Pearson’s Quest to Cover the Planet in Company-Run Schools

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For decades, the major landmark of Balut, Tondo, a densely populated slum squeezed against Manila’s North Harbor, was a monumental pile of often-smoldering trash nicknamed Smokey Mountain. “It used to be sort of pretty, actually,” says Nellie Cruz, a lifelong resident. She points to the spot, now bulldozed, across a reeking, garbage-strewn canal from where we stand with her 13-year-old son, Aki…

“Parents know that education for their children is the only route out of poverty,” says Pearson’s chief education adviser, Michael Barber.
“Parents know that education for their children is the only route out of poverty,” says Pearson’s chief education adviser, Michael Barber. James Day

For decades, the major landmark of Balut, Tondo, a densely populated slum squeezed against Manila’s North Harbor, was a monumental pile of often-smoldering trash nicknamed Smokey Mountain. “It used to be sort of pretty, actually,” says Nellie Cruz, a lifelong resident. She points to the spot, now bulldozed, across a reeking, garbage-strewn canal from where we stand with her 13-year-old son, Aki.

The scene is humble, yes, but Nellie, a single mother, isn’t destitute or desperate. She’s a modern, upwardly mobile megacity dweller, the kind you’re equally likely to meet in Shanghai or São Paulo, except with better English skills—the legacy of the Philippines’ history as a US colony and one key to its current economic growth.

APEC is a different kind of school—one that’s part of a for-profit chain and relatively low-cost at $2 a day.

Both Nellie and Aki carry iPhones, for example, though the devices were given to them by Nellie’s sister, a nurse, who lives in the San Francisco Bay Area. The Cruzes’ immaculate, doll-size family compound has a caged rooster in the front yard, Christian inspirational wall decals, and a strong Wi-Fi signal. In contrast to the screen-time panic among US parents, Nellie is OK with her only child spending time in his attic bedroom, gaming and browsing science pages on Facebook, rather than out on the street exposed to the pounding sun, the omnipresent filth, and the drug gangs on the corner.

The same protective but ambitious impulses were at work when it came to choosing a school for Aki. He attended Catholic institutions when he was younger. Then Nellie lost her job in marketing. So for sixth grade, Aki went off to public school.

“There were 58 students in one classroom,” he tells me. “Only some of us, the Section 1s”—top performers—“got to sit in the classroom. The others studied in the corridor.” Nellie didn’t like her quiet, polite child having to mix it up with kids “from all walks of life,” as she puts it.

So for seventh grade they found a new option at the other end of the street from the public school, housed in a former umbrella factory. The sign outside reads “APEC Schools: Affordable World Class Education From Ayala and Pearson.”

APEC isn’t just new to Tondo or Manila. It’s a different kind of school altogether: one that’s part of a for-profit chain and relatively low-cost at $2 a day, what you might pay for a monthly smartphone bill here. The chain is a fast-growing joint venture between Ayala, one of the Philippines’ biggest conglomerates, and Pearson, the largest education company in the world.

In the US, Pearson is best known as a major crafter of the Common Core tests used in many states. It also markets learning software, powers online college programs, and runs computer-based exams like the GMAT and the GED. In fact, Nellie already knew the name Pearson from the tests and prep her sister took to get into nursing school.

But the company has its eye on much, much more. Investment firm GSV Advisors recently estimated the annual global outlay on education at $5.5 trillion and growing rapidly. Let that number sink in for a second—it’s a doozy. The figure is nearly on par with the global health care industry, but there is no Big Pharma yet in education. Most of that money circulates within government bureaucracies.

Pearson would like to become education’s first major conglomerate, serving as the largest private provider of standardized tests, software, materials, and now the schools themselves.

To this end, the company is testing academic, financial, and technological models for fully privatized education on the world’s poor. It’s pursuing this strategy through a venture called the Pearson Affordable Learning Fund. Pearson allocated the fund an initial $15 million in 2012 and another $50 million in January 2015. Students in developing countries vastly outnumber those in wealthy nations, constituting a larger market for the company than students in the West. Here in the US, Pearson pursues its privatization agenda through charter schools that are run for profit but funded by taxpayers. It’s hard to imagine the company won’t apply what it learns from its global experiments as it continues to expand its offerings stateside.

