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An alarming new study says charter schools are America’s new subprime mortgages

The charter-school industry — consisting of schools that are funded partly by tax dollars but run independently — may be heading toward a bubble similar to that of the subprime-mortgage crisis, according to a study published by four education researchers.

The study, “Are charter schools the new subprime loans?” warns of several factors that appear to be edging the charter industry toward a bubble premeditated by the same factors that encouraged banks to start offering risky mortgage loans.

With charters, school authorizers play the role of the banks, as they have the power to decide whether to issue a new charter school. There are a multiple types of authorizers, including state education agencies and independent charter school boards. Most authorizers are local education agencies.

“Supporters of charter schools are using their popularity in black, urban communities to push for states to remove their charter cap restrictions and to allow multiple authorizers,” one of the study’s authors, Preston C. Green III, told The Washington Post, where we first read about the study. “At the same time, private investors are lobbying states to change their rules to encourage charter school growth. The result is what we describe as a policy ‘bubble,’ where the combination of multiple authorizers and a lack of oversight can end up creating an abundance of poor-performing schools in particular communities.”

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