State signs $9.8M contract with novice education savings account vendor to oversee Hope Scholarship

School children run and jump off a staircase at a school building. The board that oversees the Hope Scholarship has selected a vendor to run the growing program. (Getty Images)

A board overseeing the Hope Scholarship has selected a vendor to run the growing program, opting to award the contract to a company with limited state-level experience running managing education savings accounts.

The  State Treasurer’s Office signed a $9.8 million contract in April with Student First Technologi es to assist with running the online part of the program, according to documents obtained through the Freedom of Information Act. The Treasurer’s Office oversees the Hope Scholarship program.

Rachel Dispennette is a mother in Charleston who teaches her three children at home. She and her family enrolled in the Hope Scholarship to help pay for their education supplies, and through the online portal, she purchased curriculums, printer paper, crayons and other materials.

The program gives roughly $4,400 per student in taxpayer money to families to use for private school, homeschooling and more.

“It has been life changing,” Dispennette said. “It’s the difference between the best choices for them and us scraping to pick something not as good.”

Student First Technologies , based in Indiana, is a six-year-old company managing an ESA program in just one other state (Tennessee). The Hope Board bypassed a contract bid from ClassWallet, which currently manages ESA programs in five states.

West Virginia’s new Hope Scholarship vendor will be onboarded at a time of growth for the ESA program. More than 9,000 students have been awarded the Hope Scholarship for the 2024-25 school year, and enrollment is expected to increase asnd program eligibility expands in the coming years.

“Now that we have been through the first few years of operating this program, the Office and [Hope Scholarship Board have the experience to better know our participants’ needs and expectations,” said Jared Hunt, spokesperson for the Treasurer’s Office.

“With the program expected to grow significantly in future years, we believe we have found a program manager that will help accommodate that growth while also providing the high-level of personal service our participants require,” he continued.

Hunt said that the new online platform will allow families and service providers to submit program forms, complete the financial transactions and more. It will provide in-state customer service support.

. “ … The online platform that Student First Technologies is creating for the program will offer new functions and features to simplify online transactions and provide a better overall experience for program participants,” State Treasurer Riley Moore said in a May news release .

The state’s previous contract with Step Up for Students for its ESA program technology was set to expire in January 2025, leading the state to seek a new vendor who was poised to accommodate an expected increase in Hope Scholarship users.

ClassWallet, Odyssey and Merit also bid on the contract. Hunt said that Student First Technologies received the highest score in the bidding process.

The company said its cloud-based platform has facilitated over $300 million in K-12 education funding to families across the country with zero instances for fraud, according to its prop osal.

Mark Duran, president of Student First Technologies, declined an interview request and directed questions to Hunt with the Treasurer’s Office.

“Student First Technologies is honored to be serving the great state of West Virginia on this impactful and important program,” Duran said in an email.

The company has partnered with 17 states for educational funding programs, including tax credit scholarships and microgrants. However, the company is fairly new to the area of overseeing ESAs, like the Hope Scholarship.

Tennessee officials in May selected Student First Technologies to run its education savings account program, signing a $3.75 million, five-year contract. It was the company’s “first full-fledged entry into the education savings account arena,” according to reporting from Chalkbeat that raised concerns about the company’s ability to oversee Tennessee’s voucher program .

Tennessee was the only other education savings account experience that Student First Technologies listed in its bid for the West Virginia contract.

By contrast, ClassWallet operates in 34 states, according to the company’s bid to the state.

Hunt said his office was “not aware of any credible information that would call into question Student First Technologies’ qualifications or abilities” and noted that the ESA is still a fairly-new marketplace.

“Educational savings account programs are a relatively new type of program, and no two state-administered education savings account programs are exactly alike, so building significant economies-of-scale while tailoring a program to the specific needs of each state has been a challenge for the industry overall as it has developed and grown in recent years,” he said.

The new online platform will launch for the upcoming school year with plans to go online after July 31.

A maintenance period to switch over to the new platform is not expected to interfere with participants’ ability to apply for the Hope Scholarship or use student funds in the upcoming school year, according to the Treasurer’s Office.

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