Transcript Size of Global Education and Training Market

Career College Association
Trends, Policies and Issues
Reauthorization – 2003
Nicholas J. Glakas
National Council of Higher Education Loan Programs
Sarasota, Florida
January 9, 2003
The Global Education Markplace
A few facts . . .
Education … A Few Facts
 Education spending in the United States is $750 billion and worldwide is
over $2 trillion.
 Higher education is a $250 billion market in the United States.
 More money is spent in the United States on education than in any other
industry with the exception of health care. Annual expenditures are
more than Social Security and defense combined.
 Globally, 84 million students attend 20,000 colleges and universities.
 66 million adults and more than 50% of all employed persons participate
in some form of continuing education.
 Less than 25% of U.S. adults have a B.A. or higher.
Education … A Few More Facts
 Over half a million foreign students study in the United States and spend $13
billion.
 India, China and South Korea are the top places of origin for foreign students
studying in the United States in 2001-02. Combined they sent almost 180,000
students to the United States.
 Global demand for higher education is forecast to reach 160 million students in
2025.
 In 1950, approximately 30% of all jobs in the United States required skilled
labor; today, 85% of jobs require skilled labor.
 There are 9,485 postsecondary institutions in the U.S. Forty-seven percent
(4,463) are career schools, institutes, colleges and universities.
 There are 6,431 Title IV participating institutions in the U.S.
Thirty-seven percent are career schools, institutes, colleges and universities.
Size of Global Education and Training Market
 Global education and training market:
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U.S. market:
 U.S. higher education market:
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$2 trillion
$750 billion
$250 billion
Students: 42 million (1990); 97 million (2010)
 U.S. online higher education market (2001): $4.5 billion
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U.S. online higher education market (2005): $11 billion
 U.S. corp. & government training market:
$100 billion
 Global corp. & government learning market: $300 billion
Source: ThinkEquity Partners, Eduventures.
Major Sectors in the U.S. Economy
$ Billions
% of GDP
Health
$949
14.1%
Education
$740
9.5%
Social Security
$336
5.0%
Defense
$272
4.0%
Total GDP
$7,790
100%
Education = $2 trillion global market!
Source: Credit Suisse First Boston
The Evolving Higher Education Marketplace
 The higher education market is huge…
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Globally, 84 million students and 20,000 colleges and universities; in
the U.S., 16 million students and 9,500 colleges and universities
Higher education is a $250 billion market in the U.S.
 And growing …
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Domestic undergraduate enrollments will increase by 13% in the
next decade to 21.2 million by 2010
College less of a choice and more of a “must-have”
 With significant demand imbalance…
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U.S. is only 1 of 10 countries providing a college education to 1/3 or
more of their college-age populations
Source: ThinkEquity Partners, National Science Foundation
Education Counts
Educational Attainment Outcomes
Salary Gap between Male High School and College Graduates
112%
120%
100%
80%
47%
60%
40%
20%
0%
1971
Source: National Center for Education Statistics
2000
The Need for Skilled Workers
% of Jobs Requiring Skilled Workers
85%
90%
80%
65%
70%
60%
45%
50%
40%
28%
30%
20%
10%
0%
1950
Source: ThinkEquity Partners
1991
2000
2005E
The Need for Skilled Workers
Less than 25% of U.S. Adults 25 and Older have a Bachelor’s Degree
or Higher
75%
25%
Adults without
Bachelor's or Higher
Degree
Source: ThinkEquity Partners
Adults with Bachelor's
or Higher Degree
Higher Education Landscape
 66 million adults and more than 50% of all employed
persons participate in some form of continuing education
 56% of the workforce, or 66 million people, is without an
advanced degree
 Number of corporate “universities” skyrocketed from 400 in
1988 to over 2,000 today, including 40% of Fortune 500
companies
 More than 60% of corporate universities have alliances with
institutions of higher education, increasing to 85% by 2003
Source: ThinkEquity Partners
Global Higher Education Landscape
 Over 500,000 foreign students, or 3.5% of total
postsecondary enrollees, study in the U.S. and spend $13
billion
 America educates one-third of all foreign students
 For every foreign student studying in the U.S., there are
three to five students who would consume U.S. education
online, if they had the access or the resources

