Making the grade? Private equity, privatization and the future of American education
March 13, 2025
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Childcare and K-12 education are critical to the success of a society, but the United States struggles to provide high quality care and education for all students. With a federal government that spends ten times more on the military than it does on education, state and local governments provide the majority of funding for schools. In lieu of strong public infrastructure and funding for childhood development and student learning, school privatization increases year over year. This limits access for the most vulnerable children and families, while private equity firms stand to benefit.
As federal investment in education continues to decline, private equity firms see an opportunity to turn the sector into a return-generating machine. In 2023, private equity firm Leeds Equity Partners announced its goal of raising $1.8 billion for its largest education-focused fund to date. The firm is dedicated to investing in “knowledge industries,” of which it includes education, training, information services, and software. In a pitch to a state retirement system, the firm claimed that the knowledge industries make up 12% of US gross domestic product and “are growing twice as fast as the US economy.”
Leeds is not the only firm betting on growth in the education sector – investors such as Bain Double Capital Impact,Renovus Capital,Education Growth Partners, and A-Street are all dedicated to investing in education. Though dealmaking across the industry slowed in the past few years from its peak in 2021, analysts expect to see more activity in 2025.
Private equity firms promise to improve educational outcomes for struggling students and schools through new technology, personalized learning strategies, and resources for educators and administrators, but there is no conclusive data showing that school funding is better spent at private-equity owned companies than staying within a public school district. The following sections explore some of the ways private equity impacts students and classrooms: for-profit child care, private schools and the school choice movement, and curriculum development and test administration.
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