Increased regulation will limit expansion, but firms will seek growth online and overseas.
Los Angeles, CA (PRWEB) September 09, 2013
Unlike most industries, the For-Profit Universities industry enjoyed explosive growth during the recession. High unemployment encouraged individuals to return to school, while traditional four-year colleges became more selective because of a rising number of high school graduates, making industry institutions a desirable alternative. The rapid development of online courses has also made for-profit colleges easily accessible to a growing market, bolstering industry growth. As a result, in the five years to 2013, industry revenue is expected to increase at an average annual rate of 7.7% to $27.2 billion.
Despite robust growth, operators have recently come under scrutiny. Critics point to high loan default rates among students, questionable marketing techniques and relatively low admissions standards. Additionally, many students have had problems finding gainful employment upon graduation, causing many to question the quality of education provided by for-profit schools. These issues led Congress and the US Government Accountability Office (GAO) to launch investigations into the industry in 2010. Under this regulatory pressure, some schools have reduced admissions staff. This reduction slowed revenue and enrollment growth in 2011, even leading to declines for some industry players. “In 2012, industry-wide revenue gave way to these reductions, and is expected to fall another 3.0% in 2013,” says IBISWorld Industry Analyst Sally Lerman . While the GAO's report found that some of the largest operators engaged in fraudulent activities, the industry continues to receive access to Title IV federal financial aid funding.
Over the five years to 2018, revenue is forecast to increase at a slower annualized rate. An improving labor market will cause more individuals to enter jobs rather than schools. Furthermore, increased regulation will likely alter the industry's marketing efforts and limit its access to certain markets, including potential students who are at risk of defaulting. Meanwhile, industry operators will need to invest in higher-quality staff and courses to prove that students are able to find gainful employment or they will risk losing accreditation and access to Title IV funds. Operators will continue to seek opportunities in growing markets, such as overseas campuses and additional online offerings.
The major companies in the For-Profit Universities industry include Apollo Group Inc., Devry Inc., Bridgepoint Education Inc., and Career Education Corporation. The market share of the industry's largest players is expected to increase over the next five years. According to Lerman, “The companies will grow primarily via the acquisition of schools that already have regional accreditation.” However, new operators will also enter the industry, largely through the same process. Furthermore, increased regulation will cause some large operators to invest in overhauling their coursework rather than acquiring smaller operators.
For more information, visit IBISWorld’s For-Profit Universities in the US industry report page.
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IBISWorld industry Report Key Topics
The For-Profit Universities industry includes universities and colleges that offer academic courses at baccalaureate or graduate levels on a for-profit basis. A high school diploma or equivalent general academic training is an admission requirement. Instruction may be provided in a variety of settings, such as educational institutions, the workplace or the home, training facilities and through correspondence, TV, the internet or other means.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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