2007 k12 Private Tutoring

Copyright 2007 Eduventures, LLC | Reproduction Prohibited page 2

By Tim Wiley

Instruction for Hire:A Survey of the Private

Tutoring Market

For more than a decade, Eduventures has been

the most trusted and influential name in

education market research, consulting services,

and peer networking. Our clients include

senior administrators and executives from

leading educational institutions and companies

serving the K-12, higher education, and

corporate learning markets, as well as decision-

makers in government agencies and the

investment community. Additional

information can be found at

www.eduventures.com.

January 2007

TA B L E O F CO N T E N T S

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 3

The Market for Private Tutoring Services . . . . . . . . . . 4

Anatomy of the Private Tutoring Purchase Decision . .11

Emergence of Online Tutoring . . . . . . . . . . . . . . . . .16

Parting Thoughts on Private Tutoring . . . . . . . . . . . .19

Appendix A: Research Methodology . . . . . . . . . . . . . 20

Appendix B: Representative PrivateTutoring Providers . . . . . . . . . . . . . . . . . . . . . . . . . . 22


EXECUTIVE SUMMARY

Private, consumer-based tutoring is one of the most dynamic education-related marketstoday. At $2.2 billion, it was also one of the largest education markets in the 2005-06school year. More than 1.9 million students spending an average of almost $1,160 per yearconstituted the market for private tutoring. Hundreds of providers employing multipledelivery methods and business models serviced the market in 2006.

Although private tutoring covered a wide array of subjects in the 2005-06 school year, testpreparation was the most common area of tutoring, followed closely by math and reading.Science, however, likely will be the fastest growing tutoring subject of all over the nextthree years as the impending requirement of the No Child Left Behind Act (NCLB) tomeasure schools progress in science along with reading and math increases the publicsattention on that subject.

The emergence of online tutoring over the past decade is a disruptive innovation thatpromises to significantly alter the nature of the tutoring market in the coming years.Spending on private online tutoring totaled $115 million during the 2005-06 school year,or 5% of the total private tutoring market. Although a convergence of social, economic,and technological developments in recent years has spurred the growth of online tutoring,challenges to future growth remain formidable. Online tutoring providers will have toaddress issues related to effectiveness, access, and credibility if they are to succeed in thisburgeoning market.

In Instruction for Hire: A Survey of the Private Tutoring Market, Eduventures assesses theprivately funded tutoring market, identifying the markets unique characteristics, trends,challenges, and opportunities. The report will help company executives enhance theirunderstanding of parents decision-making processes and take advantage of relationshipsdiscovered between criteria parents use to make a purchasing decision. Eduventuresresearch and analysis draws on a survey of almost 2,000 parents of school-aged children;further details regarding the report methodology are in Appendix A. Eduventurespreviously published Educational Reinforcements: An Examination of Publicly Funded Tutoring,a companion study that examined the market for school-based tutoring, including thefederal Supplemental Educational Services program.


THE MARKET FOR PRIVATETUTORING SERVICES

Private tutoring offers a compelling and timeless value proposition: giving parents theopportunity to help their school-aged children achieve academic and lifelong success.Consequently, the market as a whole has demonstrated remarkably consistent growth sincethe advent of the modern K-12 education system.

The private tutoring market is insulated from the political winds that batter publiclyfunded tutoring, but is still subject to external shocks. The most recent demand shock tothe private tutoring market was the revamping of the SAT in 2005. As parents learned ofthe impending changes throughout the 2004-05 school year, private tutoring enrollmentsspiked, largely in the form of test preparation. The result was that the private tutoringmarket had a record 2.2 million students engaged in academic tutoring in the 2004-05school year.

The following year, however, enrollments underwent the expected correction and decreased15% to 1.9 million students. Over the two years, average spending per student increased5.9% to $1,160, tempering the total drop in market size to 10%, from $2.50 billion in2004-05 to $2.23 billion in 2005-06.1 Because this market correction was largely theresult of changes to the SAT, the most severe tightening occurred, as expected, in themarket for test preparation services.

1 Through this research, Eduventures found that 9% of parents who purchased private tutoring services also purchasedsupplemental tutoring materials through the tutoring provider, constituting a separate market of approximately$40 million.


