Private education industry

Industry Snapshot

GENERAL INDUSTRY: Education and Training

CAREER CLUSTER: Education and Training

SUBCATEGORY INDUSTRIES: Elementary and Secondary Schools; Exam Preparation and Tutoring; Fine Arts Schools; Language Schools; Sports and Recreation Instruction; Technical and Trade Schools

RELATED INDUSTRIES:Higher Education Industry; Public Elementary and Secondary Education Industry

ANNUAL DOMESTIC REVENUES: private primary and secondary schools: $98.9 billion USD (IBISWorld, 2024); for-profit universities: $13.49 billion (Statista, 2021)

NAICS NUMBERS: 6111, 6115-6116

Summary

The private education industry includes all jobs associated with providing educational services through private entities, rather than through public institutions. Thus, it includes private, religious, and parochial elementary and high schools, vocational schools, test-preparation service providers, private tutors, group instruction programs (such as language schools), and, to some degree, charter schools. The private education industry differs from the public education system in that its primary sources of funding are student tuition, endowments, and private investments, rather than government grants and tax funds. There are some exceptions to this rule, however (most notably charter schools and some for-profit degree-granting higher education institutes). By the same token, whereas public schools are ultimately answerable to the entire electorate of their jurisdiction—which elects and holds accountable the government officials who oversee them—private schools are accountable primarily to those who give them money, including tuition payers and donors. Private schools may be for profit or nonprofit. The industry offers many teaching opportunities, and it also includes numerous supporting occupations such as administration, management, marketing, and finance.

History of the Industry

While Massachusetts is often considered the birthplace of formal education in America, there is evidence that the first private schools were actually established by Catholic missionaries in what eventually became Florida and Louisiana during the seventeenth century. These schools served the dual purpose of teaching basic skills and instilling specific religious values in their students. Throughout the eighteenth century and into the nineteenth, the line between public and private schools was not especially clear. Most schools received their funding from a mixture of private and public sources, but there was not a comprehensive system of public education in place. Without specific government oversight, most schools operated in a way that more closely followed a private education model. Many of these schools focused on a particular specialty, such as religious education, reading and writing, or vocational skills.

By the early nineteenth century, a variety of school programs were available, but there was still no comprehensive oversight. The programs generally operated independently of one another and without any mandates from the government as to admissions or curriculum requirements. By the middle of the nineteenth century, factors such as industrialization, urbanization, and immigration led to a need to establish regulated, publicly funded schools to provide education for individuals who were unable to attend private institutions. Government regulation of school programs increased markedly following the Civil War, and the availability of public schools at all levels brought a dramatic decline in the popularity of private learning institutions.

Since the advent of public schools, private schools have found themselves at the center of numerous debates concerning their curriculum choices and funding sources. For example, as World War I unfolded, private schools that taught foreign languages and adhered to particular ethnic customs (especially German) were often accused of promoting American disloyalty. Several state legislatures attempted to pass laws outlawing certain private school practices, but these laws were generally struck down by the courts. Private schools experienced a surge in popularity following World War II but ended up in the middle of another debate in the mid-twentieth century. This debate concerned whether it was appropriate for private schools, particularly those with religious affiliations, to receive public funding of any kind.

Debates about funding and revenue are not uncommon in the academic world. While many private schools are operated on a nonprofit basis, the concept of for-profit educational institutes has been around since ancient Greece. This concept lost favor during the Middle Ages but rose in popularity once again during the fifteenth-century Renaissance. It has continued to grow and evolve since that time.

Within the United States, for-profit educational programs gained popularity with the founding of private business and accounting schools during the nineteenth century. This popularity was relatively short-lived, however, because public secondary and vocational schools were established during the late nineteenth and early twentieth centuries. For much of the twentieth century, private for-profit educational programs saw their enrollment numbers dwindle, as students favored public institutions for their educational needs.

Since the 1970s, however, for-profit educational programs have seen a significant resurgence. Part of this growth is due to the renewal of the Higher Education Act in 1972, which increased the amount of federal student aid available to students at private, for-profit schools. Additionally, for-profit education programs have become adept at identifying gaps in the availability of educational opportunities in specific subject areas or for specific students and then creating programs designed to fill those gaps.

The Industry Today

The contemporary private education industry is enormous and includes many different types of programs. These can include private, religious, parochial, or charter elementary and secondary schools; vocational high schools and postsecondary programs; courses to prepare for various school entrance exams or licensing exams; and private tutoring in a wide variety of subjects. As many public schools experience increased enrollment and decreased funding, some parents turn to private or religious schools to provide for their children's education. Many towns are also experiencing a growth in the number of charter schools establishing themselves within their school districts.

