Wealthy Americans have been funding U.S. charter schools for years now through their hedge funds, private foundations or personal fortunes, but it turns out that super-rich foreigners are forking over big money to American charters too.
Do you think it’s for the kids?
A federal program known as EB-5 allows foreigners to invest at least $1 million in certain job-producing projects — or $500,000 if the project is in a rural area or one with high unemployment — to win immigration visas for their families.
So much for students first in education.
According to this Reuters story, most of the EB-5 investment in the United States under this program during the past 20 years has gone into projects such as hotels and ski resorts. But now charter schools have become popular among these investors. The story says:
Wealthy individuals from as far away as China, Nigeria, Russia and Australia are spending tens of millions of dollars to build classrooms, libraries, basketball courts and science labs for American charter schools.
An investor need only Google “EB-5 and charter schools” to find advice on how to proceed.
For example, Shepherd Capital Funding, an investment consulting and management firm, has a primer on the subject that says in part:
Our ability to successfully structure EB-5 capital raises, provide technical assistance, and incorporate bridge financing as part of a finance package, make Shepherd Capital Funding well equipped to add value to the charter school field to help solve the facilities challenge. As an EB-5 Consultant, specializing in Charter School Development Initiatives, we act as a steward for capital invested in Charter Schools through the USCIS EB-5 Investment Pilot Program. Through the EB-5 Program, the Charter School Industry currently has access to billions of dollars in capital, which we can directly assist you in accessing…
Despite the perceived risks of lending to charter schools, which include a limited charter life, uncertainty over public funding, and newness of the market, there is a clear track-record of low loss to investors and bridge lenders, as well as a very low percentage of default for Charter School Bond Issuance. The potential for funding is great for both start-up and existing schools, schools that receive assistance from management companies, and those managed independently. Shepherd Capital Funding (SCF) has first-hand knowledge of the complexity of structuring charter school capital raises.
And the Education Fund of America says on its Web site:
Education Fund of America, capitalizing on our extensive investment and public charter school building experience and success, has become the first EB-5 project center to focus solely on this safe, secure and predicable investment area.
This is just one more example of the growing privatization of public education.
Thanks to Ken Bernstein, writing under teacherken, for pointing this out in this piece.