Potential of 1.6 million international distance learning candidates
 Global demand for higher education forecast to reach 160
million students in 2025

Conservatively, 45 million users of online higher education
Source: ThinkEquity Partners
Number of International Students at U.S. Colleges
& Universities 1975-2002
700000
600000
583000
515000
500000
453000
400000
387000
342000
300000
286000
200000
155000
100000
0
1974/75
1979/80
Source: Institute for International Education, Open Doors 2002.
1984/85
1989/90
1994/95
1999/2000
2001/02
Number of International Students at U.S. Colleges &
Universities From Top Ten Places of Origin, 2001-02
70000
66836
63211
60000
49046
50000
46810
40000
28930
30000
26514
20000
12518
12091
Mexico
Turkey
11614
11606
10000
0
India
China
S. Korea
Japan
Source: Institute for International Education, Open Doors 2002.
Taiwan
Canada
Indonesia Thailand
Future Demographic Trends
OVER THE NEXT 50 YEARS:
 U.S. population will grow by 50%

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275 million in 2002
395 million in 2050
 Immigration will increase by 80 million
 Under 17 population = 100 million or 1 in 4
 Elderly population will double = 20% of total population
 Racial Mix

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
White
Hispanic
Black
Asian
50% of the U.S. population
25%
15%
10%
The For-Profit Sector
 The Career College Association is a voluntary membership organization of
private, postsecondary schools, institutes, colleges and universities that provide
career-specific educational programs. CCA’s 1,000 members educate and
support more than a million students each year for employment in over 200
occupational fields.
 CCA member institutions cover the full gamut of postsecondary education: from
short-term certificate and diploma programs, to two- and four-year associate and
baccalaureate degrees, to master’s and doctoral programs.
 Most CCA member institutions participate in federal student financial assistance
programs under Title IV of the Higher Education Act.
 In addition, over the past four years CCA’s Foundation has provided more than
17,000 scholarships to high school graduates attending CCA member schools,
institutes, colleges and universities.
Size of the the U.S. Postsecondary For-Profit Sector
 There are 9,485 postsecondary institutions in the
U.S. Forty-seven percent (4,463) are career
schools, institutes, colleges and universities.
 There are 6,431 Title IV participating institutions in
the U.S. Thirty-seven percent (2,355) are career
schools, institutes, colleges and universities.
Source: National Center For Education Statistics, Postsecondary Institutions in the United States: 1993-94 and 1998-99.
Non-Profit and For-Profit Distinctions in
Higher Education
Non-Profit
For-Profit
Tax-exempt
Donors
Endowment
Stakeholders
Shared governance
Prestige Motive
Cultivation of knowledge
Discipline-driven
Quality of inputs
Faculty power
Tax-paying
Investors
Private investment capital
Stockholders
Traditional management
Profit motive
Application of learning
Market-driven
Quality of outcomes
Customer power
Source: Richard Ruch, Higher Education, Inc., The Rise of the For-Profit University. Baltimore: The John Hopkins University Press, 2001.
Postsecondary Education Companies
Company
# of
Campuses
Enrollment Total
Programs
Apollo Group/U. of Phoenix
65
133,700
Bachelor’s – Doctorate
Career Education Corp.
43
50,400
Diploma – Master’s
Corinthian Colleges, Inc.
63
35,000
Diploma – Master’s
DeVry, Inc.
26
56,000
Associate’s – Master’s
Education Management Corp.
40
39,000+
Non-degree – Doctorate
ITT Educational Services, Inc.
74
33,000
Associate’s - Bachelor’s
Kaplan Higher Education
44
20,000
Diploma – Bachelor’s
Strayer Education, Inc.
20
16,500
Associate’s – Master’s
Whitman Education Group,
Inc.
22
9,000
Diploma – Doctorate
The Reauthorization of the Higher
Education Act
CCA Reauthorization Preparations
CCA’s Reauthorization Preparations
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Identified our key issues for reauthorization
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Prepared a CCA Board-approved strategic lobbying plan
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Will cover costs of various studies
Will include regional dinners and reauthorization workshops
Additional amount retained in reserve
Formalized input from membership
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Being updated quarterly
Discussed at all CCA speaking engagements
Implemented by CCA members and staff
Established a reauthorization budget
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Finalizing legislative handbook for CCA membership & Capitol Hill
Three key studies completed or ongoing
Submitted key issues at the request of House Education Subcommittee
President’s Advisory Council
Small College Advisory Council
Entire CCA membership review of issues
Assembled a coordinating council of Washington representatives
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Monthly meetings of this Legislative Advisory Council.
Lobbying teams created based on issues of interest
CCA’s Reauthorization Preparations
(continued)
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Implemented a grassroots lobbying effort.
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Effective PAC Operations
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Legislative Action Network in operation
Goal of 200 CCA members for Hill Day
Total CCA member involvement during reauthorization
100 CCA members
CCAPAC contributed to 81 Congressional candidates in 2001-2002.
Excellent relations with key participants in Reauthorization
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White House
Senate and House Leadership
Congressional Education Committees and staff
Department of Education
State Associations
Key Business Associations
Selective Higher Education Associations.
The Reauthorization of the Higher
Education Act
CCA Reauthorization Issues
CCA Reauthorization - Issues
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Transfer of Credit (study)
Return of Federal Funds (study)
90-10 (study)
Financial Responsibility
Single Definition of Higher Ed Institution
Federal Investment (Loan Limits)
Provisional Certification
Judicial Review
Reauthorization – Issues (continued)
 50% Telecommunications Rule
 Accountability
Probably off the table:
 12-Hour Rule
 Incentive Compensation
Transfer of Credit

