Commercial Test-Preparation Industry

This article examines the growth of the test-preparation market since the enactment of the No Child Left Behind Act in 2002. The article starts with a summary of the theoretical premise of NCLB, and then describes the circumstances surrounding test-preparation companies at the beginning of the enactment of NCLB. The research then chronicles the market and business growth of test-preparation companies from 2002 up to present. The most prominent studies that have investigated the effectiveness of test-preparation companies are examined and a brief overview of some of the controversies over the theoretical and practical applications of outcome-based testing is given. The paper finishes by looking at the current technology and market trends that will likely fuel test-preparation companies in the next several years.

Keywords Accountability; ACT; American Statistical Association (ASA); Control Group; International English Language Testing System (IELTS); No Child Left Behind Act of 2001 (NCLB); Professional Development; SAT; Standardized Testing; Standards-Based Education

Overview

The New Need for Standardized Tests

On January 8, 2002, the No Child Left Behind Act (NCLB) was signed into law. The theoretical foundation of NCLB is that of "standards-based education," formerly known as "outcome-based education," which has ultimately had the effect of greatly strengthening and increasing the nation's reliance upon standardized testing. The most fundamental ideology behind this reliance on standardized testing is that educational progress, and perhaps student intelligence, can be objectively measured through various standardized tests (most often multiple choice tests) issued to every student. Our educational system operates on the assumption that student education can be measured in this way, and that schools should be held accountable for their students' performances on those standardized tests. The nation has consequently developed an intricate national testing system that has grown until it now includes testing even at the elementary grade levels. Michael Apple (2007) notes that the NCLB has redefined "accountability" as something "…reducible to scores on standardized achievement" (p. 110), so that NCLB enforces the position that "only that which is measurable is important," and this has in turn caused what Apple refers to as an "audit culture" (Apple, 2007, p. 112), meaning we increasingly audit the students as well as the public educational system through standardized testing.

Standardized testing and its attendant system of accountability (which is mainly enforced through federal funding cuts for schools who produce poor results on standardized tests) is firmly in place, and is not likely to change anytime soon. However, the evidence suggests that standardized testing and the preparation of students for those tests is less and less in the hands of educators, and increasingly in the hands of private business. In February of 2002, an article in Time Magazine noted that state high-stakes exams had become "…a fact of life in the American classroom," and that there was "a growing presence and power of firms like Kaplan [owned by Washington Post Co.] that teach students and their teachers how to master them [high-stakes exams]" (Morse & Cray, 2002, ¶ 4). In recent years, federal concentration on performance-based and standards-based education has created an excellent business climate for test-preparation companies, and the growing trend of educational outsourcing to these companies ought to be recognized and examined more thoroughly.

The market for K-12 test-preparation services for state exams, which was "almost insignificant" in 1999, had become a $50 million industry by 2002 (Morse & Cray, 2002, ¶ 5), but that sum has been entirely dwarfed in comparison with the industry of today. Already in 2002, hundreds of small startup companies had joined the test-preparation industry, which led Morse and Cray to predict that, "The demand will only grow with the law signed by President Bush on Jan. 8 that requires annual testing in reading and math in Grades 3 through 8 by 2005" (¶ 5).

It seems that some test-preparation companies were well aware that their market was about to witness the largest economic boom in its entire history, and they got ready for it - though at times this preparation seemed ethically questionable. In 2002, the Wall Street Journal reported on a survey issued by the National Research Center for College and University Admissions (a non-profit membership organization); teachers and counselors across the nation annually collect these distributed surveys from about two million high school students, but neither they nor the students were aware that the entire database was sold to a marketing company and thereafter sold to the private sector - including test-preparation companies (Angelo, 2002, p. 9). Under the NCLB directives that took effect that same year, test-preparation companies' marketing and advertising efforts saw a very big payoff, and in the five years since the NCLB Act was signed into law, the test-preparation business has been tremendous for all of the major market players. Examining the phenomenon first from a business perspective gives important insights into our current educational system.

Test Prep is Big Business

In 2006, Eduventure's report, K-12 Solutions Learning Markets & Opportunities, pointed out that assessment, tutoring and test prep markets were experiencing the biggest revenue acceleration for the entire education market; just those sectors had become a $22 billion market for the 2004-05 fiscal year ("NCLB Drives Shift," 2006, p. 24). The test-preparation sector, in particular, has generated the most profit for companies involved in the educational market. The test-preparation market also extends across several areas of sales for these companies. The largest companies are diversified in their market offerings, and they offer test-preparation manuals, classes, personal tutors, school or district consultants, multimedia packages, many online services, electronic devices, and various combinations thereof- all of which focus on preparing students for taking standardized tests. Test-preparation companies also received a major boost in 2004 when students began taking a new version of the Scholastic Assessment Test (SAT). It was a great boon for the test-prep market, and Kaplan saw its SAT-related sales jump by 50% in the latter half of 2004 (Burt & Sager, 2005, ¶ 2).

