Higher education industry

Industry Snapshot

GENERAL INDUSTRY: Education and Training

CAREER CLUSTER: Education and Training

SUBCATEGORY INDUSTRIES: Business Schools; Colleges; Junior and Community Colleges; Music Conservatories; Professional Schools; Theological Seminaries; Universities

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

ANNUAL DOMESTIC REVENUES: US$736.80 billion (Grand View Research, 2023)

NAICS NUMBER: 6112-6113

Summary

The higher education industry serves students seeking postsecondary education—that is, education beyond the high school level. It includes colleges and universities with programs leading to undergraduate degrees such as associate’s and bachelor’s degrees, graduate degrees such as master’s and doctoral degrees, and professional degrees such as medical or legal degrees. Higher education institutions may also offer other specialized degree programs, including a variety of academic and professional certificate programs. While the most obvious position within this industry is perhaps that of a professor, the industry also comprises numerous supporting roles across a variety of fields, including administration, management, marketing, and finance, all of which are essential to the operations of a postsecondary educational institution of any size.

History of the Industry

Higher education in the United States dates back to the seventeenth century, when its primary objective was to educate future members of the clergy. At that time, most higher education curricula were dominated by liberal arts subjects, particularly languages, literature, and religious studies. Faculties were small, and courses of study were often broad and designed on an individual basis depending on the interests of the student.

The nineteenth century saw significant change in the purpose of higher education, beginning with the Morrill Land-Grant Act of 1862. Signed by President Abraham Lincoln, the act included grants of land to states and territories to establish colleges devoted to agriculture, science, and engineering. This law sparked the growth of public colleges and universities, and it was an important step toward the explosive growth that would be experienced by the higher education industry during the twentieth century.

Demand for higher education programs in the early twentieth century was frequently driven by the needs of the Industrial Revolution. During this time, many schools expanded their engineering and science offerings, particularly in the fields of chemistry and physics, and specialization became more common. Programs that assisted in the manufacture of steel, rubber, chemicals, sugar, drugs, petroleum, and electricity generation grew in popularity. As specialization increased, faculty size grew, and the higher education industry experienced a fundamental change in both the way students were taught and the way departments were organized.

Following World War II, increased federal funding to public colleges, along with the GI Bill (officially, the Servicemen’s Readjustment Act of 1944), made higher education affordable for a wider range of students. As a result, more young people started to attend college than ever before. This growth in scholarship was in large part directed toward public colleges and universities, as the tuition at such institutions was generally more affordable and the large number of students at public schools resulted in larger departments offering a wider variety of programs.

In the latter part of the twentieth century, programs such as affirmative action encouraged ethnic diversity within student bodies, and increased federal funding in the form of government-sponsored student loans and grants provided more individuals with the opportunity to attend college. All these changes led to a more expansive and enriching experience in higher education, as well as an increased need for infrastructure and staff.

The Industry Today

Higher education in the early twenty-first century has grown to include a vast number of academic and vocational disciplines and a wide variety of delivery systems. Many schools now offer certification programs, as well as programs designed to help working adults enhance their existing careers. Additionally, many programs have moved away from traditional full-time day classes to include part-time and night programs, distance learning, online courses, and academic credit for employment experience.

The addition of new programs, as well as new loan and grant opportunities for students to fund their educations, has increased the number of individuals attending American colleges and universities. The US Department of Labor projects that these numbers will continue to grow in the early twenty-first century, but at slower rates than in the past. This growth is expected not only to increase the enrollment numbers at existing schools but also perhaps inspire the establishment of new ones, particularly in the for-profit sector. This growth bodes well for increased employment opportunities in the industry.

Many schools, for example, are moving away from hiring full-time tenured professors and toward hiring part-time adjunct instructors in order to save money on salaries and benefits. This may have an unexpected up-side, however, in that these part-time instructors are often working professionals. As a result, they may be better able to relate to working adults returning to school and can help students of all ages integrate their academic experiences into the workplace upon graduation. On the other hand, adjunct instructors do not have the institutional service requirements that full-time faculty have. They are not required to serve on committees and are usually not asked to serve as advisers to students. As schools hire more adjuncts, then, the fewer remaining tenured and tenure-track faculty must pick up the slack, and each professor’s workload outside the classroom increases significantly.

