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Monday, January 4, 2016

Are Charter Schools the New Subprime Mortgages? | EduShyster

Are Charter Schools the New Subprime Mortgages? | EduShyster:

Are Charter Schools the New Subprime Mortgages?

sad bubble
A new study warns that we may be headed towards a charter school *bubble*…

EduShyster: It’s unusual to see the words *hair-raising* and *academic study* in tandem, but your new study merits that marriage. You and your co-authors make the case that, just as with subprime mortgages, the federal government is encouraging the expansion of charter schools with little oversight, and the result could be a charter school *bubble* that blows up in urban communities. Do I have it right?
Preston GreenThe problem of subprime mortgages began in part because the government tried to increase homeownership for poor people and minorities by enabling private entities to offer more mortgages without assuming the risk. Under the old system, the mortgage originator was still at risk if the mortgage went into default. With subprime, they were able to spread that risk by selling the mortgages on the secondary market. You had all these mortgage originators that could issue more mortgages without careful screening because they no longer had skin in the game.Now how are charter schools similar to subprime? In the charter school context, charter school authorizers are like mortgage originators.
EduShysterThere’s a great moment in the new movie The Big Short when Selena Gomez turns to the camera and explains to the world what collateralized debt obligations are. Here’s your opportunity to do the same, but for the convoluted world of charter school authorizing.
big shotGreenPromoters of charter school expansion are calling for an increase in independent authorizers, such as nonprofits and universities. Supporters of charter school expansion believe that multiple authorizers will issue more charters, in part, because they are less hostile to charter schools than school districts. However, our research suggests another reason that multiple authorizers result in more charter schools: multiple authorizers are like mortgage originators with no skin in the game. In other words, these authorizers don’t assume the risk of charter school failure. That means that if something happens with the charter school, the authorizers don’t have to clean up the mess. Multiple authorizers may also weaken screening by giving charter schools the chance to find authorizers who *won’t ask questions.* In fact, CREDO has Are Charter Schools the New Subprime Mortgages? | EduShyster: