The Pearson Foundation has agreed to pay $7.7 million to settle allegations that the nonprofit broke New York state law while attempting to profit from Common Core-aligned products. An investigation by New York state Attorney general Eric T. Schneiderman revealed the charitable side of Pearson spent years wooing the Bill and Melinda Gates Foundation in hopes the two would partner in creating Common Core courses. The Pearson Foundation and Gates Foundation joined together in 2011, creating 24 online courses that were then sold to the for-profit side of Pearson for $15.1 million.
As for the $7.7 million settlement, the Pearson Foundation has announced it will donate the money to 100kin10, a company that focuses on developing science, technology, engineering and mathematics education. Interestingly, the Gates Foundation has also pledged $7 million to 100kin10 over the next six years along with several other partners Pearson works with. Clearly, the new standards mean big business and big profits.
America’s most recent education reform, the Common Core State Standards, has divided teachers and parents across the United States. Whether or not the standards mark a step in the right direction for the education system, one thing is for sure. For the first time in American history, businesses are able to freely tap into the K-12 market on a large scale, and they aren’t waiting.
The National Governors Association and the Council of Chief State School Officers began writing the standards in 2009 with the financial help of private donors, like the Bill and Melinda Gates Foundation and the Pearson Publishing Co. A few months later the United States Department of Education announced a $4.35 billion contest called Race to the Top in which every state could compete for federal grant money. The applications for funding were judged on a point system of fulfilled criteria, one of which was adopting the new Common Core State Standards. Many states agreed to adopt the new standards before they had even been finished, proving that the decision was largely a financial one. The grant money in RttT was a powerful vehicle in spreading the standards quickly across the United States.
How have the authors proposed we track the success of this reform? Testing, and lots of it. Along with the Common Core come two new major testing consortiums called SmarterBalanced and Partnership for Assessment of Readiness for College and Careers. Forget your No. 2 pencil; these aren’t the bubble tests you remember from school but adaptive computer testing that is required two to three times a year for every student in every grade. From the SmarterBalanced website, “The full suite of summative, interim, and formative assessments is estimated to cost $27.30 per student … These costs are estimates because a sizable portion of the cost is for test administration and scoring services that will not be provided by Smarter Balanced; states will either provide these services directly or procure them from vendors in the private sector.”
Big business in education isn’t new. Pearson and McGraw-Hill have dominated the textbook market while the College Board, makers of the SAT and Advanced Placement courses, are the veritable gatekeepers to higher education. The entire U.S. education system has been valued at nearly $1.5 trillion, second only to the healthcare industry. As media mogul Rupert Murdoch said after acquiring education company Amplify (previously known as Wireless Generations), “When it comes to K-12 education, we see a $500 billion sector in the U.S. alone that is waiting desperately to be transformed by big breakthroughs that extend the reach of great teaching.”
Until the creation of Common Core, businesses have found breaking into the K-12 market very difficult. States have historically written their own curriculums and standards, buying suitable materials and textbooks as they saw fit. Creating content that was accessible to multiple states was difficult and being able to approach the districts within their tiny budget window was nearly impossible. The nuanced field of state, local and federal funding and regulations that companies are forced to navigate takes years to master and states were the ones controlling the checkbook.
From a business point of view, why go to them when you can make them come to you? Many of the people who financially aided the creation of Common Core have investments in place in companies that would do quite well with the standards implementation. By using financial clout and political connections, billionaires, not teachers, were able to influence the landscape of our education system. If states wanted a chunk of the RttT money, they had to adopt Common Core. If they adopt Common Core, they have to pay for the assessments and proprietary materials that come with it. Products that are “Common Core Aligned” have flung the door to K-12 wide open. Still not convinced Common Core is more about money than education? Check out the American Girl back-to-school accessory set children can buy, complete with a mini Common Core-aligned Pearson textbook.
Smaller companies are getting in on the action as well. Silicon Valley has turned its sights onto this virtually untapped market, something that has many worried. Entrepreneurs looking to make it big with their start-up in this world are told the quickest way to success is to start fast, grow even faster, and if it comes to it, fail fast and move onto the next project. To live in the Bay Area, you’d never know the nation is recovering from a recession. It’s a bizarre place filled with 20-something-year-old millionaires, hundreds of millions of dollars bandied about, and a supreme optimism that this idea is going to change the world. The venture capitalists investing in these start-ups don’t suffer from any starry-eyed illusions.
When venture capitalists consider investing their money into a company they go through a process called due diligence. This means that the investors examine the backgrounds of the founders, their previous successes and failures. They look at the business itself and create forecasts based on competition and growth potential. Most important, they analyze the risks that might impede their profits. Investors don’t just hope for the best and expect everything will work out. They do not enter into a business deal without knowing, given everything they have learned, they have a good chance of making their money back and then some. Regardless of the business, they are concerned primarily with profit.
When going into uncharted waters start-up companies live by the credo, “Ask for forgiveness, not permission.” For example, 23andMe, a personal genomic and biotech company, first began selling its services to the public in 2007. On Dec. 5, the company announced it would no longer offer health-related test results after receiving a stern warning from the Food and Drug Administration.
The company has received financial backing from huge industry giants, namely Google at $3.9 million, Russian billionaire Yuri Milner, and other venture capitalists. It’s particularly hard to believe that experienced investors did not anticipate having to meet FDA regulatory approval, but the company has served nearly half a million customers in the meantime. Even if the FDA shuts down the operation, plenty of people will have made money.
Given the growing emphasis on technology in the classroom plus Silicon Valley’s affinity for gadgets, there are dozens of start-ups trying to cash in on the new market. Rupert Murdoch’s company Amplify has created its own tablet and Common Core-aligned games. According to CNBC, the amount of venture capital invested in education start-ups quadrupled, from $154 million in 2003 to $630 million in 2012.
Mick Hewitt, co-founder and CEO of education start-up MasteryConnect, said earlier this year, “I would be wrong if I said the Common Core and the dollars around it haven’t driven a lot of the activity for us.” MasteryConnect raised more than $5.2 million in investments, $1.1 million of which came from the NewSchools Venture Fund, which in turn has received more than $16 million from the Bill and Melinda Gates Foundation since 2010. Hewitt does not have an education background.
When it comes to education start-ups the risks are much more serious and the ramifications longer-lasting. The education of hundreds, thousands, even millions of young children is at stake. Three out of four start-ups fail, which means students could go through several rounds of the “next best thing.” While the software may be fun, many of the programs have not been adequately researched to be valid learning tools. In addition, these new technologies run the risk of widening the achievement gap between wealthier suburban schools and their urban or rural counterparts who might not be able to afford new equipment.
A growing resistance is pushing back against the adoption of Common Core. Teachers and parents across the country are saying these standards are developmentally inappropriate and marginalize students with special needs, and many states are beginning to listen. Alabama has distanced itself from the standards, while Indiana, Louisiana, Massachusetts and Michigan have all delayed implementation. Questions are even arising about the legality of the Common Core Standards. Since there is no direct mention of public education in the American Constitution, many feel that education falls under the 10th Amendment, which states, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
Here is the key issue. These companies see success in terms of dollars and profit, not academic success and achievement. Education start-ups fail all the time, including ones backed by the giants like Pearson. Once investors start to see diminishing returns or trouble on the horizon they will pull the plug regardless of how well students may be performing with their product. Vetting new teaching methods for success takes years of research, observation and review. Plenty of businesspeople, big and small, will have profited from Common Core even if all the states move onto the next education reform in five years’ time, but at what cost to students in school today?