Instruction for Hire: A Survey of the Private Tutoring Market

FIGURE 1. PRIVATE-PAY TUTORING MARKET SIZE, 2004-05 2007-08F

Source: Eduventures analysis

To reiterate, this one-year drop in market size is not indicative of a long-term trend, but is acorrection as a result of the spike in enrollments attributable to the revamped SAT. Market growthrates over the several years prior to the 2004-05 school year ranged between 4% and 9% per year,driven mostly by increased competition in college admissions.

Private Tutoring Vital Signs (as of July 2006)Student enrollments: 1.9 millionAverage spending per enrollment: $1,160Market size: $2.23 billionOne-year growth rate: -10%1996-2006 CAGR: 6.5%

Customer loyalty toward any given private tutoring provider has always been relatively weak, andcustomer churn was particularly noticeable after the 2004-05 school year. According toEduventures research, 57% of students in grade 11 or below involved in tutoring during the2004-05 school year enrolled in tutoring again in 2005-06. Of those students, 67% renewed withthe same provider. Although providers will always have to deal with students who drop out oftutoring entirely, this lackluster renewal rate indicates that incumbent providers do not necessarilyhave a strong advantage in what is perceived to be a heavily relationship-based business.Providers may benefit from examining their customer retention patterns and proactivelyaddressing any shortcomings.

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

Market size

2007-08F2006-07F2005-062004-050.0

0.5

1.0

1.5

2.0

2.5Enrollments

School Year

Mar

ket Size

(billions

)

Enro

llmen

ts (m

illions

)

$2.5 $2.2 $2.3 $2.5

2.2

1.9 1.92.0



Composition of the Private-Pay Tutoring Market

Although tutoring has been associated primarily with one-on-one instruction with the significantexception of test preparation courses in recent years many providers have started to offer smallgroup tutoring programs. These groups can range from three students per tutor, to situations wherethe group approaches a 10-to-one ratio. The trend of expanding class sizes is driven both byincreasing competition around price points and students interest in being tutored in a more socialenvironment. The downside to larger class sizes is less flexible scheduling, inevitably resulting insome degree of attrition. Figures 2, 3, and 4 illustrate the distribution of the instructional model,location, and time frame of the private-pay tutoring programs in which students were enrolled inthe 2005-06 school year.

FIGURE 2. DELIVERY METHODS OF TUTORING IN 2005-06

Source: Eduventures analysis; n=89

FIGURE 3. LOCATIONS IN WHICH TUTORING TOOK PLACE IN 2005-06


Online (i.e., Internet-based)

6%

Large-group instruction(10 or more students per instructor)

8%

Small-group instruction(fewer than 10 students per instructor)

31%

One-on-oneinstruction

55%

Summer camp6%

Other organizations site(e.g., library, religious institution, etc.)

8%

On school grounds10%

Student's home24%

Tutoring providers site52%

FIGURE 4. TIME OF YEAR STUDENTS PARTICIPATED IN TUTORING IN 2005-06


One of the fiercest and most persistent competitors of established tutoring companies is theindividual tutor. Often marketing through flyers posted on telephone poles and taking on ahandful of students at a time, these individuals tutored 24% of all students enrolled in tutoringduring the 2005-06 school year. For comparison, the top five national providers had combinedenrollments that constituted 29% of all private tutoring.

FIGURE 5. PRIVATE TUTORING MARKET SHARE BY STUDENT ENROLLMENTS IN 2005-06

Source: Company documents (SEC filings and press releases); Eduventures analysis



During the summer on a weekend4%

During the summer on a weekday19%

On a weekendduring the school year

19%

After school hoursduring the week

59%

K-12 teachers,higher education institutions

7%

Individual tutors25%

Other tutoring companies40%

SylvanSCORE!,

The Princeton Review,Kumon,

Huntington Learning29%



On average, individual tutors were able to charge slightly more than established tutoringcompanies, as their revenues accounted for 25% of the total private tutoring market. This slightpremium may be explained by more specialized instruction and individualized attention.Unfortunately for established tutoring companies, this competitor maintains a truly unassailableposition, short of any regulatory interference. Because the business model is inherently not scalable,however, the market share of individual tutors is not likely to shift substantially.

During the 2005-06 school year, most private-pay tutoring was delivered in three areas: testpreparation, reading, and math. Test preparation was the most common area of tutoring, with 29%of students actual tutoring time devoted to it, followed by math (24%), and reading (18%). Allother tutoring subjects combined accounted for just 27%.

