Ask educators what their schools produce and they will answer "learning." After all, any school worth its salt advances a set of learning outcomes, teachers teach to help students learn, tests try to gauge learning, and students say they learn. But no school I know of makes money on learning.
I find this odd. Nearly every viable business makes money on what it produces. Stock brokers make money by buying and selling stocks. Psychotherapists earn money by providing therapy. Fruit growers sell fruit. But schools make money by enrolling students.
This is the case whether a school is taxpayer-supported or not. Public schools receive tax funds based on how many students enroll. Private colleges (like Westminster, for example) receive tuition funds based on how many students enroll for how many credit hours. Both get additional money from grants and donations, but these sources of funding are not directly related to learning either.
You may respond that I am being obtuse--that a school cannot survive economically if it does not produce learning. There is some truth to this. After all, a student will stay to graduation only if she perceives that she is learning, and if enough students fail to learn a school may fail. But even in cases where failure is possible--under NCLB for example--many parents keep their children enrolled in schools that fail to produce learning (measure by standardized tests, I know--hardly a good measure but still...) And even among colleges that disappear, death does not come because of an absence of learning but instead because of an absence of enrollment.
Why does this matter? First, because if learning does not elicit income, then the economic incentives for the school are wrong. (Interestingly, this is the case even for the most market-focused schools--for-profit colleges, for example, or those places where vouchers are available.) One need only look at colleges who have increased enrollment through high discount rates to see that enrollment-focused income can impede learning.
Second, paying for enrollment sends the wrong incentives to students as well. It indicates that the best unit of measure is full-time enrollment, since they get the most academic credit for their dollars. But full-time enrollment may be the worst thing for learning, especially if it puts students at financial risk.
Third, it limits innovation. If more learning led to more income, then the incentive for schools would be to try create more learning better and faster.
Fourth, it blunts reform. Consider the four main reform efforts in American schooling, K-16--active learning, access to education, focus on choice, and focus on cost. Each carries in mind a model of education where income to schools is based on enrollment. The active learning folks, for example, imagine that students will learn more but that they will stay in school for the same amount of time. Cost-focused people call for quicker time to graduation or the reduction of frills without considering the effect on the viability of schools, etc. etc. And so whatever their reform ideologies, their efforts exist in the context of traditional schooling.
One has to look outside traditional schools altogether to find examples where learning is the source of income. But there are examples. Consider music lessons, where as a student gets better at the instrument (or put another way, learns more) the student pays more for learning--choosing a more skilled teacher, for example, and attending lessons more frequently.
Or consider dance and martial arts academies. They often offer free lessons for the first month. Students who learn that they hate dance or karate drop out early on. But those who like it sign on for more. Learning gets linked with success and pleasure, and before long, the student is part of a performance team and parents are paying a substantial amount of money for lessons, uniforms, and travel. At some point the student becomes so good that he is invited to teach as well, starting usually with the beginners.
I do not mean to suggest that schools ought to restructure their sources of income so that they earn nothing if students don't learn. But it would be interesting to see the effect of lower costs for introductory classes, or full tuition payment only coming after students demonstrate their learning, or a collaboration between reformers who are working to change the incentives in the system so that learning, not enrollment, is the heart of what any good school does.