Education Arbitrage

I think this is the coolest thing I’ve seen to hit the slow as morass world of education. Jonathan coined the phrase in response: “education arbitrage.” What a fantastic idea.

BOSTON (Reuters) – Private tutors are a luxury many American families cannot afford, costing anywhere between $25 to $100 an hour. But California mother Denise Robison found one online for $2.50 an hour — in India.

“It’s made the biggest difference. My daughter is literally at the top of every single one of her classes and she has never done that before,” said Robison, a single mother from Modesto.

Her 13-year-old daughter, Taylor, is one of 1,100 Americans enrolled in Bangalore-based TutorVista, which launched U.S. services last November with a staff of 150 “e-tutors” mostly in India with a fee of $100 a month for unlimited hours.

Taylor took two-hour sessions each day for five days a week in math and English — a cost that tallies to $2.50 an hour, a fraction of the $40 an hour charged by U.S.-based online tutors such as market leader that draw on North American teachers, or the usual $100 an hour for face-to-face sessions.

“I like to tell people I did private tutoring every day for the cost of a fast-food meal or a Starbucks’ coffee,” Robison said. “We did our own form of summer school all summer.”

Jonathan and Lex said it better than I can:

Jonathan: Agreed. The real story is that it potentially undercuts the entire
govt-schools system. If you have kids going from failure to excellent
performance based on a couple of hours’ tutoring per day, how much better
would they perform if they spent four or six hours every day with their
online tutors and blew off their schools entirely? That’s what parents will
be thinking. The teachers’ unions are going to try to make this kind of
tutoring illegal or so larded up with mandated bulls*** that it won’t be
effective. I don’t think the unions can succeed, however.

Yippee. Education arbitrage.


Those bast***s in the real, existing, Brezhnevite system we have here are going to EAT DEATH at long last.

This is the beginning of the market wedge that will split the whole rotten system apart.

I hope I hope I hope.

I hope that’s the reception TutorVista continues to get as it catches. Check out their website here. Outsourcing hits education, disintermediation with a vengence…

18 thoughts on “Education Arbitrage”

  1. Our local HS – which is still a decent 1 – gets knocked by NCLB.

    And what have they decided to do? Double up reading and math classes. Can we guess what happened?

    Scores raised and the administration surprised that it helped and they were thinking of expanding the program.

    And now the Math union decides the old way is the best – it’s snowing down there, isn’t it?

    My only other thought was that I thought I read that NCLB covers tutors because NYC wasn’t informing parents that the Feds will cover the cost……

  2. Not only math and science. I can tell you from being out here the last couple years that they have a better understanding of (our) history as well. Arbitrage, by definition, forces inefficiencies out of the market place. If there was ever a bigger inefficiency than our education system I haven’t seen it.

  3. The main purpose of the so-called education system is babysitting. Education can be done much more efficiently in a handful of hours a week of one-to-one (or possibly groups of 2-4 students, I’m not sure) tutoring, plus access to reference material. But if you implement that, you’ve still got to handle the babysitting some other way.

  4. “…main purpose … babysitting”

    No longer true. Not for yuppie parents. They are in a competitive panic. They see the world as increasingly competitive and zero sum and are aggressively interested in giving their kids as many advantages as possible and building a resume, sometimes literally, from pre-K on. They no longer believe in God so their only immortality is the success of their children. They are very motivated by peer comparisons, and this too pushes them to be extremely concerned about the success of their children.

  5. Lex,

    I can assure you that there are plenty of non-Yuppie parents who are extremely disatisfied with the public education system. My Better-Two-Thirds and I have gotten our daughters through secondary public education and they are now well along – and doing just dandy – in college and beyond. No thanks to “standard” public education. And we live in a town that has long held and maintained the reputation of “good schools”. The general public notion of “good” for public schools is quite sad.

    We were fortunate that we had an alternative public education opportunity (a form of what are oftern called “magnet” schools) that our brats were motivated enough to take advantage of but few families in the US have such an alternative.

    It is not entirely the fault of the educrats (which isn’t the same as saying they don’t deserve a heaping helping of steaming blame). A disturbingly large portion of US parents do not want their chillun challenged – and certainly not “pushed” or “pressured” – in the public education system. They want little Janie and little Billy patted on the head and minded for some hours each day. It will not be fixed until we demand more from it.

    The battle can’t even be joined unless and until the citizenry – a lot of us, not a sparese few or even sizeable minority – change our expectations. As it stands now the expectations of a majority are being met. Their children are being warehoused for enough hours per day, that is the expectation. They aren’t even paying much attention to whether or not the brats are learning anything. Janie and Billy are sent home with Bs and mom and dad figger everything is just ducky.

