Education, Technology (EdTech), Schools & Learning Industry Market Research

Education, both at higher and lower levels, is one of the largest activities in the world (in terms of employees, expenditures and consumers—that is, students).  However, somewhat similar to the health care sector, education’s expenditures, quality of output and ultimate results vary wildly from nation to nation, and from place to place within nations.

Globally, the UN counted 1.28 billion students in grades K-12 during 2013 (the latest year available).  This amounted to an 89.0% enrollment (of potential students) rate in primary schools and 66.0% in secondary schools.   The UN also counted 198.6 million students in higher education.  In total, global public and private spending on education (K-12 through higher education) is equal to about 6% of GDP, or $5.0 trillion for 2015, according to Plunkett Research estimates, a bit smaller than the health care sector.

Meanwhile, the global education market also serves both working adults (corporate training and worker certification) and adults seeking learning for personal or recreational purposes.  Many working adults also return to universities in order to continue or expand their educations, often with an interest in changing their careers.  Corporate training and education was a $73 billion market in the U.S. in 2015, and a $155 billion global market, according to Plunkett Research estimates.

Education in Grades K-12:  In the United States alone, 55.4 million students (public and private schools combined) attend classes from preschool through 12^th grade, in 98,271 public schools of all types, operated by 13,491 school districts, plus 33,619 private schools.  These numbers are from a study of the 2013-14 school year (the latest year for which comprehensive data is available) published by the U.S. Department of Education, National Center for Education Statistics.

The cost of this schooling is approximately $606 billion yearly for public schools (not including private schools).  That works out to about $12,000 per student per year, but the cost varies wildly depending on what part of the nation you are considering.  For example, 2012-13 found expenditures ranging from $6,950 per student in Utah to $20,437 in the District of Columbia, and $21,172 in New York City.

Roughly $80 billion of the total cost of public K-12 education is provided for by various federal government programs.  Most of the balance is split about evenly by state and local taxes.

Colleges and Universities:  In higher education, the U.S. had 13.0 million students in degree-granting, 4-year colleges and universities during the fall 2015 semester school year, and 5.9 million students in public 2-year colleges.

Challenges in Lower and Higher Education:  The realm of education can, at its simplest, be divided into two parts:  lower education (preschool through high school, often referred to as K-12) and higher education (junior colleges, technical schools and colleges and universities, including their graduate schools).  Those two sectors could each be logically divided into two further parts:  publicly-funded schools and private schools.

Regardless of which quadrant of this simplified view of schools and colleges is under discussion, the challenges faced by funders, administrators, parents and educators are disturbingly similar:  a) costs that have grown very rapidly over recent years (reflected in high tuition, high operating expenses and growing costs to taxpayers and private tuition payers); b) results that are often disappointing (reflected in a combination of low graduation rates, poor standing in comparative international studies of K-12 student achievement, high levels of college student debt and difficulty among many students in finding good jobs upon graduation—sometimes referred to as underemployment); and c) the need for schools and teachers to attempt to serve large student bodies of widely varying intelligence, cultural or linguistic background, academic interest and individual needs.

There are stellar examples of schools and colleges that rise far above these challenges across the U.S. and the rest of the world.  Unfortunately, there are also miserable failures at the bottom of the list, where schools fail to deliver a reasonable return on the time and money invested in them.

The proposed (and very controversial) cures to this situation are as varied as the challenges faced, ranging from bigger school budgets and higher pay for teachers at the simplest end to more centralized control, government intervention, student testing and accountability for teachers at the more complex end.  Others argue for less federal government involvement and more autonomy at the state and school district level, while many observers state that teachers’ unions have too much power and political influence.

Alternatives to traditional education are gaining traction.  Charter schools, home schooling, online classes and MOOCs (massive open online courses) are slowly gaining market share, sometimes provided by for-profit companies, sometimes springing from parental efforts, and most often growing through nonprofit groups ranging from public school systems to religious organizations.

At the college and university level, concerns about the costs and effectiveness of higher education have been accelerated by the massive debt levels now carried by U.S. college students.  U.S. Bureau of Labor statistics indicate that the price index for U.S. college tuition rose by nearly 1,280% from early 1978 through early 2016, four times faster than the overall rise in consumer prices (food, housing, etc.) of about 300%.

However, the increases in tuition stated above do not reflect the fact that financial aid to university students has also increased substantially.  The net cost to the typical student has risen at much slower rates, after factoring in financial aid.  Another significant factor that is often overlooked is the fact that state budgets for support to universities have either dropped or not kept up with inflation, in many cases, leaving it to universities to look to higher tuition to cover their costs.  Nonetheless, many observers point to a long term trend in rising ratios of administrative, non-academic staff to professors, creating lower operating efficiencies and higher overall costs of education.

In fact, total American student debt, at $1.23 trillion, is of stunning proportions, exceeding even total credit card debt.  The average new U.S. graduate with a 4-year degree left school in 2015 with $35,000 in student loans, up from $18,600 in 2004.  The burden of making payments on these loans is limiting the ability of recent graduates to purchase cars, household goods and homes, which in turn is very detrimental to the growth potential of the economy overall.  There is tremendous pent-up demand among recent grads to form new households of their own, but their finances and job prospects in many cases limit their ability to leave their parents’ homes and strike out independently.  Meanwhile, there is a growing emphasis in America on better supporting and utilizing the community and technical colleges that are already widespread in significant numbers, in order to reduce overall costs to students and boost career-specific training tailored to suit the needs of local employers.  Such schools typically have much lower tuition costs than 4-year colleges and universities.

Technology as a Long-Term Solution:  Technology-based education solutions are gathering tremendous momentum, and in many cases they are being carefully tested and applied in real school situations.  Online learning is gathering speed at all levels, from home schooling of high school students, to basic courses for university students, to essential skills training for corporate employees.

Software tools enhancing everything from school attendance management, to student engagement, to the availability of learning resources online are growing in availability and popularity.  Business and investment opportunities abound due to the immense demand for greater productivity, efficiency and effectiveness in education.  “Points of pain” can be found throughout the spectrum of the education sector, while the size of the market is absolutely immense, both in developed nations in North America, Europe and Asia, and in less-developed countries starved for good educational resources.