The Great Education Hypocrisy: What's So Bad About For-Profit Teaching?

From clean energy to health care, Washington enlists the private sector to solve national problems. Why not in education, too?

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From space travel to health care to clean energy, the federal government has a successful track record of partnering with the private sector. This partnership fuels innovation and jobs, and it helps solve some of the country's most pressing problems. Most federal agencies in some way engage the private sector in addressing their priorities. The Department of Commerce provided grants to build out new broadband networks. Tax credits are used to stimulate consumer demand and accelerate new-technology adoption. President Obama's budget even calls for replacing the Space Shuttle program with commercial space craft.

When it comes to education, however, Uncle Sam's handshake with entrepreneurs clenches into a fist. Instead of involving the private sector, education policymakers have actually created policy and funding barriers that skew support to nonprofits and prevent for-profits from fully participating in programs aimed at improving teaching or learning. These barriers exist at nearly every level of government -- local, state, and federal -- further isolating education from potential innovations that could help children and discouraging entrepreneurship.

Washington deems it acceptable to make a profit by reducing greenhouse emissions but not by reducing dropouts

Given the urgency of improving the US education system, we can no longer afford to shut out an entire group of providers. In a time of declining state and federal revenues, policymakers should be stimulating, not stifling, the influx of private capital to our education system. When it comes to other crucial national challenges, policymakers do not ask whether they should engage for-profit companies, but how they should. It is time for education policymakers to follow suit.


A key first step is to thaw the frigid political climate that chills innovation. As Silicon Valley blogger Sarah Lacy noted, "I've spoken to many venture capitalists who say they'd love to use technology to change education, but few think they can make money at it." One reason is that Washington deems it acceptable to make a profit by reducing greenhouse emissions but not by reducing dropouts.

Peter Diamandis, chairman and CEO of the X PRIZE Foundation, emphasized the fruits of government-commercial synergy when he noted: "The US government doesn't build your computers, nor do you fly aboard a US government owned and operated airline. Private industry routinely takes technologies pioneered by the government and turns them into cheap, reliable and robust industries. This has happened in aviation, air mail, computers, and the Internet."

The recent debacle over Solyndra, the failed solar company that received hundreds of millions in taxpayer funds, provides a cautionary example of what can go wrong when impartial, merit-based decisions are replaced by political considerations and favoritism. These are legitimate concerns, but they apply also to government grants to nonprofits as well. Concerns about market distortion are also valid, but excluding private-sector entities from participation in federal programs also distorts the market.

Taken together, these concerns do not outweigh the benefits of having a thriving marketplace of private-sector entrepreneurs tackling social challenges.

To be clear, the point is not to necessarily create new federal subsidies, but instead for policymakers to create a level playing field for all providers. An entrepreneurial education landscape is one in which government removes barriers to entry for quality providers and uses quality and effectiveness as criteria for selection, not just the organization's tax status.

We need to think of education less as an institutional system and more as an ecosystem of various providers and consumers characterized by a policy environment that welcomes all innovators, shares risk to help attract investors to incubate promising ventures, supports funding and regulations that allow innovations to scale, and offers incentives that reward quality and results.

Ultimately, our public policy should urgently seek to better educate our children by any means necessary. We need to embrace a quality revolution that focuses solely on holding organizations accountable and responsible for improving student outcomes. Those that do should be rewarded and scaled so that we can ensure that students receive the education that they deserve using the entrepreneurial spirit and genius that have made America so great.