The colossal growth and tremendous financial gains of these test-preparation companies can be seen by monitoring the last three years of economic statistics from two leading industry magazines, the Electronic Education Report (EER), and Educational Marketer. EER noted at the beginning of 2005 that the financial outlook for education technology companies for that year would be quite strong thanks to "stepped-up demands of No Child Left Behind," and they noted that this would make technology products an increasingly attractive option for schools. The report made an estimate that overall sales of electronic materials had increased to $1.68 billion in 2004, and they projected this to rise to $1.82 billion for 2005 ("Strong 2005 K-12," 2005, p. 1). The report also projected that new opportunities would emerge from President Bush's proposals for change under No Child Left Behind. Melinda George, executive director of the State Educational Technology Directors Association, forecasted to EER that the sales of technology products would increase for assessment, remediation, test preparation, tutoring and professional development ("Strong 2005 K-12," 2005, p. 6).

In May 2006, the Educational Marketer reported that for test-preparation company Princeton Review, "No Child Left Behind-related Supplementary Educational Services revenue almost doubled compared to the first quarter in 2005, which helped drive the company's revenue growth of 9.4% to $25 million in the company's Test Prep segment" ("Sales of Test Prep," May 2006, p. 1). The article also noted that Haights Cross Communications saw first-quarter revenue for its test preparations segment increase by 30.7%, to $17.8 million. The article reported that the main reason for such phenomenal growth was "because of NCLB testing requirements" ("Sales of Test Prep," 2006, p. 6). Also, revenue in the Test Preparation and Assessment segment for Peoples Education Company increased 11.7% in that same quarter, while sales of that company's "focused-instruction product, workbooks and assessments customized by state for elementary and middle-school students in reading and math, jumped more than 200%" ("Sales of Test Prep," 2006, p. 6). Though not directly stated in the article, it seems quite clear that the additional NCLB testing requirements that went into effect in 2005 were the cause for the incredible 200% increase in sales.

In November 2006, Educational Marketer reported on the company Haights Cross Communications; the company saw only a "modest 1.8 percent increase to 84.4 million in the first nine months of 2006;" ("Test Prep Drives," 2006, p. 1) the report then explains that the reason the company saw any growth at all was thanks to its test-preparation products. Its test-preparation business "grew revenue 21.8% in the third quarter, the fifth consecutive quarter they produced revenue growth of at least 20%" ("Test Prep Drives," 2006, p. 1). NCLB and Test-preparation materials seem to have saved some companies from economic stagnation. It is also interesting to note that the same report quotes Haights Cross chairman and CEO, Peter Quandt, who said he expects the demand for test-prep materials to continue to be high because "states are under increasing pressure to make their tests more effective and are changing their testing programs more rapidly than was customary in the past" (p. 1). He then explained that this consequently shortens the life of test-prep materials, making them require continual revision. Thus, test-preparation companies also seem to be assured of a solid and safe business model that is strikingly similar to the market concept of "planned obsolescence." Quandt finishes his market analysis on an upbeat note; he informs the Educational Marketer that "the implementation of No Child Left Behind-mandated science tests next year offers opportunities for both the test-prep and intervention businesses" ("Test Prep Drives," 2006, p. 2).

The most recent financial report from 2007 continues to record the rise of the test-preparation market. The May 2007 Electronic Education Report begins by noting that Princeton Review saw in its first quarter of 2007 a revenue increase of 19.5% to $40.2 million, versus first-quarter 2006; the report states that the incredible growth was "driven by gains in K-12 Services and Test Preparation Services" ("Princeton Review, Educate," 2007, p. 4). Thus, in 2002 the entire industry was worth $50 million, whereas by 2007 a single company was able to generate a similar amount of revenue within only its first fiscal quarter. Although the specifics are not stated, it may be that Princeton Review's double-digit increase for K-12 services is related to the No Child Left Behind-mandated science tests that Quand mentioned were about to be implemented. This seems likely, since the same report discusses another company, Educate Online, which saw K-12 Services revenue increase by an incredible 71.4% from the prior year's quarter. The report then states that "A major contributor to the growth was $3.5 million in revenue from contracts that closed in the first quarter, rather than fourth quarter 2006, although the company also expanded in K-12 in Florida, California and Colorado" ("Princeton Review, Educate," 2007, p. 5).