Issue: CCA’s Foundation commissioned the Institute for Higher Education Policy to study
the relationship between credit transfer of students who attend nationally accredited
institutions to regionally accredited institutions. The study found a strong pattern of full
acceptance of credit for virtually all institutions that are regionally accredited, but
acceptance for only a small percentage of institutions accredited by national accrediting
bodies.

CCA Proposal: Revise section 1094(a) to add a new required condition in the program
participation agreement signed by institutions participating in the Title IV student aid
programs as follows: (25) The institution will not exclude transfers of credit earned by
students completing courses of programs from other eligible institutions of higher
education on the basis of the agency or association that accredits such institutions,
provided that the agency or association is recognized by the Secretary pursuant to
Subpart 2 of Part H of this Act, and will base decisions on whether to accept such credits
solely on whether the courses or programs are equivalent in content to those offered by
the institution and the student has completed the course or program at the required level
of proficiency.
Revise section 1099b(a) to add a new required recognition criterion for accrediting
agencies:
(9) such agency or association shall not adopt or apply standards, policies or practices
that restrict transfers of credits between eligible institutions of higher education as
defined by this Act that are accredited by an agency or association recognized by the
Return of Title IV Funds
 Issue: Return of Federal Funds has been one of the most
controversial provisions of the 1998 reauthorization. CCA
has commissioned a major study to determine the extent of
harm to students and institutions.
 CCA Proposal:Use the results of the study and its
simulation model to develop specific proposals.
Anticipated completion the end of January.
90-10 Rule
 Issue: As part of the 1998 HEA Amendments, Congress modified the
85-15 rule to allow no more than 90% of a proprietary institution’s
revenue to be derived from Title IV. Subsequently, the Department of
Education changed the definitions of eligible revenue to make
compliance more difficult.
 CCA Proposal: CCA has contracted with the American Economics
Group for a comprehensive study of the effect of the 90-10 rule on
students and institutions. Upon completion of the 90-10 study, CCA will
determine the alternative proposals that have the greatest aggregate
benefits for the largest number of institutions and students.
Financial Responsibility
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Issue: The higher education community and the Department of Education have
gained five years of experience in applying the financial responsibility regulations
adopted in November 1997. While the regulations have been an improvement
over the requirements previously used to measure financial responsibility, there
are still serious problems with the manner in which the Department judges the
financial stability of institutions.
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CCA Proposal: Only historic goodwill should be used in determining the ratios and
calculating the composite score; additional goodwill booked as a consequence of an
acquisition would not be deducted. After an acquisition, this additional goodwill would be
recognized on a gradual basis over a five-year period. This treatment of goodwill would
be conditioned on the acquirer being creditworthy at the time of the acquisition as
measured by the strength factors for its primary reserve and equity ratios.
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The language of the statute should clearly state that the Secretary will permit accounting
treatments that are in accordance with GAAP.
Single Definition of a
Higher Education Institution
