Colleges and Universities
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Industry Overview
In the US, nearly 4,000 degree-granting colleges and universities receive combined annual revenue over $200 billion. Sixty percent of industry revenue goes to state-operated public schools, 40 percent to private schools. While some large public universities have more than 100,000 students and budgets over $1 billion, 40 percent have fewer than 1,000 students and annual revenue below $20 million.
About 1,700 schools are publicly funded, another 1,700 are private nonprofit institutions, and 600 are operated on a for-profit basis. Close to 80 percent of students are enrolled in public schools. Mainly because of big state universities, the industry is highly concentrated: 50 percent of all students are enrolled in the 400 largest schools. About 60 percent of students (including graduate students) are enrolled in four-year schools, 40 percent are in two-year (junior or community) colleges.
Competitive Landscape
Demand for higher education services is largely driven by population dynamics, but also by employer requirements. The financial success of schools is closely related to the number of students enrolled, because many costs are fixed. Public schools have the advantage of public funding and are typically larger than private schools. Small schools can compete effectively by providing a superior education.
Products, Operations & Technology
Colleges and universities provide educational instruction leading to the granting of a degree that testifies to the student's competence. Many also provide room and board for students and a variety of other services. Some schools also operate hospitals and research facilities. About 16 million students are enrolled in colleges and universities, many on a part-time basis. US schools annually award 600,000 associates degrees (two-year colleges); 1.3 million bachelor's degrees; 500,000 master's degrees; and 120,000 professional degrees.
The operations of colleges and universities involve both instruction and administration. Instruction includes hiring and managing teachers, establishing academic programs of study, and providing necessary educational equipment. Administration includes providing classroom facilities, managing support staff, providing student services such as room and board, and maintaining facilities. In general, costs for instruction are about 60 percent of total costs, but the percent can vary substantially, depending on the services a school provides. To manage expenses, schools pay close attention to the student-teacher ratio - nationally about 15:1 for all colleges (private, public, two-year, and four-year) and the total student-staff ratio - nationally about 5:1.
Colleges and universities have been among the leaders in using computer technology for administrative management functions, instruction, and communications. Many colleges have built campus-wide wired or wireless networks that allow students to sign up for courses, communicate with teachers, get classroom materials, see taped lectures, and communicate with administrative offices and other students. A growing number of schools offer distance learning via the Internet. Schools also use Internet sites for admissions, alumni, and fundraising functions.