People talk about preschool as an investment. In a Utah school district south of Salt Lake City, investors will spend $7 million over eight years to expand an early-childhood program, reports Education Week. If fewer children require special education, the district will ask the state to share the savings, which will be used to pay back the loan with 5 percent interest.
This fall, Goldman Sachs and the investor J.B. Pritzker will pay for the expansion of an early-childhood program in the 67,000-student Granite district through a social-impact bond, also known as a pay-for-success loan. Social-impact bonds are loans that seek to achieve a positive social outcome, and reduce future costs, by investing in prevention and intervention programs in the public sector.
Utah gives schools $2,600 per year for each student who requires special education. “Many students are placed in special education simply because they trailed their peers academically upon entering elementary school,” experts say.
If there are no savings — a Utah State group will decide — then the investors will lose their money.