Charter schools are publicly funded schools that are operated by private organizations under contracts or charters with the state. These schools obtain a significant portion of their revenue directly from the city or state in which they operate, and they are exempt from certain state and local rules and regulations that usually govern public schools. A school's charter is reviewed every three to five years to ensure that minimum standards of educational quality are being met. Despite the controversial nature of this arrangement, the number of charter schools continues to increase in the early twenty-first century, particularly in urban school districts. By the 2016–17 school year, according to the National Center for Education Statistics, 7 percent of publicly funded schools were charter schools.

Some private schools are specifically designed to serve the needs of children with special needs. These special needs may include language-based learning difficulties, dyslexia, attention or hyperactive disorders, autism, and hearing impairments, as well as more severe learning disorders or complex medical conditions. Parents, knowing that their children require specific services and accommodations, may choose to place them in one of these private schools. Further, in some states, state law allows public school systems and parents to place those students who are not adequately served in the public school system at one of these private special-needs schools, and local and state public school funds are allocated for part or all of this expenditure.

As many public schools reduce funding for academic enrichment programs, students are engaging in enrichment activities at private learning centers. Additionally, as classrooms become more crowded and teachers have less time to spend with individual students, parents are obtaining private tutoring services for their children to assist them in their academic development. These services were traditionally provided by individuals or small groups, but they are increasingly the domain of large regional and national companies that provide a variety of tutoring programs and other educational services.

Students of all ages may attend private test-preparation programs to help them prepare for the standardized tests required for admission to certain high schools, colleges, and professional schools, as well as for licensing exams. As school admission at all levels has become more competitive, enrollment in private test-preparation programs has increased. Students are also engaging in test preparation earlier than ever before, because standardized tests have grown steadily in importance. For example, scores on the early high school Preliminary SAT (PSAT) can very important for obtaining financial aid to attend college. The Secondary School Admission Test (SSAT), administered to middle-school students, has also become extremely important to students seeking admission into competitive private high schools. However, a backlash against such tests has seen some schools and programs move away from reliance on test scores as an admissions factor.

For students who choose not to attend a traditional four-year college program, private postsecondary vocational education has also grown in popularity. These types of programs educate students for particular fields, such as automotive repair, medical technical support, business administration, and computer network administration. Many of these private schools offer two-year associate's degrees or other formal certification in particular fields, and they may offer job-placement assistance, making them an attractive and affordable alternative to four-year colleges.

Industry Outlook

Overview

In 2019 the US Department of Education's National Center for Education Statistics projected overall enrollment in private elementary and secondary education to increase modestly over the period from 2019 to 2027. Broad economic factors such as rising household income help drive up the number of students in private educational programs. As enrollment increases, there will be a increased demand for individuals to work in private education companies of all kinds and in all occupations within the industry. There will be an increased need for teachers and instructors and a higher demand for administrators at all levels to help oversee these programs.

Further opportunities may come in alternative education programs, such as vocational training institutes, online and correspondence courses, and group instruction programs in specialized subjects such as computer skills, languages, and professional certification. Many private education companies are looking toward the large pool of working adults who are seeking to advance or change their careers as a source of new students and new income streams. These programs may present opportunities for individuals with specialized experience and an interest in teaching and may also provide administrative positions for those with strong backgrounds in computers and technology.

Employment Advantages

Most people choose to work in the private education industry because of the enjoyment and satisfaction of teaching and working with students. This field can be incredibly rewarding, as there are many opportunities to help individuals make a difference in their own lives through education. It can be easier to get a job in the private education industry than in a public school, as requirements may be lower and hiring decisions may be less influenced by local politics. Additionally, some people find that there is less bureaucracy in private schools of all sizes than one might find in a comparably sized public school.

Individuals who enjoy working with young people and who are willing to provide a high level of personalized service are likely to succeed in this industry, and they will find they are able to make satisfying and lasting interpersonal connections with the students whose lives they influence in a positive way. Even those who choose to fill administrative roles within the industry often find the work to be satisfying, because their efforts to maintain the required infrastructure ultimately support students as they strive to meet their goals.

Annual Earnings

The most common sources of revenue for private education companies include student tuition, private gifts, endowments, and contracts with other private companies. Many private education companies are operated on a for-profit basis and generate billions of dollars in revenues every year.

