TEFA Approved Expenses: What You Can and Cannot Spend Education Freedom Account Funds On

What TEFA Funds Cover

All spending runs through the Odyssey marketplace — the state pays vendors directly from your digital wallet. Here's what qualifies as an approved expense under the final administrative rules:

Tuition and school fees. Full coverage for enrollment, tuition, and required academic charges at accredited private schools, TEA-approved credential programs, and higher education institutions offering dual-credit courses.

Curriculum and textbooks. Printed and digital textbooks, instructional workbooks, educational kits, and online curriculum subscriptions. The materials must be visual and educational — audio-only content without an educational component doesn't qualify.

Academic tutoring. Supplemental instruction from state-approved tutors or commercial tutoring companies. The provider must pass a background check. TEFA funds cannot pay a person related to the program participant within the third degree by consanguinity or affinity.

Educational therapies. Speech therapy, occupational therapy, physical therapy, and applied behavior analysis (ABA) from licensed clinicians — provided those services aren't covered by a federal, state, or local government benefit or by private insurance the child is enrolled in when receiving the service.

Testing and exam fees. National norm-referenced assessments, Advanced Placement (AP) tests, SAT and ACT exams, and state industry credentialing assessments are all covered.

Dual-credit and college-level courses. High school students can use TEFA funds for approved dual-credit courses at participating higher education institutions.

Transportation. Fees paid to approved transportation providers for travel to educational institutions. School-provided meals at private schools also qualify.

Technology (with a strict cap). Computer hardware, software, and other technology must be required by an education service provider or vendor, or prescribed by a physician. These costs are capped at 10% of your annual award amount.

The 10% Technology Cap

This is the rule that catches families off guard. Technology purchases are capped at 10% of your total annual funding:

• Private school families ($10,474 award): up to $1,047 for tech
• Homeschool families ($2,000 award): up to $200 for tech

That $200 homeschool cap means a single tablet or laptop purchase could consume your entire technology allowance for the year. Plan your tech spending early and carefully.

The cap covers hardware and software combined. Educational apps, curriculum software subscriptions, and physical devices all count against the same 10%, when they meet the provider-requirement or physician-prescription rule.

What's Explicitly Prohibited

Cash withdrawals. Funds cannot be converted to cash or transferred to a personal bank account.

Payments to related people. No payment to a person related to the program participant within the third degree by consanguinity or affinity.

Out-of-pocket reimbursement. You cannot buy something with your own money and then seek reimbursement through the portal. All purchases must flow through the Odyssey marketplace. This was a major change from the proposed rules — early drafts suggested parent reimbursement would be available.

Vendor rebates and kickbacks. Vendors are prohibited from offering cash-back, rebates, or financial incentives to participating families.

General household expenses. Home internet plans, televisions, entertainment equipment, gaming systems, and non-educational software are not covered.

Non-academic extracurriculars. Sports gear, private athletic club fees, and recreational travel are prohibited.

Resale of purchased items. Selling, bartering, or trading materials bought with TEFA funds violates the parent agreement.

Audit Exposure

The Comptroller audits at least 10% of active accounts each year. Random audits review your transaction history and vendor records. If unauthorized purchases, fraudulent activity, or missing required assessment reports are flagged, the account is frozen immediately.

Confirmed misuse leads to account revocation, recovery of remaining balances, and a demand for full repayment. Intentional fraud can be referred to local prosecutors or the Texas Attorney General.

The simplest way to stay audit-safe: spend only through marketplace vendors, keep your receipts, and never try to work around the direct-payment system.

The TEFA Parent Guide includes a spending category card and audit preparation log designed specifically to help families track purchases and stay compliant.

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