The low-cost schools in the Philippines are one of Pearson’s 11 equity investments in programs across Asia and Africa serving more than 360,000 students. Two of the most prominent, the Omega Schools in Ghana and Bridge International Academies based in Kenya, have hundreds of campuses charging as little as $6 a month. They locate in cheaply rented spaces, hire younger, less-experienced teachers, and train and pay them less than instructors at government-run schools. The company argues that by using a curriculum reflecting its expertise, plus digital technology—computers, tablets, software—it can deliver a more standardized, higher-quality education at a lower cost per student. All Pearson-backed schools agree to test students frequently and use software and analytics to track outcomes.

Not every Pearson-backed chain will succeed, but the company can use the outcomes to assess which models work best. Pearson will have a stake in the winners; the Affordable Learning Fund takes at least one seat on each board. The goal is to serve more than a million students by 2020.

Like any global scheme, the fund has a mastermind: Michael Barber, Pearson’s white-haired, indomitable yet excruciatingly polite chief education adviser. As a McKinsey consultant to the nation of Pakistan starting in 2010, Barber implemented an educational system that now sees nearly three out of four residents of the second-largest city, Lahore, attend low-cost private schools, many paid for by government vouchers. Now he’s taking his ideas global with Pearson.

The growth of privatized education is igniting a global debate. Last April, major teachers’ unions in the US, UK, and South Africa signed a letter to Pearson CEO John Fallon that read in part: “By supporting the expansion of low-fee private schooling and other competitive practices, Pearson is essentially ensuring that a large number of the world’s most vulnerable children have no hope of receiving free, quality education.” In July, the United Nations Human Rights Council adopted a resolution that called for monitoring all private education providers.

Pearson’s corporate reputation doesn’t help matters. In the US, just the mention of its name is enough to make some education activists apoplectic. In 2014 the company was implicated in an FBI investigation of unfair bidding practices for a $1.3 billion deal to provide curricula via iPads to the students of Los Angeles Unified School District. Meanwhile, in New Jersey, Pearson monitored the social media accounts of students taking its Common Core tests and had state officials call district superintendents to have students disciplined for talking about the exam. Barber himself points out to me that his face appears as “the seventh-scariest person in education reform” on an anti-Common Core website.

Yet in many parts of the world, low-cost private schools are a big step up from existing public schools, where buildings may be falling down, philanthropic grants are used to line local officials’ pockets, and teachers don’t bother to show up. The father of Nobel laureate and youth education advocate Malala Yousafzai himself started a chain of low-cost private schools in Pakistan.

Barber’s thesis is simple: If his company can offer a better option, millions of families like the Cruzes will vote with their feet. “Technology and globalization are going to change everything, including the status quo in education,” he says.

“People think Pearson is this big company going after these markets in a predatory way,” says Katelyn Donnelly, managing director of Pearson’s Affordable Learning Fund. “I’m always like, wow, I wish we were milking money.”
“People think Pearson is this big company going after these markets in a predatory way,” says Katelyn Donnelly, managing director of Pearson’s Affordable Learning Fund. “I’m always like, wow, I wish we were milking money.” James Day

It’s the last week of the first academic year at Aki’s new school in Tondo, and it feels pretty much like the last week of school anywhere. The students, four classes of seventh graders totaling 123 kids, are excited, dressed up for a play; their families are happy and proud.

Katelyn Donnelly, my companion in Manila, is the managing director of the Affordable Learning Fund. “We started here from the ground up,” she says of APEC, explaining that she and Barber have taken a more hands-on role in the Philippines than in any of the other school systems that Pearson has invested in. “We were struggling to find the next couple of schools to back. So we thought, OK, well, maybe we can build one from scratch.”

Their Filipino partner is Fred Ayala, who opened the first call center in the Philippines and eventually sold his business to the Ayala Corporation (no relation). Taken together, call-center and other white-collar work that can be done over phones or the Internet account for 1 million jobs in the island nation. Ayala thinks it should be twice that. “The limiting factor is the supply of skilled talent,” he says. “You have education systems producing kids that have good academic foundations but are not as employable as the employers would like.”

Ayala assembled a board of executives with international experience to create an education company that would mold middle and high school students into the perfect entry-level employees for foreign corporations. The execs had the on-the-ground knowledge and connections; Pearson brought the educational expertise and a $3 million investment.

The biggest obstacle to expanding here, Donnelly tells me, is the dearth of available facilities within safe walking distance for kids. So APEC decided to rent a few rooms here and there, close to students, in neighborhoods all over the city.

Because space is tight, the schools have no nurse’s office and no science lab. Some have no gym or play space. One amenity offered everywhere is closed-circuit cameras, a nod to parents’ paramount concern: physical safety.