    Here’s a tip for parents of youngsters who are in public schools. Make a point, after each and every school day, of asking your child, “What did you learn in school today?” But don’t just ask the question as a throw-away. Poke, prod, dig – be interested, be determined to learn from them. It is astonishing how often you will find that they learned nothing or something quite incorrect or have been utterly confused about something that should be relatively simple. That last bit is where you can make the most difference. When you discover, for example, that some simple arithmetic has been presented in a manner that leaves you scratching your head wondering why anyone would make something so simple so difficult you can make repairs.

  6. “yuppie parents…in a competitive panic.” Many of them are, and (as is normally the case with panic) this behavior will frequently defeat their own objectives. What they are failing to understand is that success in most professions is a matter not only of skills and credentials, but of metaskills (or what used to be called “character”). The whole highly-programmed, conveyor-belt approach to education tends to undercut the development of these metaskills.

    Here’s an example of where this process leads.

  7. Knucklehead,

    I don’t disagree with you about what many parents want, but doesn’t the availability of alternatives such as homeschooling and online tutoring put pressure on the parents who have low expectations? It seems to me that the key issue is how easily parents with high standards can opt out of the conventional system, and that more parents will do so if they can do it easily and cheaply. Won’t the relative success of those parents’ children put increasing pressure on other parents to seek better educations for their own children?

  8. naturally enbough, the first thing the poster does is to state–as though he knows!–that unions will try to prohibit the use of Indian tutorsl. Tel me: do they prohibit the use of American tutors? If not, why would they bother with a less expensive system that makes more tutors availab le for our students? Just plain silly thinking.

    If the tutor thing worked, why not use it for home schooling and cut class time altogether since public education is clearly (according to comments here) the cuse of the downfall of America. ps: it isn’t. My son went to decent school and is now in prestigious college. So, too, many of his classmates.

  9. Jonathan,

    It is not particularly “easy” to opt-out of the system. One can send one’s kids to private school. That entails the obvious financial costs but it carries some other costs. Home schooling requires, of course, that at least one parent not work as well as aquiring sufficient skills and knowledge to teach. None of this is impossible but none of it is “easy”. There aren’t always quality private schools available. And the cost of private school can easily equally the cost of 4 years of college. My own research, now nearly a decade old, put the low end at roughly $7K/yr. per brat. The high end was over $20K/yr. For HS. Carry a few K per year all through grammar and secondary school and you start talking real money.

    In my own case it was a very fortunate situation. Our county, under the auspices of the Voc-Tech program, has established a series of magnet type schools that students willing to put in the effort and make certain sorts of sacrifices (often giving up sports – it can be extremely difficult, and spending a whole lot of extra time in transit each day, just as examples, not to mention the extra work of meeting higher expectations). These are, of course, just “choices”. One chooses to accept additional costs, of various sorts, to gain access to a better education.

    Interestingly, when I was chatting with the superintendant for these schools I asked him what the most difficult problem he faced was. His answer was immediate, “The educational establishment. They don’t want your children leaving their schools to come here. They don’t want the funds spent here. They don’t want this and they fight it tooth and nail.”

    By happenstance, while I was trying to determine if the opportunity for my children was as promising as it seemed, I learned that an associate’s son was attending one of the schools. I asked him what he thought of it. His face went from business to pleasure in a flash, he grinned, and said, “It’s a magical place!” Schools can be magical places. Our public schools almost never are.

    Over the years (six) that my children were in that system I found that he was correct. Budgets were always under attack from the “standard” system. The local school made a specific and concerted effort to dissuade our daughters from going – it was suprising to me the effort and methods. It is not universal but a large portion of the sending schools do NOT want to send. There are several reasons for it (transfer of funds, loss of some easy points that help raise their “grades” in the “report card” for the school). It really was as if we had to “escape” and their were “guards” trying to prevent that. I expected something somewhere between nothing and, “Wow, that’s a great opportunity. Make the most of it.” What we got, instead, was “They have nothing we can’t offer except more risk. You’re making a mistake!”

    I had no idea what they thought was “risk”. Well, the risk was that they’d be successful at sabatoging the alternative schools!

    We were fortunate that we had the opportunity and even more fortunate that we had the sort of children who WANTED that opportunity. The additional “costs” – and there were some – were well worth the payback. Excellent return on investment.

    I’ve found it difficult to explain how it mattered for my brats. The best way I’ve found, one that seems to get through to people who went to college, is to relate my own early feelings when I first went to college and sat down in those giant science lectures. I sat there wondering where the heck the kids who knew what the prof was talking about had gone to HS. I’d gone to a “good” public HS, had taken “honors” courses, gotten good grades. But I hadn’t touched upon anything the prof was going on about on Day 1. I wasn’t alone with that but there were other students who knew what he was talking about. Somehow they’d been exposed to it. Those were my brats in their frosh classes. They were the ones who other students wondered, “Where did those kids go to HS?”

    They were prepared not because they were more intelligent than their peers but, rather, because they’d been through a more rigorous secondary education where not only the school, but their peers, expected and demanded more.

    But these opportunities are not present for everyone.