FIGURE 6. DISTRIBUTION OF PRIVATE-PAY TUTORING BY STUDENT TIME


Science, however, likely will be the fastest growing tutoring subject over the next three years asNCLBs impending requirement to measure schools progress in science, in addition to reading andmath, increases the publics attention on this subject. Eduventures expects science to account for10% of all private tutoring by 2009, implying a growth rate of approximately 30% per year. Testpreparation and reading will remain strong, but some math tutoring may shift to science as anapplied form of math. Worth noting is the absence of tutoring tied to English as a secondlanguage, which accounted for less than 1% of all tutoring.

In terms of grade distribution, private tutoring tends to concentrate in high school, based on bothenrollments and market value.

Test prep29%

Math24%

Reading18%

Other27%

Writing 8%

Homework help 7%

Study skills 5%

Science 4%

Foreign language 3%



FIGURE 7. DISTRIBUTION OF TUTORING ENROLLMENTS AND MARKET VALUE BY GRADE IN 2005-06


Based on Eduventures research, grade 12 tutoring had one of the largest shares in terms of studentenrollments, yet a considerably smaller share in terms of market value. This factor is most likelyattributable to the amount of tutoring that 12th graders sat through on average. The data showthat, even compared to just their schoolmates in grade 11, 12th graders signed up for tutoring injust as many numbers and spent nearly as much per hour of tutoring, but attended almost 45%fewer hours. Apparently, students in grade 12 front-loaded whatever tutoring they signed up forbefore settling into the senior slump. In contrast, tutoring in grade 8 commanded a significantpremium, most likely attributable to the value parents placed on preparing their children for highschool. This distribution is influenced significantly by test preparation services, a segment thatwarrants closer examination.

A Closer Look at the Test Preparation Market

In the 2005-06 school year, including summer 2005, the delivery of K-12 test preparation serviceswas a $527 million market. As mentioned earlier, the overall drop in the tutoring market from theprevious year was felt most severely in the market for test preparation. By itself, test preparationrepresented almost 80% of the total market drop.

In reality, test preparation is almost exclusively focused on grades 9 to 12, which accounted for$507 million, or 96% of the total market segment value. Students in grade 11 alone accounted for$290 million, or 55% of all money spent on test preparation, even though this grade onlyrepresents 35% of all enrollments. Thus, in light of what parents value most, test preparation isnearly synonymous with preparation for college entrance exams.

0%

5%

10%

15%

20%

25%

% by Market Value

% by Enrollments

121110987654321K

Grade

2%1%

4%

1%2%

5%4%

1%

4%

9%

2%1%

8%

3%2%2%

6%

20%

8% 8%

21%23%

21% 21%

15%

6%



FIGURE 8. DISTRIBUTION OF HIGH SCHOOL TEST PREPARATION ENROLLMENTS AND MARKET VALUEBY GRADE IN 2005-06


In terms of enrollments, however, high school students do not have quite as large a share of themarket as they do of the dollar value. Thus, the students themselves are distributed slightly moreevenly than the spending, reflecting the fact that parents are open to hiring private tutors tosupport test preparation needs for their children in any grade.

Will Publicly Funded Tutoring Cannibalize Private Tutoring?

To providers of fee-for-service tutoring in an education market dominated by NCLB, it can bedifficult to look beyond recent headlines proclaiming the explosive growth of free tutoring throughthe Supplemental Educational Services (SES) program. Student participation in the federal programhas increased steadily since its creation in 2002, with more than half a million students enrolled inSES across the country during the 2005-06 school year. Upward of 3,000 entities have beenapproved to provide SES, ranging from venerable tutoring corporations to mom-and-pop outfits toschool districts themselves.2 Naturally, consumer-oriented tutoring providers have a keen interestin understanding what effect this phenomenon will have on their businesses.

Based on careful analysis of this research studys findings, Eduventures expects that SES will poselittle threat to private tutoring programs. The demographics of the two markets are simply toodissimilar to lead to cannibalization. For example, households with students enrolled in SES in2006 had a median income between $50,000 and $75,000, whereas households with studentsenrolled in private tutoring had a median income between $100,000 and $150,000. Furthermore,students enrolled in private tutoring generally do not qualify for SES even when their school does.Most conclusively, our survey revealed no evidence of defection from private to SES tutoring overthe last two years. That is, no student in the research sample that participated in private tutoringin the 2004-05 school year subsequently participated in SES tutoring the following year.

