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No. 386

November 20, 2000

"Edupreneurs"

A Survey of For-Profit Education

by Carrie Lips

Executive Summary

pared high school students for standardized

Education companies, or "edupreneurs," are

tests, are expanding their educational ser-

entering the education marketplace in droves with

vices internationally, across age groups, and

creative, cost efficient products and services for

through new media.

students of all ages. This rapidly expanding indus-

Although the marketplace for education ser-

try, which constitutes approximately 10 percent of

vices and products is strong on the margins, the

the $740 billion education market, demonstrates

structure of the American educational system

that private enterprises, even when competing

creates considerable obstacles for companies

against a monopolistic system, can deliver a wide

that would like to offer complete kindergarten

range of affordable high-quality educational ser-

through 12th grade services: entrepreneurs

vices. This study provides a glimpse of the prod-

attempting to open schools face regulatory bar-

ucts, services, and innovations that a fully com

-

riers and competition from "free" government

petitive marketplace could generate if the govern-

schools supported by state funds.

ment's stranglehold on education were loosened.

Policymakers  interested  in  improving

For example, Scientific Learning is devel-

America's education system should eliminate

oping products to help children to over-

financial biases against edupreneurs by adopting

come speech impediments. DeVry and the

policies, such as tax cuts and universal tuition

Apollo Group are making postsecondary

tax credits, that would return education pur-

education more convenient and affordable,

chasing power to individuals. Such policies

thus reducing some of the barriers that have

would begin to loosen the government's monop-

traditionally prevented adults from pursu-

oly on education and allow the natural growth of

ing higher degrees. Established companies

a vibrant education marketplace.

such as Kaplan, which traditionally pre-

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Carrie Lips, a former policy analyst at the Cato Institute, is currently pursuing a master's degree in public policy

at the John F. Kennedy School of Government at Harvard University.