Education as a Major Market

Education is a major market, linked to the job market, income and debt, and changing technology.

The U.S. education market, the marketplace for educational goods and services, is an important sector of the economy. Changes in the economy and the needs of employers, as well as technological change, influence education spending and the growth of companies and tuition-funded institutions that benefit from it. In the United States, free universal education is provided from primary school through high school. Preschool is not mandatory, but private providers offer a range of preschool options. Preschool-aged children from very low-income families are eligible for the federally funded Head Start program, although some programs are oversubscribed and unable to accommodate all eligible children. Children from middle-income and high-income families are much more likely to attend preschool than children from lower-income families. Data about private preschool costs and attendance can be hard to isolate from data related to childcare costs for preschool-aged children.

Higher education, formal education beyond high school, is also a major market in the United States. Some federal funding is provided to some students, but most higher education costs are paid by students and families. This is connected to growth of the student loan market and growth in levels of student debt. Since the late 1990s, student loan debt has risen sharply, increasing by 500 percent. This is partly because of sharply rising tuition costs. The clear link between receiving a college degree or advanced degree and higher income levels helps to increase demand for higher education. As with any product or service, increased demand fuels higher prices. Most of the profit that results from higher tuition goes to administrators rather than to instructors. Indeed, despite increased demand for higher education, U.S. colleges and universities hire far fewer full-time professors. Rather, they offer part-time adjunct positions. An adjunct faculty member is a temporary employee who is hired to teach specific courses at a college or university. These instructors cost institutions less because their salaries are low and they receive fewer or no benefits, such as health insurance and retirement plans. Increased tuition also reflects the demands of students, who expect institutions to provide robust infrastructure and updated technology. These issues reflect how higher education in the United States functions as a business rather than as part of a public system that serves a social purpose.

Growth of Student Loan Debt (U.S.)

Student debt levels reflect how education functions as a market in the United States, closely linked to the job market. American social and cultural norms encourage individual investment in education.
Sociologists investigate the social impacts of increased tuition and increased student debt. One impact is the "boomerang effect," the phenomenon of young adults returning to live with parents after they finish college, because of financial constraints. Young adults who are not able to secure high-paying jobs often cannot afford to pay living expenses and student debt, sparking the choice to live with family after they complete their education. Estimates about the extent of the boomerang effect vary, depending on the ages and educational levels that studies include. Young adults who pursue some higher education, but do not complete their degrees, have a higher likelihood of returning home.

Researchers also consider the impacts of schools treating students as consumers and of students understanding themselves as clients and schools as businesses. The degree to which institutions should pursue client satisfaction is a source of debate. Students and families who pay high tuitions look for a return on this investment. Institutions grapple with how to balance keeping students satisfied with the specific demands of education—particularly the need to push students beyond their comfort zones as part of a high-quality educational experience.

In addition to tuition costs, the education market includes many products and services that are sold to students. Tutoring services, test-preparation courses and materials, and resources sold to students to help with homework and research are a big business in the United States. Developments in technology have contributed to the steady growth of online education companies that sell courses and academic resources to students and families. Sociologists investigate the ways that this sector of the education market impacts approaches to teaching and learning, as well as broader issues of social stratification.