This enthusiasm for alternative and untried modelsis not exactly breaking news in American education.

The past 10 years have been boom times for charter schools, for-profit colleges, and a general faith that entrepreneurship is the way to “bring our outmoded school system into the 21st century”—to use the rhetoric of the believers.

This has lately culminated in a fervor for shaking up school systems by appointing as their leaders people with limited experience in public-school administration, or even in education. Two of the most visible have been Joel Klein, an accomplished prosecutor who had headed the antitrust division of Bill Clinton’s Justice Department before being named chancellor of New York’s Department of Education, and Michelle Rhee, a Teach For America alumna and founder of a teacher recruitment and training non-profit who was named superintendent of the Washington DC system partly on the basis of her outsider status. (Rhee stepped down in 2010 after the electoral defeat of her patron, Washington Mayor Adrian Fenty, in a Democratic primary wherein discontent over her school reforms was a major issue. In New York, Mayor Michael Bloomberg’s controversial choice to succeed Klein, announced in November, is another outsider, Cathie Black, who previously ran Hearst Magazines.)

“I think more economists should go into education,” says Greenblatt, explaining one of the things he likes about Lynch. “The incentive systems in education don’t work.  They make no sense. And I think if there were more economists in education, people would figure out faster why they don’t work.”

But not everyone shares the faith. Diane Ravitch, who was a high-profile supporter of some of these ideas as assistant secretary of education under George W. Bush, has metamorphosed into an even-higher-profile apostate. In her widely discussed 2010 book The Death and Life of the Great American School System, Ravitch characterized the emphasis on “applying the principles of business, organization, management, law, and marketing” (especially when those tactics focus primarily on “choice and accountability”) as a sort of bait-and-switch.

“Instead of dealing with rancorous problems like how to teach reading or how to improve testing, one can redesign the management and structure of the school system and concentrate on incentives and sanctions. One need not know anything about children or education,” she wrote. Ravitch now argues that curriculum development and teacher training—boring though they may sound as a reformer’s rallying cry—are the things we need most.

Penn GSE, to be sure, does both of those things. Lynch just has a much more expansive view of what the school’s mission encompasses. “Does curriculum matter? Heck yeah. Do teachers matter? Heck yeah,” he says. “The mistake is not thinking about it ecumenically. The problem with all these folks—whether you’re Randy Weingarten, or Diane Ravitch, or Linda Darling-Hammond, or Michelle Rhee—is that you’re orthodox. You think your algorithm is the grand unifying theory [that will work in every kind of classroom] … And I think that’s intellectually boring, and it’s also just a pipe dream.”

He adds, “I think you need to be much, much more pragmatic than that. Simply because we have a moral obligation to learn, and to further the profession. And to simply sort of say, ‘We are going to ignore all this stuff that’s going on’—which is apparently what a lot of ed schools are doing—is to me both immoral and impractical.”

Of course one might make the argument that some things really ought to be ignored.  

This an awkward time, for instance, for an elite Ivy League education school to give credence to for-profit colleges. Heavily dependent on federal student loans—which typically account for between 80 and 90 percent of their total revenue—for-profit colleges have lately come under withering scrutiny by regulators, Congress, and short-sellers.

For-profit colleges enroll about 11 percent of the nation’s college students, The New York Times reported in November, and collect 25 percent of all federal student aid, while their students account for 43 percent of all loan defaults. Investigations have turned up an alarming catalogue of accusations. Nursing students at one institution graduated only to learn that their program had never been accredited, making their degrees worthless—but their five-figure debt loads quite real. Recruiters have trawled halfway houses and homeless shelters for new students (and thus, more taxpayer-provided revenue in the form of federally guaranteed loans). A Government Accountability Office undercover investigation of 15 for-profit colleges documented deceptive practices at all of them, and fraud at four.

Perhaps the most memorable statement about the for-profit college sector, which enjoyed a stupendous run on Wall Street over the last decade due partly to a softening of regulations by the Bush administration, came from hedge fund investor Steve Eisman C’84. At an investment conference last May, Eisman—whose prescient and lucrative bets against subprime mortgage lenders made him a central character in Michael Lewis’s The Big Short—lambasted the industry.

“Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry,” he said. “I was wrong. The for-profit education industry has proven equal to the task.”

He charged that “the for-profit model seeks to recruit those with the greatest financial need and put them in high-cost institutions,” and that the for-profit sector’s tuition rates—which tend to be vastly higher than at community colleges and frequently eclipse those of state four-year colleges—bear little relationship to the underlying cost of the education they deliver.

(Tuition rates vary widely in the higher-education marketplace. For most of its associate-degree courses, the University of Phoenix charges $385 per credit hour. By comparison, California community colleges charge $26 per credit hour—but are often oversubscribed and lack the ability to add additional sections. For bachelor-level courses, the University of Phoenix charges as much as $550 per credit hour, which is higher—in some cases by a large margin—than in-state undergraduate tuition at the University of Michigan. Penn charges tuition on an annual basis, but the full tab for a student taking five courses per semester would work out to about $1,300 per credit hour.)

Eisman offered the Apollo Group, which owns the University of Phoenix, as an example of educational entrepreneurship gone wrong:

“In fiscal 2009, Apollo, the largest company in the industry, grew total revenues by $833 million. Of that amount, $1.1 billion came from Title IV federally funded student loans and grants. More than 100 percent of the revenue growth came from the federal government. But of this incremental $1.1 billion in federal loan and grant dollars, the company only spent an incremental $99 million on faculty compensation and instructional costs—that’s nine cents on every dollar received from the government going towards actual education. The rest went to marketing and paying the executives.”

Lynch doesn’t dispute this. He just thinks it misses the point. “I think there are proprietary schools that are criminal. I think you could also make a case there are some not-for-profit institutions of higher education that are equally criminal,” he says. “I believe that the beauty of the American system is institutional diversity. And I think there’s room for good for-profits. I think what we need is a lot more scrutiny on all universities in terms of their outcomes and their outputs. But in this instance we are sort of being agnostic about it. What we’re just saying is, if you’ve got a good idea, let’s kick the tires of it. And if it seems like it’s viable, let’s help you get resources to explore it further.”

Which brings us back to Sabrina Kay.


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