A Cautionary Tale for America
Sweden’s For-Profit School Experiment
In the early 1990s, Sweden embarked on a bold experiment in education. A once-centralized, egalitarian school system was transformed by market-driven reforms that introduced school vouchers and opened the door for for-profit companies to run publicly funded schools . These independent “free schools” (friskolor), as they’re known in Sweden, receive government funding for each student just like public schools – but they can be managed by private entities, including corporations. What followed was a rapid growth of a school choice industry: today about 15% of Swedish elementary students and nearly 30% of high schoolers attend these taxpayer-funded free schools . Some of the largest school operators are even listed on the stock market .
For advocates of school choice in the United States, Sweden was long held up as a trailblazer – proof that competition and innovation could revitalize education. Influential policymakers traveled to Sweden to see this “free school” revolution firsthand . But in recent years Sweden’s education system has faced stark challenges that have turned this once-heralded model into a cautionary tale. As America debates expanding charter schools, vouchers, and public funding for private (including religious) schools, Sweden’s experience offers a sobering lesson about outcomes, oversight, and equity in a market-driven system.
The Rise of Sweden’s Market-Based Schools
Sweden’s shift to a voucher-based system began in 1992 under a center-right government as part of broad decentralizing reforms . Parents were given tax-funded vouchers to enroll their child in any school – public or private – with government money “following” the student . Crucially, for the first time, private actors (even for-profit companies) were allowed to operate schools with public funds . This school choice policy aimed to spur competition, hoping that independent schools would innovate and drive quality up across the board.
In the decades that followed, these ideas took root. Nearly a quarter of Sweden’s high school students attend voucher-funded, privately run schools – roughly double the global average for private enrollment . Unlike U.S. private schools, Sweden’s free schools charge no tuition and must follow the national curriculum, making them more analogous to American charter schools (publicly funded but independently operated) . The free schools range from tiny startups to large chains backed by venture capital. At their peak, private equity firms owned or invested in nearly half of the free schools at the secondary level , eyeing the sector as a growth market.
How did this system evolve? Initially, virtually anyone could apply to start a school, and approval was often easy to obtain. Eva-Lis Sirén, head of Sweden’s largest teachers’ union, quipped that “it’s been easier to start an independent school than set up a hot-dog stand” in Sweden’s deregulated environment . The country replaced one of the world’s most tightly regulated school systems with one of the most deregulated . Operators were given broad autonomy over hiring, teaching methods, and budgeting. Even religious groups opened some schools, though officially all schools must teach the national syllabus. From major cities to small towns, new schools sprang up, competing with municipal schools for students.
Politicians promised that choice and competition would inject fresh energy into education. And early on, parents and students welcomed having more options. Surveys in Sweden have found that families with children in free schools often report higher satisfaction than those in traditional schools . Free schools, for example, sometimes offer specialized programs or newer facilities that appeal to parents. Supporters also point out that school choice broke the monopoly of residential assignment – no longer are children forced to attend only their neighborhood school, which in theory allows motivated families (including immigrants in poor areas) to access better schools outside their district .
Yet alongside these perceived benefits, serious structural problems began to emerge in Sweden’s market-based model – problems with academic outcomes, equity, and oversight that grew too glaring to ignore.
Promises vs. Performance: Slipping Educational Outcomes
By the 2010s, it became clear that the academic performance of Swedish students was faltering, even as the free school sector expanded. The most dramatic evidence came from the Programme for International Student Assessment (PISA), a respected global exam. In 2000, Sweden’s results were well above average, putting Swedish 15-year-olds near the top performers in Europe . But by 2012, after two decades of vouchers and privatization, Sweden had suffered the steepest decline of any participating country in PISA . Scores in math, reading, and science plummeted from above average to significantly below the OECD average . In that 2012 assessment, Sweden ranked near the bottom of industrialized nations: 28th out of 34 in mathematics, and similarly low in reading and science .
