Schools, For-Profit

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SCHOOLS, FOR-PROFIT. The idea of schools for profit is rooted in the growing discontent with public schools that began in the 1960s, but an experiment in performance contracting, the hiring by public schools of private companies to provide instruction with remuneration dependent on student achievement, was deemed ineffective in a 1972 government report. Responding to widespread calls in the late 1980s for broad educational reforms, the media entrepreneur Christopher Whittle and the businessman John Golle offered for-profit school plans to redesign U.S. schools. In May 1991 Whittle announced the Edison Project, a plan for a multibillion-dollar chain of 150 to 200 private schools, which, he declared, would provide better instruction at lower per-pupil cost than public schools. A year later, Whittle hired Benno C. Schmidt, Jr., president of Yale University, to head the project. After failing to raise sufficient capital, the project was scaled back, focusing instead on obtaining management contracts with existing schools or winning public funds to establish new schools. In March 1994 Massachusetts became the first state to award charters for the project to operate schools. Meanwhile, Golle started Education Alternatives, Inc. (EAI), in 1986. His first schools, which opened in 1987, did not make money, so he turned to managing public schools. Following mixed results in Miami, Florida, and Duluth, Minnesota, EAI obtained a $133 million contract to operate nine inner-city schools in Baltimore, Maryland. At the end of its second year of operation, EAI showed significant positive changes in parent involvement, facilities maintenance, and student performance on standardized tests. Supporters of for-profit schools envision positive changes resulting from incentive management.

Edison Schools, Inc., flush with new capital, opened four schools in August 1995. By 2000 the company taught 38,000 enrolled students and ran seventy-nine schools in sixteen states and the District of Columbia. Edison's contracts, which paid it approximately $5,500 per student, were paid by diverting money previously earmarked for the school districts or for charter schools. Although the company boasted of improved test scores, it was losing tens of millions of dollars. Some analysts estimated it would reach profitability if it grew to three hundred schools. Detractors continued to express dismay at the admixture of pedagogy and the profit motive and believe that the proliferation of private schools would further undermine the public schools and widen the existing chasm in educational quality between children from affluent and less-well-off families. Teachers' unions almost universally oppose for-profit schools.


Ascher, Carol. Hard Lessons: Public Schools and Privatization. New York: Twentieth Century Fund Press, 1996.

Hakim, Simon, et al., eds. Privatizing Education and Educational Choice: Concepts, Plans, and Experiences. Westport, Conn.: Praeger, 1994.

Henig, Jeffrey R. Rethinking School Choice: Limits of the Market Metaphor. Princeton, N.J.: Princeton University Press, 1994.

Myrna W.Merron/a. r.

See alsoAmerican Federation of Teachers ; Education ; Education and Intelligence Testing .

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Schools, For-Profit

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