0%

10%

20%

30%

40%

50%

60%

% by Market Value

% by Enrollments

1211109

Grade

12%7%

12% 12%

35%

55%

29%

22%

2 See Eduventures Educational Reinforcements: An Examination of Publicly Funded K-12 Tutoring for more details.


ANATOMY OF THE PRIVATETUTORING PURCHASE DECISION

Tutoring is a pervasive business, taking many different forms and covering numeroussubjects. One common theme that cuts across all aspects of private tutoring, however, isthe irrefutable influence parents have on the market. Eduventures surveyed the parents ofalmost 2,000 school-aged students to better understand their decision-making process.

Eduventures research focused on three phases comprising parents decision-making processaround private tutoring services:

n Rationale for servicesn Key sources of information n Principal evaluation criteria

Each of these phases is explored below, drawing on insights from survey respondents.

Parents Rationale for Private Tutoring Services

Parents stated reasons for enrolling their children in test preparation-oriented tutoringservices centered on one consistent goal to improve and expand the postsecondary optionsavailable to their children. As one parent said, All the students at my childs school aretaking exam review courses, and [my child is] forced to compete with those students forthe same college freshman spots. In response, parents emphasized their willingness tospend more time and money on helping their children prepare for college entrance exams(i.e., the SAT or ACT). Some parents felt that test preparation courses were useful not onlyfor imparting test-taking strategies but also for increasing specific, relevant contentknowledge.

For private tutoring services other than test preparation, parents gave more varied reasonsfor enrolling their children in programs. Although the general goal of attending non-testpreparation tutoring programs was to increase academic achievement, what this actuallymeant to parents diverged among respondents and includes examples such as:

n To catch up academically at a new schooln To supercharge the educational experience with individualized attentionn To get remedial help when the child did not qualify for SESn To provide self-confidence, goal-setting skills, and a zest for learning to achieve

a higher potentialn To teach the fundamentals that the school system did not



Thus, whether parents are interested in stretching the upper limits of their childrens learningexperience, or simply seeking out a means to provide what they feel is a minimum level ofeducation, private tutoring presents a compelling value proposition that appeals universally to thenearly 28 million households with school-aged children.

Key Sources of Information for Parents

Parents ostensibly choose a particular tutoring program or provider for their children afterthoroughly evaluating information obtained from many different sources. Based on the findings ofthis research study, Eduventures was able to understand which sources of information were mostinfluential with parents. Above all other sources of information, parents judged personal opinionsobtained by word of mouth as the most useful source of information when forming their firstimpression of private tutoring providers, cited by 60% of parents.

FIGURE 9. SOURCES OF INFORMATION PARENTS USE TO LEARN ABOUT TUTORING PROGRAMS ANDPROVIDERS

Source: Eduventures analysis; n=128, multiple responses permitted

Looking closer at the sources of information parents used to learn about available tutoring options,several noteworthy findings emerged from the data. For instance:

n Other parents or neighbors represented the single most important source ofinformation (30%), while school administrators or teachers came in a close second (29%).Thus, although word of mouth in general served as the most prominent source ofinformation, parents were open to a range of sources of personal advice andrecommendations.

n Parents placed significant value on providers tangible marketing efforts, whichwere listed as most useful by 17% of parents. Fortunately, this is one of the accessiblemechanisms a provider can use to stimulate demand for its programs.

Other 1%Newspaper or magazine articles

4%

Independent research studies6%

No useful source of information13%

Providers' brochures,advertisements, or Web sites

17%

School administrators or teachers29%

Other parents or neighbors30%



n Almost one in seven parents (13%) felt that there was no useful source ofinformation for the private tutoring market other than their own intuition. Statedanother way, this finding indicates that a significant number of parents do not proactivelyseek out information on the market, but rather passively absorb information, upon whichthey base their selection of a program and provider.

Key Evaluation FactorsSimilar to their accessing tutoring information from multiple sources, parents considered a range offactors for evaluation in making a final decision. Quality of both the providers instructors andinstructional material and convenience were the most important factors to parents; incombination, these two issues represented almost half of all top responses given by parents.