 Issue: 1998 HEA Amendments moved toward
enacting a single definition for the purpose of
providing equal access to all Title IV programs.
Separate definitions still remain in Section 101 of
the Act.
 CCA Proposal: Revise the Act to include
proprietary institutions in Section 101 and delete
Section 102.
Federal Investment in
Postsecondary Education
 Issue: The federal grant and loan programs have not kept pace with
inflation. Grants now account for less than one fourth of federal
financial aid.
 CCA Proposal: Increase funding to the Pell Grant program thereby
increasing the maximum award levels, and explore other innovative
proposals such as the concept of “front-loading” federal grant aid to
provide increased assistance to students during their first two years
of postsecondary education.
 Increase the loan limits of the subsidized and unsubsidized federal
student loans as much as feasible within the constraints of budget
considerations, with special consideration given to students who are
in year one and two where assistance is often needed the most.
Provisional Certification
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Issue: Provisional certification is a status that carries both limitations and risks that
fully certified institutions do not face. The Department of Education takes the position
that the Secretary may terminate the provisional certification of institutions as a
response to allegations of regulatory violations. In such cases, the institutions do not
have the due process protections that would be provided in a Limitation, Suspension
& Termination action or an emergency action.
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CCA Proposal:The law should be changed to create an exemption from the
requirement that an institution be placed on provisional certification upon a change of
ownership that results in a change in control when a change transfers ownership to a
person or entity that has an established track record of regulatory compliance, which
could be judged by whether the acquiring institution is itself fully certified and is
permitted to use the advance payment method.
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Additionally, the Department’s ability to make ad hoc policy should be replaced with
a clear set of rules.
Judicial Review
 Issue: The Department of Education has used an
obscure provision in the HEA to persuade some
federal courts to deny educational institutions their
day in court.
 CCA Proposal: Amend Section 432(a)(2) of the
HEA to allow court review.
50% Telecommunications Rule
 Issue: During the 1992 HEA Amendments, Congress enacted the
50% telecommunications rule. The rule stipulates that institutions
are not eligible to participate in Title IV programs if they offer more
than 50% of their courses via telecommunications or
correspondence or if 50% or more of their regularly enrolled
students are enrolled in telecommunications or correspondence
courses.
 CCA Proposal: CCA supports modification of the 50% rule to allow
increased flexibility for students in meeting their educational goals.
Accountability
 Issue: The Administration has indicated that, just as performance
measures were the centerpiece of the recent K-12 reauthorization, it will
seek to import into the postsecondary education arena some measure of
institutional effectiveness. CCA formed a Task Force to formulate
recommendations for reasonable, workable accountability measures in
higher education.
 CCA Proposal: Create an “Institutional Report Card” based on a general
framework with three constituent parts:
• Input measures to assess the resources and capacity to deliver
educational services;
• Output measures to provide information on graduations/completions;
and
• Outcomes measures to demonstrate value added to students.
Career College Association
Nicholas J. Glakas
[email protected]
Phone: 202/336-6754
www.career.org