Despite Breakdowns in Two States, ESA Provider Student First Seeks to Expand
Some West Virginia families say the company broke a promise not to seek new contracts until it eradicated widespread backlogs.
;)
Education news and commentary, delivered right to your inbox.
Sign up for The 74 newsletter.
Get stories like this delivered straight to your inbox. Sign up for The 74 Newsletter
This article was co-published with the , the and .
Last September, the CEO of a company handling online payments for West Virginia鈥檚 private school choice program promised not to seek additional business until he fixed technical glitches that led to a huge backlog of orders.
鈥淪tudent First Technologies has assured us that they will not pursue contracts with additional states until the issues and challenges we’re experiencing here in West Virginia are resolved. That’s a commitment,鈥 said former Treasurer Riley Moore. His comments came during a board meeting devoted to the state鈥檚 Hope Scholarship, an education savings account program that pays for private school tuition and homeschooling.
Well into the current school year, over 3,000 orders were unfulfilled, forcing parents to pay out of pocket for books, tech equipment and services that the state promised to provide. Some families couldn鈥檛 even download Theodore, the company鈥檚 payment platform.
Four months later, some parents using the Hope Scholarship say not much has changed. They still complain of poor customer service and purchases that are approved for some families, but not others.
鈥淔rom a parent perspective, performance has not improved significantly,鈥 said Katie Switzer, a mother of five who shared concerns with the state last summer.
In January, others posted complaints on Google鈥檚 webstore, where parents can access the payment platform. 鈥淧lease go back to last year鈥檚 system. I still cannot access 鈥 TheoPay,鈥 one parent wrote. Another said, 鈥淚’ve scanned the cart at least 100 times and the same sentence pops up every time, 鈥楽omething unexpected happened, please resubmit your cart.鈥 鈥
Despite its promise to West Virginia, The 74 has learned that the Indiana-based company has been pushing to expand. In late fall, Student First submitted an unsuccessful proposal to handle expenditures for .
Now the company could be in the running to manage a statewide ESA program in Tennessee, a prize that would mark a turnaround for a newer player in what has become a . Student First already manages for about 2,000 students in the Memphis, Nashville and Chattanooga areas. passed last month would take the program statewide, where it would serve roughly 20,000 students.
The potential for growth, however, raises questions over whether Student First, which lost a $15 million contract to run Arkansas鈥 ESA program because it failed to deliver on its promises, can meet the demand.
鈥楨volving very quickly鈥
The Tennessee governor鈥檚 office won鈥檛 say for sure whether it plans to hold a competitive bidding process. Elizabeth Lane Johnson, the governor鈥檚 press secretary, told The 74 Tuesday that the state Board of Education will first have to write rules for the expanded program.聽
She added that officials have 鈥渕et with a number of experienced vendors to learn how other states have implemented universal school choice programs successfully.鈥
Last November, Lee met with , a leader in the industry, at a conference in Oklahoma City, The Tennessean reported. But Mark Duran, Student First鈥檚 CEO, said the situation in Tennessee is 鈥渟till unfolding鈥 and that he hopes to continue serving the state.
Some observers say it would be unusual for the education department not to open the process up to other bids.
鈥淭he technology is evolving very quickly,鈥 said Jim Blew, a former U.S. Department of Education official and ESA advocate who later advised ClassWallet. 鈥淚 would be really surprised if they don’t open it up to a new competition. They’re scaling up; they’re going universal.鈥
If get their way, red states won鈥檛 be the only ones with universal voucher programs. They鈥檝e reintroduced a bill in Congress to create a nationwide tax credit scholarship program. And while details have yet to emerge, President Donald Trump directed the Department of Education to use grant funds to prioritize private school choice.
鈥淲e have millions of students right now who live under some sort of school choice program,鈥 KellyAnne Conway, a counselor to the president in his first term, said . 鈥淲e know it’s effective.鈥
The West Virginia treasurer鈥檚 office did not answer questions about whether Student First has caught up with its backlog of orders. But Duran told The 74 鈥渁 lot has changed鈥 since last fall.
That鈥檚 when Arkansas fined Student First over $500,000 because of delays in delivering a 鈥渇ully operational鈥 platform. In an canceling the contract, Education Secretary Jacob Oliva told Duran that processing delays meant that students, families and vendors were receiving 鈥渟ervice below the standard to which they were entitled.鈥 At the same time, homeschooling parents in West Virginia couldn鈥檛 order curriculum, equipment and school supplies for their kids because of problems with the company鈥檚 payment system.
A hold-up in funding can be a major setback for small businesses trying to establish themselves in the market.
When Student First still operated in Arkansas, Lauren McDaniel-Carter waited seven weeks after the school year started before her microschool ACRES received payments totaling about $23,000. All but three of the 26 students she serves at her home in northeast Arkansas participated in the state鈥檚 Education Freedom Account program. She had to take out a $50,000 loan to run the school and pay her small staff.
鈥楲arger and more numerous鈥
The state replaced Student First with , which held the contract during the program鈥檚 first year.
Duran, Student First鈥檚 CEO, did not respond to specific questions about the status of orders in West Virginia, but said his team seeks to 鈥渃onstantly improve our operations.鈥
鈥淢omentum remains strong,鈥 he said. 鈥淲e鈥檝e grown and are ready for even more growth.鈥
The company now has over 35 staff members and recently hired Andrew Nelms, formerly with school choice advocacy group Yes. Every Kid, as its new head of government affairs. Other include a vice president of operations, a software engineer and a 鈥渃ustomer success鈥 director.
The additional personnel, Duran said, will allow the company to 鈥渟upport larger and more numerous programs across the country.鈥
An entrepreneur, Duran grew up in northern Michigan where his mother taught him while building a large network of homeschooling families. The flexibility, he said, allowed him to spend time with his dad, a homebuilder, and sparked his business career.
He got his start in the private school choice sector in Indiana when he teamed up with a friend who built a software platform for managing donations to tax credit scholarship programs.
Indiana 鈥渆ducation freedom policy folks鈥 encouraged them to break into the ESA market, he said. He was further inspired after attending a 2020 ExcelinEd conference in Florida, where he mingled with voucher advocates who saw the pandemic鈥檚 disruption as an opportunity to expand private school choice.
鈥淲e saw a bigger picture,鈥 he said. Among lawmakers there was a 鈥渂ig push to unlock more money 鈥 to send to families through these different programs.鈥
Did you use this article in your work?
We鈥檇 love to hear how The 74鈥檚 reporting is helping educators, researchers, and policymakers.
