August 7 2012
Let's Make Education Big Business, With Profit, Loss & High Pay For Top Performers
Carrie L. Lukas
When you see that Americans spend more than $1.1 trillion on education—that’s 7.8 percent of GDP—it’s tempting to call education “big business.” Except that it’s not really: 80 percent of that spending is controlled by government and spent on public schools and universities. That means that it’s divorced from the usual factors that make our competitive free market system work.
Parents everywhere who are getting ready for their kids to go back to school—which includes shopping for new clothes, shoes, backpacks and school supplies—should consider what a functioning education marketplace for schools and learning would look like. As we debate education reforms, rather than focusing on relatively minor policies such as those governing school hours, curriculum, and teacher pay, we should look at the bigger picture: Is our current approach to spending on education providing the most value for students?
The answer is surely no. With government-spending on every K-12 public school student now topping $10,000 each year, the typical American student will have more than $100,000 spent on her behalf from kindergarten through high school. Parents hope and trust that those years in school will give them more than just a degree, and they should expect their children to acquire more than just the most basic life skills, such as reading and arithmetic. Yet, according to the most recent national reading test, only 38 percent of high school seniors are “proficient” in reading. That means that a majority of high school seniors can’t read a passage and understand the full meaning. Given the investment we are making on their education, that’s an outrage.
Sadly, even those parents whose children go on to college must question whether they will get their money’s worth. The annual cost of attending college at public in-state and private universities now tops $17,000 and $38,000 respectively. But according to the 2011 book, Academically Adrift, 45 percent of students learn little to nothing after two years of college, and more than one in three learn next to nothing after four years.
For decades, those vested in the education status quo have fought market-based education reforms claiming that this would reward companies and businesses, while sacrificing quality education and the ideal of public education. This kind of thinking was on display last week in a new report released by Senator Tom Harkin, which laments the problems at for-profit colleges and universities, including “exorbitant tuition” and “abysmal student outcomes.”
Undoubtedly there are for-profit colleges that take advantage of the current college financing system to the detriment of their students. But any honest look at the nation’s public universities and non-profit colleges would find similar problems at many of those schools as well.
The problem that plagues our higher education system—regardless of the for-profit or private status of the institutions—is that much of its costs fall on taxpayers, rather than education consumers. Well-intentioned politicians may believe that larger loans and government grants will make college more affordable, but there is little evidence that this actually works. Instead, that money is gobbled up by a college and university system that seems to forget that its fundamental purpose is supposed to be preparing young men and women for the real world.
Similarly, since most parents still have little control about where their children attend K-12 school, public elementary and secondary schools are allowed to deviate from their purpose of finding the best ways to engage and educate students. Unfortunately, the current policy experiments to try to recreate market dynamics in K-12 or higher education have been greatly limited.
A real market-based approach would focus on giving customers the power to control all of a child’s share of education spending to design a learning program and experience that is uniquely suited to meet her specific needs. This would give parents an incentive to economize and shop for superior services, while also encouraging learning providers to offer the best services at the lowest possible price. With recent advancements in digital learning technologies, one can imagine how the future of American education could include parents shopping to create truly customized learning experiences for their children.
Education should be big business. There are few things in life as valuable as a quality education. Rather than attempting to shield our education system from the supposed evils of the profit motive, education innovators should be seeking ways to bring the discipline of the market to our nation’s schools.
Carrie Lukas is the managing director of the Independent Women’s Forum.