Ten-year-old Asiko Aderin is wearing headphones and staring into a computer screen, looking very much like an underage call center employee. It’s a weekday morning—a school day—and this is what school looks like for Asiko and her two brothers, Ayomiro, 11, and Ayodeji, 8. Holed up in the basement of their family’s Poconos, Pa., home, they watch lessons on a screen, typing answers to questions as their mother, Sharon Aderin, a former U.S. Army Reserve sergeant, hovers nearby. The children attend Agora Cyber Charter School, managed by K12 (LRN), the largest U.S. operator of taxpayer-funded online schools and part-owned by billionaire Michael Milken.

In a development that would have been unheard of a decade ago, about 200,000 U.S. school children are enrolled in full-time online programs. Eleven years after its founding, K12 has 81,000 students in 27 states and the District of Columbia. If it were a school district, it would be one of the largest in America. K12 expects to generate $500 million in revenue this year—it earned a $21.5 million profit last year—and its stock has doubled in value since the company went public in December 2007. The financial success of K12 has shown that Milken—the 1980s junk-bond king, convicted felon (securities fraud), and health-care philanthropist—has figured out how to profit from public schools. But while online education may have paid off for Milken and other investors, it’s less clear that K12 is benefiting its students.

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