DFER analysis finds over $849 million in annual scholarship contributions can be retained by New Mexico
WASHINGTON, D.C. – Democrats for Education Reform (DFER) today praised New Mexico Gov. Michelle Lujan Grisham’s decision to opt the state into the Federal Scholarship Tax Credit, ensuring New Mexico students and families can benefit from new scholarships for qualified K-12 education expenses.
By opting in, Gov. Lujan Grisham opens the door to hundreds of millions of dollars in potential new education resources for New Mexico students.
“It takes political courage for a governor to revisit an early position, and Gov. Lujan Grisham showed exactly that,” said Jorge Elorza, CEO of DFER. “She waited for the federal rules and made the call that’s best for New Mexico’s students. That approach has defined her education agenda, from structured literacy to high-dosage tutoring to getting help to students before they fall further behind.
“New Mexico has already seen what targeted academic support can accomplish, and these scholarships extend that approach to individual families. By opting in, the governor made sure that money stays here, working for New Mexico students alongside the state’s investments in public education. After a huge night for the Democratic party, 75% of Americans will have a Democratic governor come January. Every one of them should follow her lead, opt in and work in their states to make this program work for as many kids as possible.”
Nicole Pollock, President of DFER said, “Today’s decision is a win for public school students across New Mexico. Whether it’s a first grader in Las Cruces still learning to read who can now get a tutor trained in structured literacy, or students with disabilities in Albuquerque who can now access speech or occupational therapy. Not a dollar of this comes out of New Mexico’s school budgets. The work now turns to building the infrastructure to deliver it: strong scholarship-granting organizations in New Mexico, including ones that partner directly with public schools, ready to get these dollars to families when the program launches in January.”
Arne Duncan, senior fellow at DFER and former U.S. Secretary of Education said, “Gov. Lujan Grisham did what every governor should do: she took a second look, waited for the rules and judged this program on its merits. We’re talking about almost $850 million a year in new resources for New Mexico students, a state that’s been near the bottom in the nation in outcomes for too long now. This is an important new tool to help get it back on track. Those dollars will pay for more learning time for more kids through intensive tutoring and after-school and Saturday programs. Every governor still on the fence should follow her lead.”
Estimates by Education Reform Now project 336,000 New Mexico tax filers could take advantage of the federal credit. If every potential redirector contributed the full individual amount, more than $849 million annually could flow to scholarship-granting organizations serving New Mexico students.
The program has broad support among voters surveyed in New Mexico, with 69% supporting participation in the federal tax credit program compared with 24% who oppose it. Support reaches 72% among Latino voters, 79% among unaffiliated voters and 67% among Democrats.
The new federal program allows taxpayers to receive a tax credit of up to $1,700 per individual, or $3,400 for married couples filing jointly, for contributions to qualifying scholarship-granting organizations, which then provide scholarships to eligible students. Scholarships can support a broad range of qualified education expenses for students attending public, charter and private schools, including tutoring, academic enrichment, books and instructional materials, technology, transportation and services for students with disabilities.
The Federal Scholarship Tax Credit will take effect Jan. 1, 2027. With Gov. Lujan Grisham’s announcement, New Mexico becomes the 32nd state to formally opt into the program and just the third state led by a Democratic governor, joining Colorado’s Jared Polis and New York’s Kathy Hochul. Regulations issued by the U.S. Treasury on October 1, 2026, gave states until the end of the year to opt in for Year 1. Participating states must submit a list of qualifying scholarship-granting organizations to the IRS for the 2027 tax year.
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Democrats for Education Reform is a national political organization that supports Democratic leaders and candidates who champion innovative policies that expand opportunity, address inequities and improve outcomes for students.