Dollars & Details:
Education, both at higher and lower levels, is one of the largest industries 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 state to state.
In total, global public and private spending on education (K-12 through university) was equal to about 6% of GDP, or $4.5 trillion for 2016. On a worldwide basis, this makes the education sector only a bit smaller than the health care industry. These numbers are according to Plunkett Research estimates.
Globally, there are about 1.3 billion students in grades K-12. This amounts to an 89% enrollment rate (of potential students) in primary schools and 65% in secondary schools. There are also about 210 million students in higher education worldwide.
Meanwhile, the global education market also serves both working adults (corporate training and worker certification) and adults seeking learning for personal, casual or recreational purposes. Corporate training and education was a $70.6 billion market in the U.S. in 2016, and a $155 billion global market, per Plunkett Research estimates.
Trends and Theories:
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 1,300% from early 1978 through early 2017.
However, the net cost to the typical student has risen at a much slower rate, after factoring in financial aid. Often overlooked is the fact that state budgets for support to public universities typically have not kept up with inflation, leaving it to universities to look to higher tuition to cover their costs.
Total American student debt, at $1.31 trillion exceeds total credit card debt. The average new U.S. graduate with a 4-year degree left school in 2016 with $37,000 in student loans, up from only $18,600 in 2004.
At the same time, many observers point to a long-term trend of rising ratios of administrative staff to teachers and professors, creating lower operating efficiencies and higher overall costs of education. This indicates opportunities for the application of technology to reduce the number of employees required for administrative tasks, such as human resources or accounting.
Technology as a Long-Term Solution: Technology-based solutions for the education sector’s needs are gathering tremendous momentum, and in many cases they are being carefully tested and applied in real school situations. Online learning is gaining 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. (University libraries have been highly successful pioneers in this regard.) Business and investment opportunities abound due to 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 immense, both in developed nations and in less-developed countries starved for good educational resources.
Massive demand for quality education worldwide, combined with the need to control costs and harness the potential of cloud-based computing, mobile devices, ultrafast internet access and artificial intelligence, will lead to unexpected changes and advancements. For example, Google’s free cloud-based apps, like Google Docs, are taking public schools by storm, while traditional publishing firm Bertelsmann (the massive global firm that is owner of dozens of radio and TV companies and such book imprints as Penguin Random House, as well as music company BMG) has invested heavily in state-of-the-art edtech firms including Udacity, HotChalk and Relias Learning.
One of the biggest surprises of all was an announcement by world-class Purdue University, long a leader in fine education with its advanced schools of engineering, science, business and aerospace, that it would acquire the for-profit education business of Kaplan university, picking up 32,000 students in the process. Kaplan owned a very well developed online learning platform, and the acquisition enables Purdue to rapidly expand its offerings to remote students, including working adult learners.
Ranks and Results, US Education:
The cost of public schooling in America is approximately $625 billion yearly for public K-12 schools (not including private schools). Public expenditures were expected to be about $11,600 per student for the 2016-2017 school year, but the cost varies depending on what part of the nation you are considering. For example, 2013-14 found expenditures ranging from $6,546 per student in Utah to $20,557 in the District of Columbia, and $20,156 in New York City.
All the information you need about this industry can be found at Plunkett Research, including our education industry research center online, and our just-published, completely-updated Plunkett’s Education, EdTech and MOOCs Industry Almanac, 2017 edition.