The drop was not a one-time blip. Internal tests and other indicators echoed the PISA trend. Teacher reports spoke of declining basic skills and eroding discipline in classrooms . International education officials sounded alarms – a 2015 OECD review bluntly stated the Swedish system was in need of “urgent change” . As one former education minister, Gustav Fridolin, noted, Sweden had gone from being a star performer to a country where “scores in international tests have gone down” and the once-narrow achievement gaps were widening .
Indeed, inequality in education outcomes grew alongside the new market reforms. Sweden had prided itself on providing equal learning to rich and poor. But by the mid-2010s, student achievement was increasingly linked to family background . Socioeconomic segregation between schools rose: well-educated, affluent families often maneuvered to get their children into certain popular free schools, while others – especially immigrant or lower-income families – were over-represented in under-resourced municipal schools . “Instead of breaking up social differences… we have a system today that’s creating a wider gap between the ones that have and the ones that have not,” Fridolin warned as minister . Research confirms this stratification. One analysis found school choice, more than residential segregation, became a driving factor in diverging outcomes across Swedish schools . In practice, “school choice is used to avoid schools where students have less-educated parents,” explains Swedish educator Linnea Lindquist, describing how savvy parents flock to schools with peers of similar advantage .
The competition for students also introduced perverse academic incentives. With funding tied to enrollment, schools – especially those run as businesses – had a motive to attract and retain students by keeping them (and their parents) happy. Over time, critics say, this contributed to grade inflation and diminished rigor. In Sweden, there are national exams but no tradition of externally standardized grading, so individual schools largely set their own grades. Under the pressure of competition, many free schools began awarding higher grades than students’ actual performance might merit . Even public schools felt compelled to “give higher grades” to avoid losing students to competitors, according to Sweden’s current Schools Minister . This systemic grade inflation left students with rosier report cards, but potentially undermined their learning – and universities have to accept those grades at face value . As Minister Lotta Edholm put it, “Free schools tend to give higher grades than municipal schools… It’s unfair and leads to students thinking they are much more knowledgeable than they are.”
It’s important to note that education experts continue to debate how much Sweden’s falling test scores can be blamed specifically on the voucher/free-school system. The period of decline coincided with other changes – decentralization of school governance, revamped curricula emphasizing “modern” pedagogies, and reduced status for the teaching profession. Some analysts argue these factors, or a general decline in school discipline, share the blame . Even pro-market researchers acknowledge that Sweden’s reform was “poorly implemented” in many ways . But even if one grants that multiple factors led to the “Swedish school crisis,” the market-driven model undeniably introduced new challenges that compounded the situation.
By 2015 and 2018, Sweden’s PISA scores did rebound somewhat after national attention focused on the crisis . Reforms like stricter curricula and investments in teacher training helped lift results back up to around the international average . But those gains have been fragile. The latest PISA (2022) showed Sweden slipping back toward its 2012 low point, effectively erasing much of the earlier recovery . In short, Sweden’s grand experiment with free-market education has yet to show a clear, sustained improvement in national outcomes. If anything, it correlated with a lost decade of learning. This stark outcome is a cautionary data point for U.S. policymakers: expanding “choice” without robust safeguards can undermine overall quality instead of improving it .
Profits, Oversight, and “Education Inc.”
Why did Sweden’s for-profit school model stumble? A key issue was the lack of oversight and quality control in the rush to privatize. When Sweden unleashed choice and competition, it failed to strengthen its supervision of schools in tandem . Andreas Schleicher, the OECD’s education director, observed that Sweden had “no means to detect and address educational underperformance” once it decentralized and that a successful school system must be more than “a collection of independent schools” . In hindsight, many Swedes admit the country was too naive in assuming the market would self-regulate. “I think we had too much blind faith that more private schools would guarantee quality,” said Tomas Tobé, a senior member of Parliament from the (conservative) Moderate Party . In practice, authorities were unprepared to hold the new schools accountable – inspection was light, data on performance was limited, and intervention in failing schools was rare.
