Two outstanding situations sometimes warrant government intervention in the marketplace. First, “natural monopoly” providers, such as public utilities, would charge all the market could bear without government regulation. Second, unprofitable markets, such as those for orphan drugs and certain types of research and development, would not exist to meet certain public needs absent government subsidies or donor contributions.
Yet, confusion and “market failures” abound when government-subsidized or nonprofit entities compete in the marketplace with private, taxpaying entities. Consider the mid-20th-century prospects of private U.S. railroads, which purchased all the land and laid all the rail on their own roads, competing against truckers operating on government-provided roads.
Confusion abounds when government-subsidized entities compete in the marketplace with private ones.
College Board: Benevolent or Mercenary
The College Entrance Examination Board (College Board) often promotes itself as a public servant of the second monopoly type that exists to serve otherwise unmet societal needs. Its Advanced Placement (AP) program, for example, is the only one of its kind—a standardized, advanced-credit credential recognized throughout the United States. If not for AP, there might be no such service.
Their other major product—the SAT Suite of Tests—operates in a duopoly with competitor ACT but maintains some monopoly components.
Some state governments pay for and administer ACT tests, thus guaranteeing sales.
College Board’s early history would support this view. Shortly after World War II, during a key phase in the history of educational testing, College Board joined with the Carnegie Foundation and the American Council on Education (ACE) to create the Educational Testing Service (ETS), an independent scientific community dedicated to developing and administering standardized tests. ETS was handed responsibility for several ongoing testing programs, including the National Teacher Examinations (from ACE), the Graduate Record Examinations (from Carnegie), and the Scholastic Aptitude Test (from College Board). Some programs became ETS’s to own, others just to manage. All the programs met important public needs, but none were moneymakers at the time.
Traditionally, the College Board has hired others—usually ETS—to develop and administer its tests. In more recent years, however, College Board has competed more aggressively. It developed the “new” SAT—built to align with the Common Core standards—in-house, with an expanded staff of testing experts mostly hired away from rival firms, including a large contingent who had worked at ACT, College Board’s chief rival in college-admission testing. College Board would fight ACT in other ways, as well.
After resting in second place for decades, the ACT test had, by 2010, surpassed the SAT in popularity in the North American market. Priming ACT’s growth was their statewide testing innovation. They convinced some state governments (including North Carolina’s) to pay for and administer ACT tests to all their high-school juniors, thus guaranteeing sales to the total of their potential customers while offloading administration costs to boot.
College Board would eventually offer the same service. In 2015, it bid against ACT for the state of Michigan’s statewide testing contract and won, underbidding its rival by almost half—$17.1 million to $32.5 million. Coincidentally, College Board sold a substantial number of investments that had been tropically domiciled in the Cayman Islands for years. Luckily for College Board, it had the assets to sell. Other companies did not, and some of those firms were College Board competitors.
One could argue that “ACT started it”—the competition for statewide contracts, that is. But College Board’s reaction revealed its current character—not that of a benevolent charity interested only in public service.
Despite overstretching its test development capacity so tightly that it risked ruining the SAT in the mid-2010s, College Board also found the time and resources to develop from scratch a product to compete with the International Baccalaureate (IB) diploma program, its only real, albeit marginal, competitor for federal fee-waiver subsidies for advanced-credit college-admission testing.
The federal government distributes substantial sums of money to the College Board for a variety of purposes. College Board’s formula for soliciting funds is to evoke sympathy for the poor and cite equity concerns. For example, shouldn’t all students enjoy the opportunity to benefit from AP courses and tests, even those who cannot themselves afford the exam fee? Over the past couple of decades, federal, state, and local governments and foundations have helped boost steep growth in the number of schools offering AP courses in even in the poorest neighborhoods and even, some charge, by enrolling thousands of unprepared students lacking relevant prerequisites.
College Board’s formula for soliciting funds is to evoke sympathy for the poor and cite equity concerns.
Furthermore, institutions outside government donate money to College Board. Just one among many such organizations, the Bill and Melinda Gates Foundation, gave them $32.2 million.
Career Kickstart
Most recently, College Board has decided to develop and administer a new class of products—certification programs and tests for the skilled trades called Career Kickstart. Following the AP model, College Board designs the curricula and tests, and regular schools and colleges deliver them. College Board rationalizes the effort as meeting a societal need amidst Americans’ newfound appreciation for the skilled trades (and its newfound disillusionment with the college-for-all boondoggle).
Absent from the Kickstart promotional literature is any mention of how and how well the need in question is already being met.
The meeting-a-need rationale makes sense with AP and partially with SAT (though there’s also the ACT, remember). But will it work with Career Kickstart?
Absent from the Kickstart promotional literature is any mention of how and how well the need in question is already being met. Take, for example, cybersecurity training and certification, the only Career Kickstart subject field available thus far. To get a rough idea of the current market, I plugged “cybersecurity certifications” into a search engine. Results suggest that all needs for cybersecurity training and certification are currently met by a thriving market with abundant choices. My first page of results (DuckDuckGo, Jan. 24, 2025) fills not with links to individual programs but with links to summary lists of such programs—“Ten Best,” “Ten Popular,” “Your Ultimate Guide,” “Security Certification Roadmap,” etc.
Moreover, the many programs one can find in seconds with a keyword search tend to be national ones. Also available are the standard course fare at your local college, community college, or technical school.
With Career Kickstart, College Board proposes meeting a need that is already being met. Even the names “Career Kickstart” and “Career Kickstarter” are already widely used. So, what’s in it for College Board? Do they retain any competitive advantages?
Three come immediately to mind. First, as a nonprofit corporation, they pay few taxes, unlike their for-profit competitors. Second, they can offload some expenses onto schools—regular salaried teachers teach the AP program in their own school classrooms, something most of their competitors do not or cannot match. Third, in addition to this in-kind subsidy, College Board may appeal to various governments for public funding for fee waivers and such and to generous citizens for their volunteer time.
One might assume that branding Career Kickstart an Advanced Placement program will also confer upon it AP’s mostly positive reputation. Kickstart’s cybersecurity product, however, competes directly with offerings from Google, Microsoft, IBM, and various prestigious universities.
If Career Kickstart succeeds, College Board may eventually exploit economies of scale with national or international reach and economies of scope across a wide variety of subject fields. For the time being, however, they enter a competitive thicket. Will they again come hat-in-hand for donations from governments, foundations, and individual volunteers?
While College Board portrays itself as a benevolent pseudo-governmental entity, it shelters behind an elaborate governmental structure with multiple walls and moats guarding against accountability to anyone.
Yet it retains the hubris to solicit taxpayer subsidies, donor contributions, and the volunteer time of over 800 upright citizens (see part 1, line 6) while paying the CEO responsible for an impressively long string of major blunders $2.4 million a year, 11 others over half a million a year, and over 1,300 individuals over $100,000 a year. Good work if you can get it.
Richard Phelps has authored, edited, and co-authored books on standardized testing, learning, and psychology. His newest book is The Malfunction of US Education Policy: Elite Misinformation, Disinformation, and Selfishness (2023).
This article was originally published at jamesgmartin.center
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