These contracts that the report mentions, as well as its reference to expansion into U.S. states, brings us to an important point: a lot of the money these companies are making increasingly comes from contracts directly with school districts in various states. The Federal government has created a standards-based testing system, and the money that school districts receive from the government is contingent upon student performance on those tests. The school districts therefore outsource to companies in the hope that this will cause their students to score higher on those standardized tests so that the school can continue to get federal funds. This is a financial cycle wherein a growing amount of federal funds has been fueling a niche test-preparation market. This system, in which education is increasingly outsourced to the private sector, also seems to be causing public schools to re-evaluate their expenditure priorities.

New Expenditure Priorities

In 2002, Morse and Cray reported in Time Magazine that, "in the three years since The Princeton Review created its grade-school division, it has signed contracts with schools in 25 states" (Morse & Cray, 2002, ¶ 6). The article cites the growing trend of school districts signing contracts with test-preparation companies. They also noted that because of this change in priorities, "electives like PE or chorus could be the first to go" (Morse & Cray, 2002, ¶ 8). In their article, the authors used a case in point: the principal of Jefferson Junior High School in Washington D.C. was faced with a choice "between buying more computers and doing something to raise her students' scores" (Morse & Cray, 2002, ¶ 8). The school ended up signing a test-preparation company contract for $21,000, and the principal hoped she could obtain computers for the school sometime in the future.

However, these test-preparation services are just one way that private educational companies have managed to receive payment from public education funds. They have also expanded their services so as to obtain lucrative contracts in other ways with school districts throughout the U.S. In 2005, The Princeton Review signed an agreement with the Texas Education Agency to "supplement the work of high-school counselors with its own advisers, who will work with students in middle schools and high schools in Dallas and South Texas." Thus, the job of advising prospective college students is now also being outsourced to private firms, and is being financed by millions of dollars from state agencies (Hoover, 2005, ¶ 1). In 2006, the company signed another contract in Colorado, and is currently fulfilling a contract to provide "on-site advisers and computer software to bolster college-counseling services in 23 middle and high schools in a three-year, $3 million pilot program" (Borja, 2006, ¶ 29). Additionally, there are an increasing amount of K-12 contracts like the above-cited example, wherein Educate Online increased sales in K-12 in Florida, California and Colorado. These are contracts to work with school districts to provide teacher training, test-preparation books, multimedia materials, online services, and technical support.

Individual Services

Aside from various types of contracts with school districts, there is also an enormous amount of profit in providing extra services for those students who can afford it. Today, there are a growing number of companies that are targeted to upper-middle-class and wealthy families. A first-class college prep program "can cost as much as a year at Princeton" (Wang, Fitch & Tharasook, 2007, ¶ 33). The authors include the following fees for services that test-preparation companies offer:

• Individual SAT review: $3,000 (20 hours),

• Academic tutoring, $10,000 ($200 an hour for 50 hours), and

• A private college counselor: $25,000 (Wang, Fitch & Tharasook, 2007, ¶ 8).

For the less wealthy clients, test-preparation companies offer

• Online review ($99 and up),

• Big classes (typically $1,000) and

• Small groups ($1,500), as well as

• One-on-one tutoring (20 or so sessions for $2,700 to $8,000, depending on the tutor's experience)" (Wang, Fitch & Tharasook, 2007, ¶ 8).

Thus, not only school districts seem to be changing their priorities on educational expenditures, but the parents of students are also a very large market that these companies are successfully targeting. This gives test-preparation companies two main channels to reach the students; the companies can get government funds for the students through contracts with the schools, and money from those parents who can afford it. The U.S. system of education has fueled the tremendous business growth of test-preparation companies.

Research Studies

One question to ask is whether all that money spent by school districts and parents actually obtains proven results. In other words, are these test-preparation companies by using the same accountability to which students and school districts have been forced to uphold? Unfortunately, there is no large body of research that measures the companies preparing the students for standardized tests. Morse and Cray (2002) researched this same question, and found no solid evidence that students improved significantly after using the services of test-preparation companies. The authors do mention one "minuscule" study of five schools in Houston that used The Princeton Review's Homeroom.com. These results showed that fourth-graders who used the online assessments "improved their scores twice as much as nonusers - but that study was conducted by the company itself" (Morse & Cray, 2002, ¶ 11). However, more objective studies (carried out by less interested parties) indicate an extreme over-inflation in the above cited company study.

