Rising tuition and demand for post-secondary education will facilitate growth.
Los Angeles, CA (PRWEB) April 10, 2012
Revenue for the Colleges and Universities industry is expected to decline at an average of 3.5% annually to $363.2 billion in the five years to 2012. Revenue fell as the impact of the global financial crisis slashed endowment fund income and state budget allocations to the industry. Many schools have tried to combat declining state budgets by increasing tuition fees. According to IBISWorld industry analyst Kevin Culbert, “rising tuition and improving endowment incomes are expected to slightly boost industry revenue in 2012.” However, reduced state funding will limit industry revenue growth to about 1.0% during the year.
Prior to the financial collapse, a steady increase in student enrollment, investment income and tuition fees drove revenue growth. However, endowment funds lost up to a quarter of their value in 2008 and 2009, forcing many institutions to reduce staff numbers and cancel building projects. Culbert says, “university enrollment has grown during the recession by attracting those who have been laid off or want to improve job prospects.” While this factor poses an opportunity for many schools, it also creates a challenge: High unemployment has caused student enrollment to increase, but government funding has declined at the same time. Institutions are coping with high student demand during a period of reduced revenue from state funding and investment income sources. In 2009, the University of California, the largest public university system in the United States, announced a 32.0% tuition hike to make up for the budget gap. While some states have laws against these large increases, many schools across the country have been forced to take similar actions to make up for budgetary shortfalls.
In the short-term period, slow growth in government funding and weakened state budgets will constrain revenue for the Colleges and Universities industry. Access to student loans will remain an important issue for overall industry growth, and unfavorable demographic trends will dampen future enrollment in universities and colleges. Despite these factors, increasing tuition fees and a growing proportion of high school graduates seeking post-secondary education will boost industry demand. In the five years to 2017, industry revenue is forecast to continue growing at a modest rate.
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This industry includes public and private universities and colleges that offer academic courses and grant degrees at baccalaureate or graduate levels. The requirement for admission is a high school diploma or equivalent general academic training. Instruction may be provided in a variety of settings, such as educational institutions, the workplace or home, and through correspondence, the internet or other means. This industry does not include for-profit institutions.
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