Pearson models do vary by setting and the visions of individual entrepreneurs. All of them, though, save money on teachers and claim they still deliver a superior education—even though most research shows that teacher quality is the single most important factor in a student’s education. Donnelly and Barber draw parallels to US charter schools, which employ younger, less-experienced teachers without union protections, and to Teach for America, which places recent college grads into the country’s most challenging classrooms with just five weeks of training.

“You’re getting younger, not-formally-qualified teachers, so you’re paying them a lot less,” Donnelly says. “You’re providing a lot of the content and the training centrally and trying to figure out how you can make them successful. Each of our investments is doing that in slightly different ways.” In the Philippines, teachers are supervised by a more experienced “master teacher” who floats between schools. In its first year, the school in Tondo had smaller class sizes than the nearby public school, but it doesn’t plan for it to stay that way.

They may not be dissecting frogs, but they know how to shake hands and put together a PowerPoint.

The curriculum, designed with much input from Pearson, hints at innovative, progressive ideas about education, like interest-driven learning and collaboration. Every classroom has computers and Internet access. There are also frequent standardized tests and a custom-built software system that uses analytics to manage applications, admissions, parent satisfaction, and student outcomes.

Most important, all instruction is in English; that’s the number one academic priority the parents I talk to mention. Students tutor each other in various subjects—Aki is a mentor in English and science but a mentee in math. Through the Life Labs curriculum, students work in groups to create public information campaigns on topics like safe smartphone use. They may not be dissecting frogs, but they know how to shake hands and put together a PowerPoint.

About a month after my visit to Tondo, I sit over tea and sandwiches with Michael Barber in a cozy chamber at his airy offices on London’s Strand. The white art deco building, overlooking the Thames, sports the largest clockface in the city, nicknamed Big Benzene for the building’s first tenant, Shell oil. Barber, 59, is in the midst of treatment for a rare form of skin cancer. Although he’s pale and thin, with a fresh scar behind his left ear from surgery, he makes a point of saying he has never felt better. He spent the previous day cycling some 50 miles in the English countryside.

Barber’s quest to transform education began when he was a young man, married with three daughters, teaching school in a newly independent Zimbabwe in the early 1980s. His initial idealism about the yearning of rural black Africans for education and the aspirations raised by self-rule faded to frustration with the slow pace of change. Later he became a key member of Tony Blair’s administration, where he focused on schools, health, and literally running the trains on time. Next came his stint at McKinsey, during which he started his work in Pakistan, and then he brought his mission to Pearson. He depicts working in the private sector as the ultimate expression of his pragmatism. “Are we going to get more children education by building more and more public schools?” he asks me. “In the developing world, that plan hasn’t worked.”

Pearson’s Affordable Learning Fund, on the other hand, is winning the “ground war” of creating higher-functioning school systems, he says. Now it’s time to tackle the “air war” of public opinion. “We want to be judged on our performance,” he says.

The most comprehensive global review of research on low-cost private schools was published in 2014 by the UK’s Department for International Development—and it’s worth noting that Barber advised the agency on education in Pakistan at that time.

The review found strong evidence of better learning outcomes—that is, test scores—at private schools than at public schools. That’s probably in part because the teaching is in fact better. Compared with teachers at government-run schools, which can be dogged by corruption, those at tuition-charging schools in developing countries are more likely to show up, to spend more time providing effective teaching, and to be paid regularly for it.

However, other analyses have pointed out that the students at fee-charging schools tend to come from families with a little more money, which generally correlates with higher test scores. There’s an X factor too, harder to quantify: It could be that for-profit schools attract more parents like Nellie, who place more of an emphasis on education and whose children would therefore do better in any setting. Critics of charter schools in the US make a parallel argument, accusing them of “creaming off” the most engaged families.

On the negative side, the 2014 review found “weak and inconclusive evidence” that low-cost private schools are truly affordable or accessible to the poor.

Research by groups that oppose for-profit schools goes further. The Privatization in Education Research Initiative reports that when schools aren’t free, poor students must work one day and go to school the next, and boys are educated in favor of girls. The official position of many groups, including the UN’s Committee on the Rights of the Child, is that charging a fee, no matter how low, excludes the most needy and magnifies social divisions—like those between Aki and his neighbors in Tondo, for example.