Chance magazine of the American Statistical Association in Alexandria, Va., published a study in 2001 that was carried out more scientifically - in particular, the study used a control group, which the test preparation companies have never done. The research used a much larger test group of 16,500 students ranging from 8th grade through high school and beyond. The results showed a 1 percent to 2 percent difference in SAT scores between those who took test-preparation courses, and those who did not (Zehr, 2001, ¶ 13). However, Derek Briggs, the author of the study, included a caveat even with these meager improvements: he noted that students who participate in test preparation courses tend to be "more affluent, more motivated, and generally more academically ready to take the tests than students who do not" (cited in Zehr, 2001, ¶ 10).

Kim (2007) writes on Briggs' study, too which showed that, on average, "after controlling statistically for factors such as socioeconomic status and academic achievement, SAT-coached kids scored just a little higher, one or two correct answers higher, than uncoached kids" (Kim, 2007, ¶ 11). Such negligible differences in studies carried out by the academic community call into question the above company's claim of doubling the score for those fourth-grade students; it also challenges other test-preparation companies' claims that their services cause students' scores to "improve on average by more than 100 points on the SAT [a 12.5% improvement]" (Zehr, 2001, ¶ 1).

Thus it seems that educators, parents and the federal government should be asking whether the test-preparation industry actually satisfies an outcome-based criterion. Kim (2007), a former SAT instructor, wrote,

Commercial SAT preparation is not what it's cracked up to be. Sure, at $1,000 a course, you'd think there was some kind of magic being performed. Trust me, there isn't" (Kim, 2007, ¶ 3).

Kim also noted that people seem to have an unquestioned belief that test-prep students have an unfair advantage over students who cannot afford the expensive courses, and that society is "brainwashed into believing that such courses are necessary" (Kim, 2007, ¶ 2).

Briggs' studies seem to support her opinion about the effectiveness of test-preparation courses. However, a lot of researchers - including those cited above - believe that practice in taking such standardized tests is quite beneficial, since it allows the student to go into the real test with some experience. This tends to give them a more confident feeling and may help them improve their scores somewhat.

Questioning the Ideology

Although NCLB has already enforced several years of increased standardized testing, and although the public may be largely accepting of its theoretical foundation, some of the nation's teachers seem largely unimpressed. Even as the law was coming into effect, Morse and Cray (2002) recorded teacher discontent. In 2002, the authors attended a Kaplan teacher-training session where 50 teachers had convened to be trained in test-preparation procedures. An eighth-grade language arts teacher told the Kaplan instructor, "When you're doing the language section, you're taught to first eliminate two of the possibilities, leaving two left. That's leverage, not learning" (Morse & Cray, 2002, ¶ 10). The authors also quote Walt Haney, a testing expert at Boston College, who said, "My main worry is that students will learn how to take tests but not how to think" (cited in Morse & Cray, 2002, ¶ 9). Randi Weingarten, president of the United Federation of Teachers, also pointed out a major problem with the growing trend for test-preparation: "The fixation on test preparation is resulting in a narrowing of the curriculum, leaving little time for science, social studies, art, music and physical education" (Weingarten, 2006, ¶ 3).

Education writer Alfie Kohn recently published an article in USA Today that echoed the thoughts of the above educators. He wrote,

It's time to say in a national newspaper what millions of teachers, students and parents already know: No Child Left Behind (NCLB) is an appalling and unredeemable experiment that has done incalculable damage to our schools … It's a stretch even to call the law 'well-intentioned' given that its creators, including the Bush administration and the right-wing Heritage Foundation, want to privatize public education. Hence NCLB's merciless testing, absurd timetables and reliance on threats" (Kohn, 2007, ¶ 1- 2).

Kohn believes that, at best, the NCLB is about raising scores on multiple-choice exams (Kohn, 2007, ¶ 3). NCLB critics implicitly make an important point, and that is the possibility that education has been politicized in a way that has allowed test-preparation companies to profit at the expense of what may be a higher quality system of education. In other words, money and politics may be pushing the increased testing in the guise of a convenient and supportive ideology. Anna Quindlen (2006) was more direct in her opinion when she wrote "The presidential commission is allegedly concerned about analytical skills, although one of its members runs a big test-prep company, which my analytical skills tell me means he has a vested interest in more testing" (Quindlen, 2006, ¶ 9).

