With “The Big Short” doing well in theaters — a film about the near collapse of the financial system because of the bursting of a housing and credit bubble — here’s a piece that asks the simple question: “Are charter schools the new subprime loans?” The post by Jennifer Berkshire refers to a new study by four academics titled, “Are We Heading Toward a Charter School ‘Bubble’?: Lessons From the Subprime Mortgage Crisis.” This is a Q & A with Preston C. Green III, the lead author of the report and the John and Carla Klein Professor of Urban Education at the University of Connecticut’s Neag School of Education. Berkshire, a freelance journalist and public education advocate, worked for six years editing a newspaper for the American Federation of Teachers in Massachusetts. She writes the EduShyster blog, where this first appeared. (The other three authors of the report are Bruce Baker of Rutgers, The State University of New Jersey; Joseph Oluwole of Montclair State University; and Julie F. Mead of the University of Wisconsin at Madison
Jennifer Berkshire: 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 Green: The 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.