FIGURE 10. IMPORTANCE OF FACTORS PARENTS USED TO EVALUATE PRIVATE TUTORING PROGRAMSAND PROVIDERS


In addition, parents considered advice or recommendations obtained by word of mouth, includingpersonal recommendations from school administrators, teachers, and other parents, the mostimportant decision-making factor 20% of the time.

Looking at the evaluation factors between the 2004-05 and 2005-06 school years, the mostsignificant trend was the increased importance parents placed on perceived quality, both in termsof instructors and instructional materials. The percentage of parents who ranked either of those twoaspects of quality as most important jumped from 19% in 2004-05 to 31% in 2005-06. Whenpressed to specifically define the concept of quality, parents tended to associate quality of tutorswith expert knowledge of subject matter and strong interpersonal skills with the students. Withrespect to quality of instructional materials, parents mentioned such factors as the materials abilityto engage students and supplement, though not necessarily align with, the schools curriculum.

% of Respondents

0 5 10 15 20 25

2004-05

2005-06

Other

Provider offered online or computerized tutoring

Providers advertising was most convincing

Provider tutored one of their children in the past

Teacher or school administrator recommended the provider

Other parents recommended the provider

Provider was deemed trustworthy and reputable

Quality of the providers tutors

Quality of the instructional materials used

Providers location or hours were most convenient 17%20%

16%11%

15%8%

11%13%

11%16%

9%11%

7%6%

5%5%

3%5%

6%3%



Across the same time period, the importance of personal recommendations in selecting a tutoringprovider decreased significantly, from 27% in 2004-05 to 20% in 2005-06. One possibleexplanation for this shift was the modification of the SAT in 2005. As parents learned of theimpending changes to the college entrance exam in the 2004-05 school year, many of them likelyturned to other parents and school officials to try to decipher what the changes meant to theirchildren. Consequently, parents may have placed more importance on word-of-mouthrecommendations in that year, only to return to an average degree of importance the following year.

A Closer Analysis of Parents Purchasing Decision Process

Beneath this studys top-level findings were telling correlations between various factors thatparents deemed valuable or not. Based on the decision-making factors expressed in the 2005-06school year, these correlations indicate that purchasers of private tutoring services generally fallinto disparate camps with markedly different values and priorities. For example:

n Parents who valued the personal recommendations of other parents most werein a separate camp from those who valued the quality of instructional materials.

n Likewise, parents tended to value either the personal recommendations ofschool administrators and teachers or the convenience of location, butnot both.

n Parents whose children were tutored in the past by a particular tutoring providertended to not value tutoring providers advertising.

Such inverse correlations between evaluation factors were more characteristic of the decision-making process of parents than any positive correlation. That is, while parents in total actuallyvalued a wide array of factors, each parent tended to feel very strongly about whatever particularfactor they personally valued most. Providers may want to remain cognizant of these distinctionsand apply them to their marketing and outreach efforts.

One noteworthy finding was a correlation that was not found in the data total spending onprivate tutoring was not correlated at all with household income. In fact, the amount of moneyparents spent on tutoring was largely independent of all the factors examined for this study. Thatis, parents generally did not pay a premium for any particular feature they indicated was valuableto them quality of tutors, type of instructional material, convenience, reputation, or advertising.There were, however, three key exceptions to this general correlation:

n A slight connection existed between choosing a provider based on the opinion of otherparents and paying more for that provider. The connection, however, was notstatistically significant and although logically sound only should be consideredanecdotal evidence.

n Another exception was that parents who valued the opinion of community groups,including religious organizations, also tended to spend less in total on tutoring. This



trend may be explained by the prevalence of free or low-cost tutoring provided by thesecommunity groups and religious organizations.

n The third exception dealt with parents who valued online or computerized instruction.These parents tended to pay less both in total amount spent and amount spent per hourof instruction.

Based on these findings, tutoring providers will want to ensure they have clearly identified theunderlying motivation of their customer segments. Are customers driven largely by word ofmouth? Or do they fall in the group that places more value on quality instructional content? Byunderstanding this distinction, and by corroborating this research with follow-up market studies,tutoring providers stand the best chance of creating an optimal marketing mix.


EMERGENCE OF ONLINE TUTORING

The emergence of online tutoring over the past decade is one disruptive innovation thatpromises to significantly alter the nature of the tutoring market in the coming years.While tutoring traditionally has been based on face-to-face interaction, new collaborativetechnologies such as Voice over Internet Protocol (VoIP), video streaming, and virtualwhiteboards have expanded the way in which tutoring can be effectively delivered. Takingadvantage of anytime, anywhere instruction, online tutoring is making the greatest inroadsamong the population of digital natives in rural communities.