    And stop and think for a while about even recognizing the problem! Many, many, of even we parents who are interested in our children’s education go through the trouble of researching a bit about the schools. We often select where we’ll live based upon the reputation of the school system. This is quite common. We typically launch our own kids. They know their colors and alphabet and numbers and often even basic reading by the time we kiss ’em good bye for kindergarten. They can easily be in third grade before we start becoming suspicious that something isn’t right in Denamrk. Another year or two before we’re sure. Then maybe you start seeking alternatives or fighting the battle. By the time you’ve radioed Houston that you have a problem your brat is through grammar school.

    Everyone knows middle-school is hell. HS is four quick years.

    All the educrats need to do is give you the Heisman stiff-arm for a few years (and they are VERY good at that) and you’re out of their hair and they just turn to the stiff-arm the next bunch of dopes staggering their way through the system. They have this down to a science. Once you’ve gotten your own through it you’re exhausted with the battle. You get one chance to raise and educate your children. If you manage to reach the finish line in good shape you give ’em a kiss, thank Gaia or whomever, and start figuring out what to do with the rest of your life (and fighting the public school mess doesn’t generally seem like the thing to do).

    I do tend to go on and on. Sorry.

  10. Nate Zuckerman,

    Because many public schools are terrible and it’s nice for parents to have better options. Tutors who charge $20 or $40 per hour are not an option for most of these parents.

    Because the people who run teachers’ unions will interpret the availability of high-quality cheap tutoring as a fundamental challenge to the control they now have over the children of poor people. And they will be right, and it is a good thing that that control is being challenged.

  11. Mr Zuckerman doesn’t think that unions will try to prohibit the use of Indian tutors. If this process takes off, and becomes a threat, it will be attacked.

    Any monopolist, assuming rationality, if it faces a threat to its monopoly position, will try to defend its position. A government-based monopoly is especially well-placed to use regulatory power to thwart and destroy potential competitors. Good hearted people may create the government machinery, but once it exists it is used by its beneficiaries to secure their economic rents. As a lawyer I have seen quite a bit of “gaming” of the government, all of it legal, all of it self-serving. That is what the American government school system has been for — to prevent competition, especially to price religious schools of out of the market with a “free” alternative, to keep wages and benefits up and easy working conditions for teachers, with the actual needs of the students being incidental. This is most true in poor areas where the parents, often single moms, have no wealth or political power. It is less true in wealthy suburbs where the parents have money, power and desire for their childrent to be educated.

    But the incentives are the same for the unionized workforce. And around here we look at incentives to try to figure out what people will do and why they do things.

    So “as if he knows!” can be answered by: “as if a monopolist would not act like a monopolist!” They’d be stupid not to. And they are not stupid.

  12. Nate,

    Tel me: do they prohibit the use of American tutors?

    Ummm… who do you suppose views the “tutor industry” as a nice source of additional income?

    Have you never met parents who, upon realizing that their child is struggling with math, and starts casting about for a tutor, turn to public school math teachers?

    Take a little jaunt over to Kitchen Table Math and start up a little echat with the good people there. You might find their experiences enlightening. Perhaps not. But their experiences are not unusual. Our public schools have lost all track of how to teach children basic mathematics. They are so deep into the quagmire of new age nonsense that our nation is littered with sobbing, “math is hard!” kiddies. And there is no shortage of American math teachers picking up some extra pocket money tutoring these kids for whom the real problem is nothing more than failed “modern” methods for teaching math.

  13. Where the unions really have a stranglehold is in inner city schools and I don’t see this tutoring effort making a dent on the entrenched forces there. NPR this week ran a piece on how Detroit schools are trying to attract students with hip hop concerts and free iPods. They’re losing students to charters and magnets and need to attract a certain number of students to stay open. “It’s critical,” you see. My thought was: Why not just shut down the whole system and provide vouchers for local kids to attend magnets, charters, private or parochial schools. But that seems to be an option no one is considering. Corrupt local politicians are in thrall to “the educational establishment” and wouldn’t dream of making such a move.

  14. Hip-hop concerts and iPods. I don’t suppose they every considered trying a better quality educational product to keep those rotten kids from dashing off to the charters and magnets. Nah, that would never work. They really don’t get it, do they?

  15. There does seem to be some underlying notion within the educational establishment that our young children are the property of the school districts. The attitude of many seems to be that rather than us turning our children over to them for a few hours a day, expecting them to be educated, that it is them who turn the nation’s children over to us for overnight keeping. And they hope we don’t do too much damage while we have charge of them.

  16. –Tel me: do they prohibit the use of American tutors?–

    CA’s teacher’s union’s trying to pass a law that the only way a child can be home schooled is if the parent is either certified or has a degree in teaching, IIRC. Whichever it it, it’s onerous on the parent.

    Give them time, they will. Like I said, tutors and money are available under NCLB, but the parents aren’t being told of it.

Comments are closed.