There are some exceptions to this model. Many private elementary and secondary schools, particularly schools with religious affiliations, operate as nonprofits. They still receive funding primarily from sources other than the government, but they do not have the same objective of generating profits for shareholders as the for-profit companies within the education industry. It is difficult to track revenue numbers for these schools, as they are not subject to the same reporting requirements as for-profit institutes, and the Department of Education has only recently begun tracking data for private schools. As of 2024, the market-research firm IBISWorld reported that annual revenues for private primary and secondary schools, both religious and secular, totalled $98.9 billion.

Charter schools present an interesting model. These schools receive most of their funding from state and local governments, but they are run by private organizations. They receive a charter to operate from the state in which they are located, but they are exempt from certain rules and regulations ordinarily governing publicly funded schools. In exchange, the charter must be reviewed and renewed every three to five years. This arrangement generates a great deal of controversy, as some argue that it takes away much-needed funds from local public schools and only benefits the few children who are able to attend the charter schools. However, others argue that, because charter schools are operated by private companies rather than by the government, they tend to be more efficient than public schools, benefiting their students and raising standards across the board. There is so far very little objective evidence that charter schools provide better educations than public schools.

For-profit institutions of any level operate explicitly to make money for their shareholders, and they are treated as businesses by the government. They are generally subject to corporate taxation and oversight by regulatory bodies such as the Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC). These postsecondary institutes include two-year, four-year, and graduate-level degree programs, as well as a variety of certification programs and other courses that require less than two years to complete. This last category has been a source of significant growth in the for-profit education industry in the past few decades, as public institutions have been slow to fill the demand for these types of programs. However, they have also become controversial, because some programs misrepresent both the likelihood of employment for, and the likely salaries commanded by, their graduates. The for-profit education industry faced increased regulation and several high-profile lawsuits in the 2010s. For-profit universities had annual revenues of $13.49 billion as of 2021, a figure that was projected to decline.

Non-degree-granting programs, commonly referred to as the "supplemental education market," are another aspect of private education. Due to the variety of companies and offerings in this sector, earnings estimates vary.

Bibliography

Associated Press. "Career Education 4Q Profit Up, Revenue Down." Boston.com, February 19, 2009. http://www.boston.com/business/articles/2009/02/19/career‗education‗4q ‗profit‗up‗revenue‗down.

Burch, Patricia. Hidden Markets: The New Education Privatization. New York: Routledge, 2009.

Coleman, James, and Richard Vedder. For Profit Education in the United States: A Primer. Washington, D.C.: Center for College Affordability and Productivity, 2008, files.eric.ed.gov/fulltext/ED536282.pdf. Accessed 25 Mar. 2024.

Hallinan, Maureen T. Handbook of the Sociology of Education. New York: Springer Press, 2006.

The Handbook of Private Schools: An Annual Descriptive Survey of Independent Education. Boston: Porter Sargent Handbooks, 2009.

Herrera, Debbi. Resource Guide for Private School Administrators. Danvers, Mass.: LRP Publications, 2007.

Hussar, William J., and Tabitha M. Bailey. Projections of Education Statistics to 2022. 41st ed. Washington: National Center for Education Statistics, US Dept. of Education, Feb. 2014. PDF file.

Jones, Steven L. Religious Schooling in America: Private Education and Public Life. Westport, Conn.: Praeger, 2008.

Morphew, Christopher C., and Peter D. Eckel. Privatizing the Public University: Perspectives from Across the Academy. Baltimore: The Johns Hopkins University Press, 2009.

"North American Industry Classification System." US Census Bureau, 25 Mar. 2024, www.census.gov/naics/. Accessed 25 Mar. 2024.

"Occupational Projections and Worker Characteristics." U.S. Bureau of Labor Statistics, 6 Sept. 2023, www.bls.gov/emp/tables/occupational-projections-and-characteristics.htm. Accessed 25 Mar. 2024.

"Private Schools Industry in the US - Market Research Report." IBISWorld, February 2024, www.ibisworld.com/united-states/market-research-reports/private-schools-industry/. Accessed Accessed 25 Mar. 2024.

"Public and Private School Comparison." National Center for Education Statistics. 2022, nces.ed.gov/fastfacts/display.asp?id=55. Accessed Accessed 25 Mar. 2024..

Sandler, Michael R. Social Entrepreneurship in Education: Private Ventures for the Public Good. Lanham, Md.: Rowman & Littlefield Education, 2010.

StateUniversity.com. "Private Schooling: What Is a Private School? History of Private Schools in the United States." http://education.state university.com/pages/2334/Private-Schooling.html.

U.S. Department of Education. Institute of Education Sciences. National Center for Education Statistics. "The Condition of Education." 2007. http://nces.ed.gov/programs/coe/2007/section4/indicator32.asp.