This lax regime allowed serious problems to fester. Investigations found some operators cut corners to maximize profit: hiring less-qualified teachers (who cost less), overcrowding classrooms, or skimping on support services . Notorious anecdotes made headlines, such as a convicted pedophile legally establishing several schools in 2011 due to insufficient background checks . Basic record-keeping was sometimes neglected – a few schools infamously kept no records of student grades or progress, essentially letting students decide when they were “done” learning . When such stories emerged, the public was understandably outraged that public funds could be mismanaged so easily.
Perhaps the most dramatic demonstration of the risks of a market-based system came in 2013, when one of Sweden’s largest school companies – JB Education – suddenly declared bankruptcy. Backed by a private equity firm, JB Education had expanded rapidly, running dozens of schools across the country. But after financial troubles, it collapsed almost overnight, shuttering 36 schools and leaving 11,000 students in the lurch . Teachers and staff lost their jobs, final-year students scrambled to find new schools, and many families felt betrayed. “Tina was absolutely shattered,” recalled one mother whose daughter’s school closed just a week before the end of term . The JB Education fiasco – which left over $150 million in unpaid bills – was the starkest example of how education, when run as a business, can fail children . Sweden’s education minister at the time admitted such an event would have been unthinkable in the old system; it was the kind of disruption one might expect in the corporate world, not in public education.
Financial instability turned out to be a systemic issue. While some early free-school entrepreneurs made quick profits, by the 2010s many operators were struggling. One in four secondary free schools was losing money, and the sector’s bankruptcy rate far outpaced other industries . The boom in school supply (so many new schools) overshot the demand in some areas, leaving half-empty classrooms and schools competing for too few students. Sweden’s School Inspectorate noted that municipalities had to keep “many empty school places” to accommodate the flux, diverting funds away from actual teaching . In essence, market oversupply created inefficiency and drained resources – a caution for policymakers who assume competition is always efficient.
The profit motive itself became a lightning rod. Critics argue that education should not be treated as a commodity, and that for-profit schools face an inherent conflict: every krona taken as profit is a krona not spent in the classroom. Cases like JB Education’s collapse, or revelations of companies paying out hefty dividends while cutting staff, fueled public anger. Investigative reports uncovered that some chain schools had exported millions in taxpayers’ money as profits while posting mediocre academic results, sparking accusations of “profits before pupils.”
Even some proponents of choice came to agree that tighter rules were needed. The free-market experiment, they say, lacked the kind of safeguards one normally applies to public-private partnerships. “The voucher system is a form of public procurement, not a free market utopia,” economist Tino Sanandaji wrote, noting that strong regulation and quality control are essential when public funds are contracted out . In Sweden, however, oversight mechanisms were slow to catch up. It took a wave of scandals and the PISA shock to prompt stricter measures (for example, authorities eventually began auditing grade distributions to spot inflation, and new rules were proposed to require minimum numbers of certified teachers). Had these checks been in place from the start, some problems – like grade inflation – might have been avoided .
A Public Backlash and Political Reversal
As the problems mounted, Swedish public opinion shifted strongly against for-profit schooling. While Swedes broadly still like the idea of school choice, surveys show they overwhelmingly oppose the idea of companies extracting profits from tax-funded schools. A poll found that 70% of the public wants to stop for-profit firms from operating schools (and healthcare) with public money . Editorial pages and experts began referring to Sweden’s schools as a “failed market experiment.” Perhaps most telling, politicians who once championed the reforms issued mea culpas. In 2014, the Green Party – which had initially supported free schools – ran a full-page newspaper apology headlined “Forgive us, our policy led our schools astray.” Even leaders in the center-right parties started acknowledging excesses. “We are rethinking our system… competition on the basis of quality rather than profit needs to be ensured,” one Moderate party MP said in essence.
