Colleges & Universities

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 3,000 colleges and universities in the US provide post-secondary education and award degrees to students who have developed expertise in a specific field of study. Colleges and universities include public, private non-profit, and for-profit institutions.

Tuition Increases Jeopardize Affordability

College tuition continues to grow faster than inflation and family income, making higher education less affordable.

Volatility in Government Funding

During tough economic times, state and local governments typically reduce budgets and may cut support for higher education, forcing schools to rely on tuition increases or other sources to fund the shortfall.

Industry size & Structure

A typical four-year college employs about 680 workers and generates $231 million annually. A typical junior or community college employs about 119 workers and generates $43 million annually.

    • The US has 3,000 colleges and universities which employ over 1,750,000 workers and generate about $665 billion annually.
    • Colleges and universities include public, private nonprofit, and for-profit institutions.
    • While enrollment can vary significantly, public colleges average about 8,900 students while private colleges average about 2,100 students. Large institutions have enrollments of 40,000 students or more.
    • Institutions with the largest enrollments include The University of Phoenix's Online Campus, Arizona State University, Ohio State University, and the University of Central Florida.
                                  Industry Forecast
                                  Colleges & Universities Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  May 19, 2024 - Weak Sales Growth Expected
                                  • College and university industry revenue is forecast to grow at a 3.64% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc. Sources of revenue include tuition and fees; federal, state and local government funding; auxiliary enterprises (dorms, bookstores); endowment income; investment return, gifts and grants; and contracts. College and university industry employment has rebounded and was near pre-pandemic levels in early 2024, according to the US Bureau of Labor Statistics.
                                  • Elite higher education institutions — selective schools that draw from national applicant pools — will still be able to fill classes with qualified students when an expected multiyear decline in the number of traditional-age college students begins, according to Carleton College professor Nathan Grawe, author of Demographics and the Demand for Higher Education. Less prestigious four-year colleges and two-year colleges, which tend to draw students living locally, will suffer most from the so-called "demographic cliff". The consensus view is that America will hit a peak of around 3.5 million high-school graduates sometime near 2025, according to The Chronicle of Higher Education. The college-going population is then expected to shrink across the following five to 10 years by as many as 15 percentage points. Decreasing enrollment is problematic because most schools depend heavily on tuition, so the finances of a college that has fewer students than it is capable of serving are negatively impacted. Ernst and Young’s consulting arm EY Parthenon estimated in 2020 that excess capacity at US postsecondary schools is costing schools between $27 billion and $51 billion annually. Schools often raise tuition or decrease offerings to cover the deficit. Schools that are financially unstable are more likely to shut down.
                                  • People with four-year degrees earn far more and tend to accrue much more wealth than those with only a high school education or a two-year degree, according to an American Enterprise Institute report released in 2024. They also enjoy higher rates of marriage and better social and health outcomes. What’s true at the individual level is also true at the community level: Regions with higher concentrations of people with four-year degrees are wealthier and healthier. They also have a much easier time attracting investment, driving further economic growth.
                                  • Americans’ confidence in higher education decreased to 36% in 2023, sharply lower than in two prior readings in 2015 (57%) and 2018 (48%), according to a Gallup survey. Gallup did not probe for reasons behind the recent drop in confidence, but the polling organization said that the rising costs of postsecondary education likely play a significant role. There is also a growing divide between Republicans’ and Democrats’ confidence in higher education. Previous Gallup polling found that Democrats expressed concern about the costs, while Republicans registered concern about politics in higher education.
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