Why the Growing Market Share of For-Profit Providers?

By Colin Nelson

Recently I pulled data from the U.S. Department of Education’s IPEDS Data Center for one of our member schools. The data had to do with the growing market share of for-profit business education providers at the master’s level. Though my colleague Dan LeClair has touched on this topic once before, the data I saw gave me a new point of view for this increase.

As Dan pointed out, the market share of business master’s degrees conferred by for-profit providers in the U.S. has grown considerably over the past decade. I found the trend in enrollments to be even more pronounced:

Figure 1. Graduate-Level Enrollment in Business Programs by Sector (U.S.)

Note: N = the total number of graduate-level business students enrolled in the given year. In 2000-01, 710 total institutions reported enrolling business graduate students, versus 1127 in 2008-09. Source: IPEDS Data Center.

Enrollment in graduate-level business increased overall and in each sector, but the share of enrollment across sectors changed dramatically. It is interesting to note that the growth in for-profit providers’ market share in degrees conferred that Dan noted in his post primarily takes away from that previously held by private not-for-profit institutions. In the case of enrollments, however, it is public institutions that suffer the bulk of the losses in market share.

There are a number of possible reasons for the growing market share of for-profit schools in these areas. For-profit schools often allocate far more resources for advertising and recruitment than public and private, not-for-profit institutions do (or can). Many for-profit institutions are seen, rightly or not, as having less stringent requirements with regard to admissions, faculty qualifications, curricula, etc., than other (particularly AACSB-accredited) schools. I should note here that, at this writing, there are no AACSB-accredited schools in the for-profit sector.

What struck me as particularly curious was when I considered these trends in the context of reported ratios of full-time versus part-time enrollees by sector:

Table 1. Percentage of Full-Time Graduate-Level Enrollment in Business by Sector, 2008-09 (U.S.)

Institution Type	N =	Mean FT % of Business Graduate Enrollment	Median FT % of Business Graduate Enrollment	Reported Range
Public	401	43.9%	40.3%	1.7% to 100%
Private, for-profit	147	74.8%	100%	2.8% to 100%
Private, not-for-profit	556	48.4%	43.6%	0.5% to 100%
Total	1,104	50.3%	45.0%	0.5% to 100%

Note: N includes all institutions reporting enrollment figures for both Full-time and Part-time graduate students in Business. Source: IPEDS Data Center.

These numbers indicate that for-profit schools have significantly higher proportions of business graduate students enrolled full-time, which IPEDS defines as nine or more graduate credit hours per semester. This was quite unexpected, particularly considering that for-profit schools typically market themselves to working adults, who presumably must also contend with time management for their jobs in addition to their studies, and thus might be expected to gravitate more towards part-time study.

From my perspective, then, this implies that it is easier for working adults (and likely others as well) to carry a full-time course load at for-profit institutions. If so, it would certainly explain, at least in part, the substantial increases in market share of enrollments at and degrees conferred by for-profit schools.

Comments

[Jane Lawler]

Thank you Colin for an insightful blog. From my experience as a director for an adult evening program at a private non-profit, I was able to observe the academic calendar system of for-profits which usually includes very accelerated terms i.e. 5 - 6 weeks allowing students to complete one course at a time. One right after another resulting at least 3 courses or 9 hours completed in a traditional semester time frame. Thereby permitting such programs to assign full time status to their students. Nine hours is the golden number as it allows the school to maximize the financial aid award packages (mostly student loans)offered to students.

[Jimmy S]

Enjoyed the info, this stuff is great keep it up!