Market Trends

If the pressure on public schools to increase testing ever subsides, it will certainly take at least several more years. At present, test-preparation companies are continuing their market strategies based on the surety that their market will remain stable if not growing for at least another several years. The current standardized testing system, with its outcome-based benchmarks, is set all the way to the year 2014, so educational companies are competing in a safe and rigorous market to develop new products and services. Technology is one of the more dynamic areas where companies are currently competing. For example, Princeton Review and Franklin Electronic Publishers have collaborated to produce and market a portable electronic device called the "Pocket Prep" which is designed to help students prepare for the SAT. (Hoover, 2005, ¶ 2) The device sells for $179.95, about half the cost of a new iPod, but six times more than Princeton Review's printed study guide, Cracking the New SAT, which comes with a CD-ROM of practice tests. The company plans to develop similar devices for other standardized tests, including the ACT (Hoover, 2005, ¶ 9).

Kaplan Inc. has introduced high-tech materials onto the market as well, including $19.99 test-preparation software for cell phones and personal-digital assistants (Hoover, 2005, ¶ 10). The company has also developed three interactive programs that can be purchased at iTunes for downloading to iPods with video screens. According to Kristen Campbell, the national director of SAT and ACT programs for Kaplan, the iTunes downloads are a valuable supplemental product (Aspan, 2007, C7). Kaplan also recently launched a series of manga (Japanese-style comics), into which they placed a lot of SAT-level vocabulary words. The comics include a sci-fi fantasy, a medieval epic based on the video game Warcraft, and a swords-and-sorcery tale. All the original art and story lines are the same as in the original manga comics, but the vocabulary level has been adjusted to a more advanced level (Woyke, 2007, ¶ 1). Market strategies and product development such as these will likely yield healthy profits for the companies; we can only hope that some students will use technologies such as iPods or other electronics in the service of self-education - or at least self-preparation for the next multiple-choice, standardized test.

Terms & Concepts

Accountability: The idea of holding schools, districts, educators, and students responsible for demonstrating measurable results, usually through standardized tests. Under the NCLB Act's accountability provisions, states must annually report to parents and communities about state and school progress. Schools must make Adequate Yearly Progress or must take corrective actions. If still not making adequate yearly progress after five years, dramatic reform must take place.

ACT: A standardized achievement examination for college Admissions which assesses high school students' general educational development and ability to complete college-level work. Some students who perform poorly on the SAT find that they perform better on the ACT, and vice versa.

Control Group: In an experiment, a necessary test group that is used to eliminate alternate explanations of experimental results.

No Child Left Behind Act of 2001 (NCLB): A United States federal educational reform law that emphasizes mandatory standardized tests in public schools, and a voucher system that allows money for student education to be paid to private schools, including religious schools.

Professional Development: The pursuit of education and skills required for following or embarking upon a specific career path. It can be training to keep current with changing technology and practices or in the concept of lifelong learning. Many U.S. states require some professional development of school teachers pre-kindergarten through grade 12.

SAT: The SAT is a standardized college admissions test administered by the College Board corporation, a non-profit organization in the United States, and is developed, published, and scored by the Educational Testing Service (ETS). In 2005, the test was renamed as "SAT Reasoning Test" with possible highest scores from 600 to 2400 in combined test results from three 800-point sections (math, critical reading, and writing), along with other subsections scored separately.

Standardized Testing: A testing procedure that tests knowledge of a content area in a way that designs test questions, the scoring procedures and interpretations of responses such that the answers are uniform and consistent. The method generally does not allow for multiple responses to be correct, and is most often represented by multiple choice or true false testing so that computers can grade the tests.

Standards-Based Education: An education reform model for elementary and secondary education. This education model objectively measures student performance to determine whether or not the education system is performing adequately. Also known as Outcome-based education (OBE).

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Suggested Reading

Coatney, S. (2007). Testing, testing, testing. Teacher Librarian, 34 , 60. Retrieved November 16, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=25327529&site=ehost-live

Ponessa, J. (1996). SAT-prep programs seek to give disadvantaged students a leg up.

Education Week, 16 , 1-2. Retrieved November 16, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=9612176296&site=ehost-live

Kozol, J. (2006). Standardized testing: the do-or-die agenda. Principal, 85 , 18-22. Retrieved November 16, 2007 from EBSCO Online Database Education Research Complete. http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=19745495&site=ehost-live