Sunday, March 2, 2014

Selling Is Not Doing

In yesterday's New York Times, Suzanne Mettler provided one more explanation of why school choice doesn't-- and won't-- work.

Mettler is looking at how college has become the "great unleveler," an education system that reinforces a caste system instead of breaking down walls. That's in no small part because the percentage of household income required to send a child to college has skyrocketed for the lower classes since 1971 (for the bottom fifth, it now takes 114% of annual household income to send a child to college),

"But wait," you say (particularly if you haven't tried to finance someone's college education lately), "Don't we have a system that makes grants, or at least loans, available to folks who need financial help for college?" The first part of the answer is "Not so much as we used to," and that part of the discussion is best served by Mettler's article.

The second part of the answer is, "Yes, we do, some, and how that plays out tells us about how vouchers really work."

As a graph in Mettler's article vividly illustrates, for profit colleges represent a voucher-fied, market-based business model. Management at Phoenix, Corinthian, Kaplan and others have realized a powerful insight about how to make it in the biz.

Selling is not doing.

There are a whole bunch of folks out there who have control of a big chunk of money for college. The money might be grants or it might be loans-- it really doesn't matter to me if I'm setting up a for-profit. What matters, what I must absolutely grasp, is that my business is not providing a service. My business is selling a service. My business is convincing those people to give me the chunk of money that they control.

Are they later dissatisfied? Doesn't matter-- I already have that money. And this isn't a used car lot. I don't need them to come back again and again for the rest of their lives.

Selling a service and providing a quality service are two entirely different operations, and only one of them provides immediate cash flow for my business.

Phoenix, Kaplan, Corinthian, Education Management and DeVry all reap over 80% of their revenue from government loans and grants-- higher education vouchers. Convincing customers to fork over those $$ isn't crucial to their business model. It IS their business model. Vouchers aren't the key to their survival; it's their reason for existing.

Selling is not doing. We know this already. We collectively observe every four years, for instance, that the skills needed to be an effective President are not exactly the same ones needed to win a Presidential election. We know that we'd better google that guy who took our sister on such a fabulous first date.

Every time we buy Coke or Pepsi, we give them a little extra money so that they can spend it on marketing aimed at convincing us to give them more money.

Selling is not doing, and selling is a separate budget category. The next time someone says, "What's wrong with schools making a profit if they educate kids?" Tell them this: Every cent that schools have to spend on marketing is a cent that doesn't get spent on actually doing the education thing. And every cent they spend on students is one less cent to spend on selling. Voucher and choice schools must screen out high-overhead students because they need that extra money for marketing.

Market forces do not foster superior quality. Market forces foster superior marketability.

The more we open education to market forces, the more money we will waste on marketing schools, the fewer resources we will devote to actual education, and the more educational snake-oil salesmen we will find working their way into the school biz. Sure, the marketplace will sort some of them out-- we're seeing some of that already in places like Ohio, where charter schools have the same life span as tse-tse flies. But how much student education, how many years of students' lives, do we want to throw away as cannon fodder for the invisible hand?

There is no place for hucksterism in education. Schools should be doing, not selling.

1 comment:

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