NCPA - National Center for Policy Analysis

Education Entrepreneurs

December 4, 2000

Despite obstacles to entering the education marketplace, for-profit education companies are expanding and now hold about 10 percent of the $740 billion market. The most difficult sector for companies to enter is elementary and secondary education, where they receive only 5 percent of total dollars spent and government-run schools teach about 88 percent of students.

Still, in pursuit of consumers, for-profit education companies have devised innovative, creative and cost-efficient approaches to meeting the needs of individual students. Entrepreneurs are both working within and competing against the state-run schools with a variety of products and services. For example, they open or administer roughly 10 percent of all charter schools. Among the approaches of for-profit companies that run schools:

  • Edison Schools, the largest private operator of public schools, provides students in the second grade or above with computers, has longer and more school days and offer a reading program developed at Johns Hopkins University and a mathematics program from the University of Chicago.
  • National Heritage Academies focuses on educating students to be good citizens as well as good students, encourages parental involvement in education and measures results by student performance and parent satisfaction.
  • The SABIS School Network, which has schools in other countries, emphasizes the school's global perspective and diversity of its student body; students begin studying another language in preschool.
  • Two other education companies, Bright Horizons Family Solutions and Nobel Learning, both started out as for-profit child care providers and expanded their services to school-age children because of parents' enthusiasm for the day-care programs.

Other for-profit companies have developed technologies that have the potential of revolutionizing parts of education.

  • Scientific Learning Corp. has developed educational software based on 25 years of brain research that has been shown to dramatically improve the language and reading skills of children aged 4 through 13, particularly children who have difficulties reading and processing speech.
  • Advantage Learning Systems, Inc., provides learning information systems that drill students on their lessons and provide teachers with assessments of student progress.
  • TRO Learning, Inc., has designed computer-based educational and training programs to provide adolescents and adults with problem-solving skills that are transferable to the workplace.

The monopoly that government now holds on elementary and secondary education appears to be the fundamental cause of many of its shortcomings. A private, customer-driven system would offer a wider range of services and products so varying needs of students could be better met.

Source: Carrie Lips, "'Edupreneurs:' A Survey of For-Profit Education," Policy Analysis No. 386, November 20, 2000, Cato Institute, 1000 Massachusetts Avenue, N.W., Washington, D.C. 20001, (202) 842-0200.

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