Thursday, July 9, 2020
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K12 Inc. gets a boost with DeVos

The business journal Market Watch reported a momentary rally in the price of stock in the online education provider K12 Inc, in which Education Secretary Betsy DeVos used to hold stock, on Tuesday afternoon right after her confirmation as US education secretary.


Daily closing stock price of K12 Inc (NYSE:LRN) over 36 months through today’s close

The stock did rally a little in the afternoon, following Vice President Mike Pence’s historic tie-breaking vote, but share prices quickly fell back.

K12 Inc in Herndon, Virginia, is a technology-based education company that offers proprietary curriculum, software systems, and educational services designed to facilitate “individualized learning” for students primarily in kindergarten through 12th grade, according to the company’s own profile for the New York Stock Exchange.

It was founded by Ronald Packard in 2000 and provides curricula used mainly in online or virtual schools, which are inadequate. This inadequacy is especially pronounced with schoolchildren younger than about eighth grade, because virtual schools don’t provide the social networks and other supports—a friendly face to say hi in the morning, etc.—that young children need to thrive in a learning environment.

What K12 sells to companies who start fly-by-night schools and to others who fail to understand the elements of a high-quality education in the 21st century is “personalized learning” (without a person) or “individualized learning” (without an individual). It’s really delivered by a computer, not a person.

Ms DeVos, who no longer holds shares in the company, according to disclosure statements, would have the government divert funds away from traditional public schools and send them to private or online schools, like those who buy K12’s products, so they can make a profit from those tax dollars, which come from all of us, not just the parents who decide to enroll their kids in a private school.

I can see it now. Kids will wave their vouchers in front of those private schools, I tell you, but private schools aren’t likely to want too many of those kids coming in.

In order to temper the onslaught of kids with vouchers, private schools might just say they’re full and can’t take any more students, even with partial vouchers. They might also raise the tuition, which would mean the vouchers will offset even a smaller percentage of the cost. Or in the case of selective charter schools, they might need to change the lottery rules. These are the kinds of things normal companies do when demand barrels forward.

As a result, traditional public schools will lose money and have to cut some great educational programs, which will make them even less desirable for students and their families. Wealthy families, however, will get a little help paying for private school tuition, provided they can afford part of it. Remaining public schools, scraping by on skeleton crews, will be worse off. Kids will then have a right to pay for an education, not the right to be provided with an education.

Meanwhile, kids with vouchers who don’t “choose” the public schools because they don’t have the programs they used to but who can’t get into private schools that say they’re “full,” will be driven to online schools, which operate chiefly as profit engines for companies like K12 Inc. In the end, private schools won’t take all of them, even with the vouchers, and no good public schools will remain on our educational landscape, because the government will have taken all their money away.

This is the fallacy of vouchers: there’s no end-game for the kids, and companies like K12 Inc make lots and lots of money, which is good for their shareholders but no one else. I am all willing and ready to be business-friendly, but businesses need to start being kid-friendly if they want my education tax dollars. I don’t see any of that so far.

Paul Katula is the executive editor of the Voxitatis Research Foundation, which publishes this blog. For more information, see the About page.

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