 
                has been activated); and
                    ``(B) in the case of a child seeking to establish a 
                Military Education Savings account for the first time, 
                was enrolled in a public elementary school or a public 
                secondary school for not less than 100 consecutive days 
                in the preceding school year.
            ``(3) The term `institution of higher education' has the 
        meaning given the term in section 102 of the Higher Education 
        Act of 1965 (20 U.S.C. 1002).
            ``(4) The term `qualified educational service provider' 
        means an entity or person that is licensed by a State to 
        provide one or more of the educational services for which funds 
        may be expended under subsection (e), including--
                    ``(A) a private school;
                    ``(B) a non-public online learning program or 
                course provider;
                    ``(C) an institution of higher education, which may 
                include a community college or a technical college;
                    ``(D) a public school;
                    ``(E) a private tutor or entity that operates a 
                tutoring facility;
                    ``(F) a provider of educational materials or 
                curriculum;
                    ``(G) a provider of education-related therapies or 
                services; or
                    ``(H) any other provider of educational services 
                licensed by a State to provide such services.''.
    (b) Table of Contents.--The table of contents in section 2 of the 
Elementary and Secondary Education Act is amended by inserting after 
the item relating to section 7012 the following:

``Sec. 7012A. Military education savings accounts.''.

SEC. 3. AUTHORIZATION OF APPROPRIATIONS.

    Section 7014 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7714) is amended by adding at the end the following:
    ``(f) Military Education Savings Accounts.--For the purpose of 
carrying out section 7012A--
            ``(1) there are authorized to be appropriated 
        $1,200,000,000 for fiscal year 2022; and
            ``(2) for each fiscal year beginning after fiscal year 
        2022, the amount authorized to be appropriated shall be the 
        amount authorized to be appropriated for the previous fiscal 
        year increased by the percentage increase in the Chained 
        Consumer Price Index for All Urban Consumers (as published by 
        the Bureau of Labor Statistics of the Department of Labor) over 
        the period of such previous fiscal year.''.
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