Colleges & Universities

Institutions in this industry offer academic and professional courses and confer baccalaureate or graduate degrees. Major US-based institutions include public university systems in states such as California, New York, and Texas, and private universities such as Duke, Harvard, Johns Hopkins, and New York University; leading institutions outside the US include the universities of Cambridge and Oxford, both located in the UK, as well as the University of Tokyo in Japan, and the University of Toronto in Canada.

There were about 20 million students in 2024 with about 75% enrolled in public institutions, according to the Education Data Initiative.

In academic year 2021-22, there were 3,542 degree-granting postsecondary institutions in the US with first-year undergraduates, according to the National Center for Education Statistics (NCES). Two-year colleges are covered in the Community Colleges industry profile. Business, secretarial, technical, and trade schools are included in the Education & Training Services industry profile.

COMPETITIVE LANDSCAPE

Declining enrollment, caused in part by rising tuition, is holding back revenue growth at many US colleges and universities. Schools are competing more intensely for qualified applicants, and many are employing new highly targeted marketing strategies to increase yield rates — the percentage of accepted applicants who choose to attend. While institutions with large endowment funds are generally more financially secure, below-average investment returns are weakening overall purchasing power. However, many schools have increased spending from endowments to pay for student financial aid, research, and other programs.

Colleges are using improved data-tracking methods to streamline the recruiting process and better meet the needs of individual students. Some institutions have implemented new technologies that make online instruction more accessible and interactive. Student participation in study-abroad programs remains strong, and international students are attending US schools at higher rates. Undergraduate institutions may compete with community colleges as well as private education companies that offer specialized vocational training.

Demand for higher education is largely shaped by regional population dynamics, as well as employment and economic trends. The financial success of individual schools is closely related to the number of students enrolled, because many costs are fixed. Large educational institutions have the advantage of government support and can typically offer a wider range of academic programs. Smaller private colleges may have sizable endowment funds and are often able to charge more for tuition.

Competitive Advantages:

Affordability — Prospective students are becoming more price-sensitive as average tuition rates have increased at a faster rate than inflation. Some institutions have lowered tuition and increased financial aid awards to help stem enrollment declines.

Job Market Demand — Colleges and universities may update their course offerings and curriculums in response to current employment trends. Institutions with strong computer science and public health programs, for example, are benefiting from rising demand for workers in fast-growing fields like software development, data science, and health care.

Data Analysis — Colleges and universities are increasingly using data analysis to identify and market to qualified high-school students. Schools that use these methods may have competitive advantages over those that do not, especially as applicant pools continue to shrink.

Supplemental Revenue — Large universities often generate additional revenue from secondary sources such as patent licensing, publishing, and athletics. Colleges of all sizes solicit philanthropic gifts to fund capital projects, academic programs, and research studies. Schools with fewer resources to support these revenue streams rely more heavily on tuition and student fees.

PRODUCTS, OPERATIONS & TECHNOLOGY

Colleges and universities provide 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. In 2020-21, public institutions account for about 54% of total revenues, private nonprofit account for about 44%, and private for-profit account for about 2%.

About 14 million students are enrolled in four-year colleges and universities in the US, according to the Education Data Initiative. In the academic year 2022/23, around 20.3 million students were enrolled for undergraduate degrees, according to Statista.

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. Costs for instruction are nearly 30% of total expenses at four-year public colleges, according to the NCES. To manage expenses, schools pay close attention to the student/faculty ratio; the national average student/faculty ratios for public and private degree-granting institutions are about 14-to-1 and 10-to-1, respectively. Show more