Online Tutoring Market Overview

Approximately 108,000 students signed up for private online tutoring during the 2005-06school year, or 6% of all students enrolled in any kind of private tutoring nationwide.Spending on private online tutoring totaled $115 million during the 2005-06 school year,or 5% of the total private tutoring market. On average, online programs charged slightlyless than their onsite, face-to-face counterparts.

Because online tutoring has grown to its present size from zero in only the last few years,growth rates are not statistically meaningful. Looking forward, however, Eduventuresexpects private online tutoring to grow to 10% of total students and 8% of total spendingin the private tutoring market by 2009, implying an average market growth rate ofapproximately 15% per year.

Online Private Tutoring Vital Signs (as of July 2006)Student enrollments: 108,000Average spending per enrollment: $1,064Market size: $115 million2006-09 CAGR forecast: 15%

From a subject area perspective, private online tutoring is less focused on test preparationthan is in-person tutoring. About 20% of online tutoring dealt with test preparationcompared to 29% for in-person. Reading represented approximately 30% of onlinetutoring, compared to nearly 18% for in-person tutoring.



Enablers of Online TutoringIn the private tutoring market, online tutoring expands the delivery methods available to providersand students, creating fertile ground for new business models. Although the effectiveness of thesedelivery methods is questioned by some, most students today are comfortable with the computerinterface and view computer screens even the smallest handheld screens differently than thegeneration that preceded them. The growth of online tutoring has benefited from a convergence ofsocial, economic, and technological developments:

n Collaborative technologies have enabled rich interaction between tutor and tutee,allowing for activities such as writing on electronic whiteboards to be shared across aglobal network. Using VoIP, tutors and tutees can discuss lessons in real time atpractically no cost. A handful of tutoring companies already have built successful modelsentirely around an interface enabled by collaborative technologies.

n Web-enabled mobile phones promise to create a new medium capable of deliveringrich, multimedia instructional content. Although not yet in widespread use in tutoringor even in virtual learning applications, the emergence of this technology already hasmade an impact in commercial applications that could serve as an analogy to theprovision of tutoring.

n Formative instruction systems have grown to be one of the most credibleexamples of the practical application of formative assessment.3 While formativeassessment as a concept is well understood,4 applying that concept to the classroomproved extremely challenging until technological developments allowed for greaterautomation of teachers routine tasks. One such routine task is creating customizedfollow-up activities to prescribe a student based on diagnosis of assessment data. Onlinetutoring has emerged as one of the most innovative examples of such prescriptiveinstructional activities; a connection will become more lucrative as formative instructionapplications spread.

n Outsourced instruction is one of the most contentious developments in K-12education today. Short of any new government regulation, however, the use of outsourced,overseas tutors is likely to spur the growth of online tutoring the most over the next fewyears. Online tutoring has made the physical location of the tutor immaterial, andcountries such as India and South Korea are home to many highly qualified, low-costtutors. On average, tutors based in India earn about $300 per month, or less than $2 perhour for a typical 40-hour work week. In comparison, their U.S. counterparts start atabout $20 per hour with some specialized tutors earning $100 per hour or more. Some ofthese overseas companies employ call centers to field students questions, while othersallow tutors to provide instruction from their homes. To improve effectiveness of theirofferings, some India-based tutoring companies train their teachers in the cultural andcommunicative nuances of their American tutees.

3 See Eduventures Formative Instruction and the Quest for the Killer Application for more details.4 For a thorough explanation of formative assessment, see: Boston, Carol (2002). The Concept of Formative Assessment.

Practical Assessment, Research & Evaluation, 8(9).