These changes have opened up higher education to a greater variety of individuals than ever before. While much debate remains within the academic community as to whether these changes have been a positive development or whether they are lowering the standards previously set for higher education, the increased diversity of students and programs can lead to a more enriching academic experience for everyone. The increased level of education among the US workforce overall is likely to produce many positive changes in the years to come.

In response to their changing environment, many schools are also branching out with respect to their private industry associations. Historically, many schools (particularly large ones with science and medical programs) have affiliated themselves with hospitals and other research institutions to exchange facilities, equipment, expertise, and revenue. Schools are also increasingly seeking funding sources from private industries to finance everything from research labs to programs that provide computers and other equipment directly to students. These affiliations can be of great benefit, as the schools may be able to obtain resources that they could not otherwise afford. However, such affiliations raise ethical questions about potential conflicts of interest if private industry becomes too closely associated with teaching methods within a school.

Industry Outlook

Overview

The BLS projects continued growth for the higher education industry, particularly in the private and for-profit segments. Much of this growth can be attributed to continued education, as many adults are returning to school to further their education or change careers. This new segment growth will be in addition to an expected increase in the number of students who pursue higher education immediately following high school.

As student enrollment increases, there will be an increased demand for individuals working in higher education across all occupations within the industry. In particular, this growth will create a greater demand for administrators to oversee the increased number of students, particularly as many smaller colleges expand their traditional enrollment numbers. Demand for course instructors will grow as colleges fill their classrooms and seek to expand their course offerings, although many institutions are choosing to meet this increased demand by hiring more part-time adjuncts, rather than creating additional full-time tenured professor positions. In addition, demand for the highest-level managerial positions—such as deans, directors, and trustees—may grow somewhat, but since so few positions are available in these areas, the growth will not be as significant as in other occupations within the industry.

Importantly, many of the new opportunities will come in less traditional forms, as many colleges and universities expand specifically to cater to working adults who might otherwise not pursue higher education. This expansion may include night and part-time programs, online and distance-learning programs, and programs that provide academic credit for on-the-job experience. Schools will need administrators, managers, and facilities directors with training and experience that are different from those traditionally expected in the field in order to adapt to these new educational models. There will be many opportunities, particularly for individuals with strong backgrounds in computers and technology, to play important roles in the development of these schools and their programs.

Employment Advantages

Most people choose to work in the higher education industry because they enjoy and gain satisfaction from working with young people and returning adult students. This field can be incredibly rewarding, as there are many opportunities to help individuals make a difference in their own lives through education. Individuals who enjoy working with people and who are willing to provide a high level of personalized service will succeed in this industry and will find they are able to make satisfying and lasting interpersonal connections with the students whose lives they influence in a positive way. For those individuals working in research areas within colleges and universities, much depends on the availability of funds to support that research. When university coffers are well stocked, the role of a researcher can be fulfilling and challenging. Even those who choose to work within the industry in support positions that require minimal direct contact with students often find the work to be satisfying because their efforts to maintain the required infrastructure ultimately support the goal of helping students of all ages meet their goals.

Annual Earnings

Revenue can be difficult to define in the higher education industry, as there are public and private institutions, nonprofit and for-profit institutions, and many different sources of funding for each of these combinations. The most common sources of revenue for higher education institutions include student tuition and fees, government grants and contracts, private gifts, and investment returns from prior endowments.

For the 2020-21 school year, the National Center for Education Statistics reported the domestic revenue for public institutions as $539 billion, private nonprofit institutions as $438 billion, and private for-profit institutions as $16 billion. At public and private nonprofit institutions, only a small portion of this revenue comes from tuition and fees charged to students; at private for-profit institutions, the majority of the revenue comes from tuition and fees.

Colleges and universities in the early twenty-first century have come to recognize the importance of both capital campaigns to fund the construction of new facilities and endowment campaigns to fund operating budgets and student scholarships. Because of cuts in-state and federal budgets, large universities have had to develop these campaigns in much the same way as private small and midsize colleges and universities have, by soliciting donations from business leaders and alumni. Because nearly all investments lost significant value in the 2007–9 fiscal crisis, many colleges and universities implemented cost-saving measures to compensate for the loss in value of these endowment funds. The global COVID-19 pandemic closed schools, including post-secondary education, in March 2020. Some colleges and universities refunded portions of housing and other expenses to students.

In 2022, the US BLS reported that approximately 1.3 million individuals were employed in post-secondary education. The BLS predicted employment growth of 8 percent for postsecondary teachers over the next ten years.

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