Less funding and demand for test-prep services has limited revenue growth
Los Angeles, CA (PRWEB) July 04, 2013
Tutoring services drew national attention with the 2001 passage of the No Child Left Behind Act (NCLB). The legislation implemented a government-subsidized program to tutor students who attend schools that failed to make adequate progress under the NCLB accountability requirements. As such, “the tutoring market grew rapidly as companies scrambled to make their states' lists of approved education providers and capitalize on these government funds,” says IBISWorld industry analyst Sally Lerman. With the influx of new enterprises entering the market, however, competition has mounted in recent years, limiting revenue and profit growth. Consequently, revenue for the Tutoring and Driving Schools industry is anticipated to decrease an annualized 0.8% to $9.1 billion over the five years to 2013.
The test-preparation market provided a needed boost to the Tutoring and Driving Schools industry following the recession as well. With high unemployment and a tight job market, many people decided to return to school to improve their chances of work, boosting demand for this segment. “Historically high numbers of high school graduates have also created intense competition for college placement,” says Lerman, “so many students have enlisted the help of tutors to boost their chances of admission.” Despite an expanding customer base, heightened competition is expected to push revenue down 0.6% in 2013.
In addition to academic services, this industry also includes driving schools and other instructional services (e.g. first aid, self defense and speed reading). Unlike tutoring and test preparation, these courses are discretionary, making them sensitive to changes in disposable income. During the recession, enrollment in these discretionary courses declined significantly as households cut nonessential expenses.
Over the next five years, potential changes in NCLB funding will largely dictate industry performance. The NCLB program has received widespread criticism since its passage, with calls for more regulation of funding disbursement. Also in question is the ability of standardized tests to accurately forecast student success. More colleges are making the tests optional, which will likely stifle the test-preparation segment's growth during the period. Because of potentially lower NCLB funding and the diminished importance of standardized tests, the industry is projected to experience relatively weak growth. For more information, visit IBISWorld’s Tutoring and Driving Schools in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes exam-preparation and tutoring services, automobile driving schools and other varied education services. Academic schools, colleges and universities are excluded, as are schools offering instruction in business, management, computers, technical and trade areas, fine arts, athletics and languages.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
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