By the late 2010s, education had become a hot-button political issue in Sweden. Voters demanded action to fix the perceived “school crisis.” In 2018, the Social Democrats campaigned on promises to curb profiteering in welfare services (including schools). The resulting debate saw something rare: a broad consensus that the free-school system required major reform, though disagreement on how far to go. Some called for banning profits outright; others urged strict regulation and transparency. Teachers’ unions took a strong stand, with Sweden’s largest union declaring in 2023 that the nation’s highly marketized school system has led to viewing “pupils as customers” and chronic under-resourcing, and demanded an end to schools run as joint-stock companies .
Even under a coalition government that includes pro-market parties, Sweden has begun moving to rein in the excesses. In late 2022, Lotta Edholm, an outspoken Liberal Party politician who became Schools Minister, stunned observers by calling the current free school model a “system failure” . It was jarring because Edholm’s party historically championed school choice; yet here she was, likening the situation to a broken system that needs an overhaul. She launched an official investigation aimed at tightening regulations on free schools. “It will not be possible to take out profits at the expense of a good education,” Edholm vowed in an interview, pledging to “severely limit” profit withdrawals and even impose fines on schools that put shareholders before students . In her words, “It can’t be that the state pumps in lots of money … and a portion goes out as profits. That we will put a stop to.”
Edholm’s plans include requiring that any surplus from school operations be reinvested in the school or else handed back to the state . She also is pushing for stricter vetting of who can open schools, after incidents where unsuitable or foreign-backed organizations ran schools with hidden agendas . Notably, religious free schools have come under scrutiny amid concerns about extremism or segregation; Edholm wants to tighten rules on religious influence in those schools to ensure they don’t deviate from national standards . All these steps represent a remarkable pivot: Sweden is essentially saying that education is not just another market, and that taxpayer-funded schools must operate by different rules than typical businesses.
Whether Sweden will actually ban for-profit schools remains politically contentious. But clearly the era of laissez-faire in Swedish education is over. The country learned the hard way that a “Wild West” approach – with rapid expansion, weak oversight, and profit incentives – can undermine educational quality and equity. As one union leader summed up, “In the push toward freedom of choice, one lost sight of quality control.” That lesson is increasingly cited beyond Sweden’s borders.
Lessons for the United States
Sweden’s experience offers a powerful case study for the United States, where debates over school choice and the use of public funds for private or religious schools are intensifying. In recent years, several U.S. states have expanded voucher programs that help families pay for private and parochial schools, and the U.S. Supreme Court has opened the door to more public financing of religious education by striking down certain state-level funding restrictions. Proponents often argue that injecting competition and choice will pressure all schools to improve and will empower parents to find the best fit for their child. Those goals echo the intentions of Sweden’s 1990s reformers. But the Swedish saga is a vivid reminder that choice without accountability can backfire .
One clear lesson is the importance of oversight and standards for any school receiving public money. In the U.S., Betsy DeVos (former Education Secretary) was pressed by senators on whether private schools taking taxpayer vouchers should meet the same accountability requirements as public schools – she demurred, which alarmed many observers . Sweden shows why that accountability is crucial. If America directs public dollars to more private and charter schools, those institutions must be held to rigorous academic and operational standards. Every school getting public funds – be it a charter in New York or a religious academy in Arizona – should be expected to hire qualified teachers, follow an approved curriculum, administer standardized tests, and be subject to transparency in finances and outcomes. Without these safeguards, the door is open for the kinds of abuses seen in Sweden’s free schools (insufficient teaching staff, opaque grade practices, even sudden school bankruptcies).
