School Freedom Act of 2026

(a) Conversion of School Freedom Account

(1) Account creation. A School Freedom Account established on behalf of an eligible individual shall be converted by the Secretary of the Treasury into a savings account to be known as a Higher Education and Skills Obtainment Fund on behalf of such individual on the earlier of the following:

(A) The date on which the individual completes secondary school.

(B) The date on which the individual is no longer eligible to attend a public elementary or secondary school due to the individual’s age.

(2) Treatment of Federal SFA Funds. Any Federal SFA Funds that remain in a School Freedom Account at the time such School Freedom Account is converted into a Higher Education and Skills Obtainment Fund pursuant to paragraph (1) shall be transferred to such Higher Education and Skills Obtainment Fund and be classified as Federal HESOF Funds.

(3) Treatment of Parental SFA Funds. Any Parental SFA Funds that remain in a School Freedom Account at the time such School Freedom Account is converted into a Higher Education and Skills Obtainment Fund pursuant to paragraph (1) shall be transferred to such Higher Education and Skills Obtainment Fund and be classified as Parental HESOF Funds.

(4) Treatment of State SFA Funds. Each State shall determine how funds deposited by the State into a School Freedom Account are to be treated by the Secretary of the Treasury when such School Freedom Account is converted into a Higher Education and Skills Obtainment Fund pursuant to paragraph (1), including requiring such funds to be transferred to such Higher Education and Skills Obtainment Fund and be classified as State HESOF Funds or requiring such funds to be returned to the State.

(b) Withdraw of Parental HESOF Funds. Not later than 30 days after the date determined by the Secretary of Education under section 2(a) and consistent with the provisions of section 530C of the Internal Revenue Code of 1986, the Secretary of the Treasury shall issue regulations establishing how an individual with a Higher Education and Skills Obtainment Fund may withdraw Parental HESOF Funds.

(c) Use of funds. Funds in a Higher Education and Skills Obtainment Fund may be used to pay for the following postsecondary educational expenses:

(1) Costs of attendance at an institution of higher education.

(2) Costs associated with pursuing career and technical education.

(3) Any other postsecondary educational expense as determined appropriate by the Secretary of the Treasury.

(d) Termination. The Secretary of the Treasury shall terminate the Higher Education and Skills Obtainment Fund of an individual on the date on which such individual attains the age of 30 years.

(e) Return of funds

(1) Federal funds. Any Federal HESOF Funds remaining in a Higher Education and Skills Obtainment Fund of an individual on the date such fund terminates under subsection (d) shall be returned to the Treasury of the United States.

(2) Parental HESOF funds. Any Parental HESOF Funds remaining in a Higher Education and Skills Obtainment Fund of an individual on the date such fund terminates under subsection (d) shall be provided to the individual.

(3) State HESOF funds. Any State HESOF remaining in a Higher Education and Skills Obtainment Fund of an individual on the date such fund terminates under subsection (d) shall be disbursed as specified by the State under subsection (a)(4).

(4) Regulations. Not later than 180 days after the date determined by the Secretary of Education under section 2(a), the Secretary of the Treasury shall issue regulations as necessary to carry out this subsection.

(f) Limitation. The Secretary of the Treasury may not require that—

(1) individuals obtain preapproval prior to the expenditure of amounts from a Higher Education and Skills Obtainment Fund; or

(2) the expenditure of amounts from a Higher Education and Skills Obtainment Fund be through a specific marketplace or portal.