Challenges Facing Online TutoringDespite the hype and high growth rates associated with online tutoring, providers will need toaddress several challenges as they develop online tutoring programs. Chief among these challengesare the following issues:

n Online interfaces risk losing the personal connection. The popular notion isthat computerized interactions are less engaging than in-person interactions, makinglearning in such environments especially difficult. This notion has yet to be proven,however, and overlooks the cultural particularities of the current generation of students.Many students today are completely comfortable with a computerized form ofinteraction. When students do exhibit a lack of motivation, it often may be attributablenot to the online interface, but rather to the overall experience. Employing the latesttechnologies does not absolve providers of the imperative of designing a robust andengaging curriculum. Even a cell phone display can engage students if the message iscrafted properly.

n A majority of students lack high-speed Internet connections at home.A 2005 U.S. Census Bureau report estimated that two-thirds of households had Internetconnectivity, but only half of those connections were high-speed, which would berequired to take full advantage of the technologies utilized by online tutoring. Thus, onlyabout one-third of K-12 students are able to engage in online tutoring from their home.Providers may be able to mitigate this challenge by promoting expanded Internet accesspoints, such as in public libraries or other community centers, or partnering with high-speed Internet service providers to offer a bundled package. In some cases, the bestapproach may be to maintain online tutoring as one element of a comprehensive approachto tutoring that also includes offline delivery methods.

n Concerns abound about the lack of transparency into tutorscredentials. Parents naturally are concerned about from whom their children learn nowhere more so than with overseas tutors. To date, most concerns about the credentialsof these overseas tutors have been satisfied. According to one report, most Indian tutoringcompanies guarantee that their tutors have at least an undergraduate degree in thesubject they teach, whereas not even a majority of full-time teachers in the United Stateshold that qualification, let alone tutors.5 Nevertheless, providers need to continuepromoting this aspect of their business to parents who are inherently skeptical.

In light of this analysis, tutoring providers that to date have focused exclusively on face-to-facetutoring may want to evaluate the potential benefits of establishing an online service offering.Although online tutoring has pitfalls consistent with any new delivery method, many providershave already concluded that in the near future online services will be integral to any successfultutoring business model.

5 Overdorf, Jason. Tutors Get Outsourced. Business 2.0. August 2006: 32.


PARTING THOUGHTS ONPRIVATE TUTORING

Effectively implemented, private tutoring has the potential to reinforce an educationsystem that is repeatedly assailed by its stakeholders. Although few parents (6%, excludingthose signing up for test preparation) explicitly cited their childs school systems failingsas the primary reason for hiring a tutor, more than half (52%) cited a specific subject- orcontent-related shortcoming as being the main impetus. Whether this sentiment still canbe considered a general indictment of the U.S. school system is not the point; that tutoringproviders are well positioned to address this demand, however, is.

As in many other industries with heavy government involvement, the private sector oftenproves adept at creating innovative solutions to persistently irksome problems. In the caseof K-12 education, most parents will inevitably find that publicly available educationoptions fall short of their expectations. Although revised federal and state educationpolicies aim to address such shortcomings in the long run, parents of school-aged childrendo not have the luxury of drawn-out timeframes. Turning to private tutoring willinvariably improve parents immediate options at least for those who can afford it.

Although private tutoring as a whole is a mature, stable market, there exist numerousdynamic pockets of opportunity for providers to develop, market, and profit frominnovative approaches to tutoring. Online tutoring currently has the spotlight, but it isaccompanied by other more down-to-earth approaches, such as helping public schoolsaddress their most burdensome state and federal accountability requirements andsubsequently leveraging those relationships to get into students homes. One schooldistrict in Wisconsin has enjoyed great success with such a model. Tutors based in Indiaremotely view classes along with the students in real time and then provide lesson-specifictutoring to the students after class. The provider then offers extended private tutoring tothe students outside of school hours, which is paid for by parents. The long-term success ofany approach to private tutoring, however, depends entirely on how effectively it helpsachieve the primary goal of K-12 education: improving academic achievement.


APPENDIX A: RESEARCH METHODOLOGY

Private tutoring for K-12 students is defined as additional academic instruction that isinitiated and procured by a consumer as opposed to a school or school district. The bulk ofthis type of tutoring is arranged by parents, but there are many exceptions such astutoring provided by community-based organizations, religious organizations, and evencorporations as an employee benefit.

Private tutoring can cover any number of possible subject areas, but for the purposes of thisresearch study, Eduventures limited it to traditional academic areas. The definitionprovided to survey participants was:

instruction provided to students outside of their regular schooling byindividuals not employed by any school to: (1) increase knowledge of specificsubject areas, (2) prepare for some type of academic test (e.g., SAT, ACT,graduation exams, etc.), (3) improve study skills, or (4) provide general homeworkhelp. To count as private academic tutoring, the tutoring must not be paid for orarranged by any school or school district.