Another lesson is about the profit motive. Sweden’s model is unusual in how openly it allowed profit-making in compulsory education. The U.S., so far, has mostly barred for-profit K-12 schools directly receiving public funds (with some exceptions like certain charter management organizations). As school choice expands in the U.S., policymakers must decide: Should public education dollars ever end up as private profit? If states authorize for-profit charter operators or funnel vouchers to for-profit schools, the Swedish case suggests caution. Even if outright profit-taking remains banned, profit can seep in through management fees, real estate deals, or other contracting arrangements in the charter sector. The takeaway is that public funds need to stay focused on students, not enriching companies. Measures to cap administrative fees, require nonprofits as school operators, or reinvest any surplus into schooling can help avert the pitfalls of “education as business.”
Crucially, Sweden’s story underscores that school choice can exacerbate segregation if not carefully managed. The U.S. has its own painful history of segregation, and policies like open enrollment or vouchers can unintentionally (or intentionally) lead to stratified schools – for instance, if more advantaged families are better positioned to exercise choice, or if private schools select students in subtle ways. In Sweden, choice enabled “system-savvy” parents to avoid schools with many low-income or immigrant kids, intensifying academic and ethnic divides . American communities should be mindful of this risk. Strong equity provisions – such as lottery admissions, transportation support, and outreach to disadvantaged families – are necessary to prevent choice programs from simply becoming escape valves for the privileged. Otherwise, as happened in Sweden, overall inequality can widen, leaving the neediest students concentrated in underfunded schools that lose both resources and the balancing presence of middle-class families.
Furthermore, Sweden shows that public oversight of curriculum and values in schools is vital, especially when religious or other ideological organizations are involved. In the U.S., the prospect of public funds going to religious schools raises church-state issues, but also practical concerns: Will these schools teach broadly accepted curricula, or promote sectarian views? Sweden permits faith-based schools but mandates adherence to the national curriculum and recently moved to limit religious influence in core teaching . Even so, controversies have arisen (for example, a few fundamentalist schools were criticized for gender-segregated classes or biased teaching until regulators intervened). The U.S., with its First Amendment considerations, must tread carefully – if taxpayer money supports a religious school, that school’s freedom to inculcate religious doctrine may clash with the principle of providing a neutral, quality education to all. Clear standards and monitoring are needed to ensure publicly funded schools – secular or religious – serve the public interest and not a narrow agenda.
Finally, the Swedish case debunks the notion that simply creating a marketplace automatically drives up quality. Education is not a typical commodity; parents don’t have perfect information, and “competition” might revolve around marketing or grade inflation as much as actual learning quality. American education reformers can glean from Sweden that choice is no panacea. It matters who is allowed to operate schools (are they competent educators or just opportunistic investors?), how those schools are evaluated, and what guardrails are in place to protect students. In Sweden, a period of trial and error revealed many “unanticipated problems” – from financial collapses to cheating the system – which only later were addressed. The U.S. has the advantage of learning from countries like Sweden (and Chile, which had a similar voucher experiment) to anticipate these pitfalls before scaling up similar programs.
As the U.S. considers expanding charter schools or implementing new voucher schemes (some targeting religious schools in the name of equal treatment), the Swedish experiment stands as a flashing warning sign. Yes, offer families choices and spur innovation – but do it with eyes open and safeguards in place. Ensure that the public good of education isn’t compromised by private interests. Insist on transparency, equitable access, and intervention when a school is failing its students. Remember that schools are more than marketplace players – they are fundamental democratic institutions entrusted with our children’s future.
In the end, Sweden’s two-decade journey from market enthusiast to cautious regulator highlights a fundamental truth: education may benefit from fresh ideas and dynamism, but it cannot be treated like a pure market commodity without risking serious collateral damage. The United States would be wise to heed that lesson. When it comes to publicly funded education – whether in district schools, charter schools, or voucher-supported private schools – the priority must remain on students, standards, and the public interest. The Swedish story is a reminder that the stakes are too high to experiment recklessly. American policymakers can pursue choice and innovation, but they should do so with robust oversight and a commitment to equity over profit. Anything less, and we may find ourselves writing our own educational cautionary tale in the years to come.