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 4,000 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 454 workers and generates $224 million annually. A typical junior or community college employs about 250 workers and generates $43 million annually.

    • The US has 3,982 colleges and universities which employ over 1.5 million workers and generate about $658 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

                                  Nov 2, 2022 - Endowment Returns Turn Negative
                                  • Investment returns for university endowments have decreased in 2022 after recording their biggest gains in a generation the year before, according to The Wall Street Journal. Experts cite a dramatically changed investment environment in which stocks, bonds, and other assets have sold off sharply. The median result for endowments and foundations in the fiscal year ended June 30, 2022, was a 7.8% loss, according to a preliminary estimate by Cambridge Associates. It was the worst showing since 2009. Some endowment chiefs and advisers said that the returns likely would have been even worse if venture-capital and private-equity valuations fully reflected the deep declines in public markets.
                                  • A federal judge in Texas struck down the Biden administration’s student-debt forgiveness program. Judge Mark Pittman wrote in his opinion that the program is an “unconstitutional exercise of Congress’s legislative power” that also failed to go through normal regulatory processes. The program would have canceled up to $20,000 in student loans for tens of millions of borrowers. The Justice Department is appealing the verdict, a spokeswoman said.
                                  • The debt forgiveness plan also extended the pandemic-related student debt payment freeze until the end of 2022. Borrowers who hold loans with the US Department of Education and make less than $125,000 a year are eligible for up to $20,000 in student loan forgiveness if they obtained Pell Grants. Individuals who make less than $125,000 a year but did not receive Pell Grants are eligible for up to $10,000 in loan forgiveness. Most student loan borrowers owe less than $25,000 on their loans as of May 2022, according to the Federal Reserve. The canceled student debt would be federally tax-exempt, as seen in other federal student debt forgiveness programs.
                                  • Industry consolidation is accelerating as students continue to pack into flagship universities and brand-name colleges while less-prestigious schools struggle. About 200 colleges closed in the past 10 years, four times more than during the previous decade, according to data compiled by the consulting group EY Parthenon. There have been 95 college mergers in the past four years, compared with 78 over the prior 18 years. Experts cite rising costs for college and uneven return on investment, which has diminished public confidence in higher education, opened the door to competitors, and led to falling enrollment.
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