NCPA - National Center for Policy Analysis

Private Enterprise and Public Education: Strange Bedfellows or Natural Allies?

August 19, 2013

Many parents, educators and observers argue that for-profit businesses should stay out of education, often stemming from fear that their focus on maximizing profits will bring impure motives to the crucial processes of teaching and learning. These concerns are sometimes founded but often spring from misunderstandings of the factors at play. Although some providers are more concerned with profit margins than student success, others have proven that their resources and experience allow them to offer innovative, nimble, cost-effective solutions to pressing current problems in education, say Frederick M. Hess, Michael B. Horn and KC Deane of the American Enterprise Institute.

  • For-profits attempting to enter the education market are largely met with hostility, but the role they can play in K-12 and higher education deserves further consideration.
  • For-profits are sometimes less transparent than nonprofits and overly concerned with pleasing customers, but they are more able to innovate, maximize efficiency, and attract key talent and resources.
  • When considering the role of for-profits in education, we should stop fixating on tax status, recognize for-profits' unique strengths, and conduct more focused research on their effectiveness.

Yet, although most instances of for-profits ­providing public schools with routine services are not remarked upon, the for-profit providers in K-12 that offer tutoring or charter school options to kids trapped in lousy schools are frequently ­subjected to vitriolic attacks. For-profit colleges, after decades of being formulaically paid with ­federal aid dollars for enrolling new students, have suddenly been subjected to withering criticism for enrolling students without educating them well.

Hostility to for-profit ventures has also been evident in federal and state legislation.

  • One prominent example was the prohibition on for-profit entrants in the U.S. Department of Education's Investing in Innovation Fund.
  • Similarly, when New York legislators lifted the state's charter school cap in 2010, they placated unions by banning for-profit charters.
  • Most recently, the reform-minded group Parent Revolution has pushed for legislation prohibiting for-profit charter school operators from getting involved in taking over schools where parents have invoked the "parent trigger" turnaround option.

For-profits have a productive and valuable role to play in American education. But it is a role that needs to be earned. Given public skepticism, for-profits need to make the case that what they offer is useful and important, and that the nation, our schools and our students will be better if we welcome them in from the cold.

Source: Frederick M. Hess, Michael B. Horn and KC Deane "Private Enterprise and Public Education: Strange Bedfellows or Natural Allies?" American Enterprise Institute, August 14, 2013.


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