History suggests they are right. Starting in the 1980s, the World Bank, as a condition of lending, pushed about 90 poor countries to raise revenue by charging fees to attend public schools. When evidence showed the tuition was excluding millions of children, a global campaign to abolish the fees gained traction, and in the early 2000s the World Bank dropped the policy. David Archer of the international development group ActionAid, who cofounded that campaign, believes that the power of “free” is one good reason school enrollment has risen by 50 million worldwide in the past 15 years. “The clear evidence is that when you charge children, the poorest cannot afford to go,” he says.

Barber has an answer for that too: government-funded vouchers to make private schools free to the poor. “The question is, how do we get every child a good education? Not how we fix our public system,” he says. “Parents know that education for their children is the only route out of poverty, and they have often been frustrated with public schools. Those who oppose choice for parents are really only opposing choice for the poor—the wealthy always have choice.” Vouchers, he says, level the playing field.

Jishnu Das, a lead economist at the World Bank’s Development Research Group, has questioned the data behind Barber’s claims of great improvements in Pakistan’s schools. He doesn’t think much of the voucher idea either. He says it’s perfectly fine for private providers to compete in the free market, just as they do in the preschool market in the US. If Nellie can afford $2 a day for her only child to have a chance at a better future, that’s her prerogative.

But it’s a real mistake, Das says, for government to put a thumb on the scale by diverting large amounts of cash away from already struggling public schools toward private providers: “If the government can’t be trusted to run schools, it can’t be trusted to price vouchers.”

Donnelly first met Barber at McKinsey. She worked closely with him in Pakistan and came with him to Pearson in part to advance the low-cost model. “People think Pearson is this big company going after these markets in a predatory way,” she says. “I’m always like, wow, I wish we were milking money.”

Starting schools in the developing world is far from a quick or easy buck—margins are thin, costs and red tape must be cut as much as possible. “It’s a struggle getting these companies breaking even and getting growth and trying to wade through a mire of regulations,” she says.

The only check on its progress will be the tests that Pearson itself creates.

Still, in the Philippines at least, the odds favor Pearson’s bet on APEC schools. The government is in the midst of a huge expansion of its school system, making 11th and 12th grades compulsory by 2017. That’s 2.7 million more students in just two years. APEC’s competing low-cost model is off to a good start, with 24 branches and 3,300 students and plans to add 5,700 more next school year.

It’s hard to argue with the mission of local entrepreneurs like Fred Ayala who strive to offer a better educational option to their communities. In Tondo, Aki’s mobile phone and his impeccable English, both of which he’s currently using to learn about global warming and interstellar travel, really do look like catalysts for a better life for his family.

But a matchup between a $9 billion public company and the impoverished governments of developing countries looks lopsided, to say the least. If Pearson achieves its vision, only the most destitute would remain in public schools in the world’s largest and fastest-growing cities. Or those schools would close down altogether, as governments increasingly outsource education—a fundamental driver of development and democracy, a basic human right, and a tool of self-determination—to a Western corporation. Teaching would become a low-paid, transient occupation requiring little training. And Pearson would try to bring the lessons it learns in Africa and Asia to education markets in the US and the UK.

One morning in Manila, I had breakfast at a five-star hotel with James Centenera, who had worked closely with Donnelly and was key to launching the APEC schools. In his view, for-profit schools have quickly become an accepted part of the educational landscape here—just another option. “I’m glad people have stopped asking whether the schools are better.” Startled, I realized his remark spoke to a mantra of Barber’s: irreversibility.

In other words, create enough momentum around any change and you’re no longer arguing the merits of your idea. You’re simply treating it as a fact on the ground and rallying others to the cause.

What makes this a most effective path to change is also what makes it terrifying and infuriating to critics. Inserting itself into the provision of a basic human service, Pearson is subject to neither open democratic decisionmaking nor open-market competition. The only check on its progress will be the tests that Pearson itself creates.

Barber’s temperament doesn’t allow for a wisp of doubt. He downplays “nice little initiatives” and “little boutique projects.” To him, the only scale that matters is global—historic. His heroes are Churchill, both Roosevelts: leaders who slammed their fists down on the table of world events, rearranging all the figures on the game board at once. Ever polite, he is nonetheless unyielding. “I recognize that to get really good things to happen is a bit of a struggle.” So Pearson’s grand experiment on 360,000 kids continues—capturing just a little more of that $5.5 trillion with each passing day.

Anya Kamenetz (@anya1anya) is the author of The Test, a book about standardized testing in US schools.

This article appears in the April 2016 issue.


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