I'm not familiar with what "education institute backed" means. Does that mean GTech provided initial seed capital to the co-op for free? If so, how much money was it?
To the general question of why co-ops are not prominent, it's because the workers don't have significant money. By definition, the co-op is owned by the workers and therefore, the workers need to fund the business. That limit on investment is why co-ops are often smaller businesses like consultants sharing an office & a laser printer or farmers-&-market collective. I also made a previous comment about it: https://news.ycombinator.com/item?id=11165966
I am surprised I wasn't downvoted (I deserve it) to oblivion for such a mistake.
It was confusing and I thought it was the education one because they said:
* Hire a Co-op
* I have never seen a technology co-op. Sure I have seen grocery stores, farms, insurance companies etc but never seen a tech co-op.
* The article mentioned students.
For example my alma mater Georgia Tech used to offer a Co-op program but I believe they discontinued it.
Northeastern here in Boston from what I have heard from others had serious problems with adoption of the Co-op program (I have to find the citation where I also read this).
Of course this was a few years back so maybe Co-ops are in now?