Why It Matters
Tennessee’s school voucher program has grown into a major state financial commitment, and the vendor managing its administrative backbone just received a substantial contract expansion. The decision carries implications for tens of thousands of students relying on the system — and raises accountability questions given the vendor’s track record in other states.
What Happened
The Tennessee legislature’s Fiscal Review Committee voted Wednesday to approve a $356 million increase to the contract held by Student First Technologies, LLC, lifting the maximum contract value to nearly $637 million over a five-year term.
The company, hired by the Tennessee Department of Education in May 2023, runs the online portal that handles applications and payments for the state’s private-school voucher programs. The contract expansion comes after the state’s second voucher initiative — the Education Freedom Scholarship program — was enacted in February 2025, adding a large new pool of students to the vendor’s responsibilities.
The original Education Savings Account program, approved in 2019 and initially serving students in Metro Nashville, Memphis, and Chattanooga, was first administered under a no-bid contract with Florida-based ClassWallet before Student First Technologies took over through what officials described as a competitive bid process.
Department of Education officials defended the vendor selection, saying the company has been a “good partner” throughout its tenure in Tennessee. The Tennessee Comptroller’s office has not flagged any performance problems with the vendor’s work in the state.
Problems Elsewhere
The contract increase drew scrutiny because of Student First Technologies’ performance in other states. Sen. Heidi Campbell raised the issue directly during committee consideration, stating that “the state of Arkansas terminated its contract with the vendor and obtained $300,000 in damages for failure to deliver online services.”
West Virginia presents a similar concern. The vendor received a $10 million contract there but failed to process nearly 3,000 of roughly 9,000 student applications — a processing gap of about one-third of the total caseload.
State officials did not dispute those out-of-state outcomes but pointed to the absence of similar complaints in Tennessee as grounds for proceeding with the expanded agreement.
By the Numbers
$637 million — maximum contract value following Wednesday’s approved increase, up from the previous ceiling.
$356 million — the size of the contract increase approved by the Fiscal Review Committee.
35,000 — total students enrolled in the Education Freedom Scholarship program for the 2026-27 school year, after lawmakers added 15,000 students this year.
$270 million — projected program cost in the coming school year, compared to roughly $40 million when the ESA launched.
$300,000 — damages recovered by Arkansas after terminating its contract with the same vendor.
Zoom Out
Tennessee is among a growing number of states that have significantly expanded school choice programs in recent years. The rapid scaling of Education Savings Account and voucher-style programs has placed increasing pressure on the administrative infrastructure supporting them — including the technology vendors that manage eligibility, applications, and payments. Vendor performance failures have emerged as a recurring concern in multiple states as these programs grow faster than administrative capacity.
The Education Freedom Scholarship program’s expansion to 35,000 students represents a dramatic increase from the original ESA’s scope, and the corresponding budget growth — from $40 million at inception to a projected $270 million next school year — reflects how significantly the state’s financial exposure has expanded.
Tennessee has also been navigating other policy debates intersecting with its education and governance landscape. A dispute between a Tennessee congressman and Governor Bill Lee over a directive requiring schools to report sick children’s immigration status has added to the state’s education policy profile in recent months.
What’s Next
With the Fiscal Review Committee’s approval secured, the expanded contract takes effect as the 2026-27 school year approaches. State oversight will likely focus on whether Student First Technologies can manage the increased enrollment load without the processing failures seen in Arkansas and West Virginia. The Tennessee Comptroller’s office would be the primary body to flag any performance deficiencies going forward.
Lawmakers who raised concerns about the vendor’s past performance may revisit the issue if problems emerge during the upcoming enrollment cycle.