News Release

November 20, 2000

For-profit education offers alternatives to government-run system
A more open and competitive market environment would improve education, study says

WASHINGTON-For-profit education companies are finding innovative solutions to today's education problems, but regulation and competition from monopolistic public schools are forcing these companies to the margins of the education system and making it hard to turn a profit, according to a new Cato Institute study. If regulations are relaxed and a market for education is allowed to flourish, for-profit education will be able to provide needed goods and services unavailable from the government-run education system, the study says.

In "'Edupreneurs': A Survey of For-Profit Education," former Cato policy analyst Carrie Lips argues that the "for-profit education marketplace provides us with a glimpse of what a thriving, competitive market for education might look like if the United States were to open the education sector to the forces of competition." For-profit schools like Greensboro Academy in Greensboro, N.C., SABIS International Charter School in Springfield, Mass., and Chestnut Hill Academy in Bellevue, Wash., offer a wide variety of curriculums and teaching philosophies for parents to choose from. To promote the success of education companies, policymakers "should eliminate financial biases against edupreneurs by adopting policies, such as tax cuts and universal tuition tax credits, that would return education purchasing power to individuals," says Lips.

In K-12 education, "the lack of competition appears to be a fundamental cause of the system's stagnation," says Lips. "A private, customer-driven educational system would offer a wider range of services and products than does the government-run system," she says.

Postsecondary and adult education has become increasingly important in the new economy as a lack of skilled workers creates labor shortages in technological industries. Lips says "edupreneurs" are attempting to meet the demand with flexible educational programs that focus on improving the career prospects of the student.

For-profit education also features strong measures of assessment and accountability, Lips says. "For-profit schools and school management companies typically measure results in terms of student performance and parent satisfaction," she says. "They recognize that they will be held accountable if they fail to deliver on their promises, either by parents removing their children from the school or by school boards failing to renew their charters or contracts."

"'Edupreneurs': A Survey of For-Profit Education"