Eduventures defines the test preparation market as sales by private providers ofsupplemental services to help students prepare for standardized testing. Sales of testpreparation products, including workbooks, tutorials, and software, are not included inthis market. For the purpose of this research, test preparation was considered a subset oftutoring.

To gain a better understanding of the market for publicly funded tutoring, Eduventuresbased this research study on information collected from June to August 2006 from acombination of primary and secondary research. Primary research included an originalsurvey of parents of school-age children as well as a number of interviews with senior-leveldistrict administrators and tutoring company representatives. Secondary research includeda literature review of publicly available government reports, news reports, and third-partyreports.



For the primary survey, a total of 1,921 parents of 3,107 children ages 5 to 18 were selectedfrom a randomly generated nationwide sample. After qualifying, parents then were asked up to 20questions to determine, among other things:

1. Frequency of participation in private tutoring2. Reasons for choosing a particular tutoring provider3. Details of tutoring services used4. Expenditures on tutoring services and related materials5. Likelihood of continuing tutoring services in the future6. Frustrations and challenges with tutoring services and providers

The responses of the 1,921 parents surveyed were used to extrapolate the prevalence of privatetutoring, giving a maximum margin of error of 2.2% with a confidence level of 95%. Of thoserespondents, a total of 117 parents were qualified to answer the full battery of questions pertainingto private tutoring. The responses then were analyzed to derive the findings presented in thisreport.


APPENDIX B: REPRESENTATIVEPRIVATE TUTORING PROVIDERS

The following table is a representative list of companies that participate in the marketfor private tutoring. Given the dynamic nature of the private tutoring market, this listis not meant to be exhaustive, but rather to provide an overview of some notablemarket participants.



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Indi

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Smal

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Indi

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Indi

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Aim

s to

del

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an

indi

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nd f

lexi

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tuto

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prog

ram

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tors

wor

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e on

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or

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mal

l gro

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at t

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re m

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e an

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nd c

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of t

each

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and

soci

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Prov

ides

aca

dem

ic t

utor

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tes

t pr

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ms,

and

acad

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coa

chin

g at

the

com

pany

s lo

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ns o

r at

the

stud

ents

hom

e.

Off

ers

care

er-o

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ted

stu

den

t se

rvic

es,

inst

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nal

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s pr

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al d

evel

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ent

for

teac

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and

adm

inis

trat

ors

,an

d a

cad

emic

ser

vice

s in

clu

din

g t

uto

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g,

con

ten

t d

evel

op

men

t,an

d a

cad

emic

cal

l cen

ter

serv

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bas

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of

Ind

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o s

tud

ents

in a

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par

t o

f th

e w

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d.

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L C

apit

al is

a s

trat

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inve

sto

r in

the

com

pan

y.

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ers

ind

ivid

ual

tu

tori

ng

at

the

stu

den

ts h

om

e o

r an

oth

erlo

catio

n of

cho

ice.

Les

sons

are

des

igne

d to

com

plem

ent

stud

ents

ed

uca

tio

nal

an

d p

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nal

nee

ds,

iden

tify

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gap

s in

stu

den

tkn

ow

led

ge

in o

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to

cre

ate

cust

om

tu

tori

ng

go

als.

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ore

a-b

ased

co

mp

any

fou

nd

ed i

n 1

97

6 t

hat

off

ers

earl

ych

ildho

od e

duca

tion,

indi

vidu

al t

utor

ing,

and

hom

esch

oolin

g to

stud

ents

in p

rimar

y an

d m

iddl

e sc

hool

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e co

mpa

ny a

lso

publ

ishe

ste

ach

ing

mat

eria

ls,

off

ers

on

line

edu

cati

on

al p

rog

ram

s, a

nd

oper

ates

inst

itute

s of

edu

catio

n. It

has

exp

ande

d its

ser

vice

s to

othe

r co

untr

ies

incl

udin

g C

hina

, Ja

pan,

Mal

aysi

a, N

ew Z

eala

nd,

and

the

Uni

ted

Stat

es.

It is

the

fla

gshi

p co

mpa

ny o

f th

e D

aeky

o G

roup

.

Pro

vid

es o

ne-

on

-on

e o

nlin

e tu

tori

ng

in m

ath

an

d s

cien

ce f

or

hig

h s

choo

l stu

dent

s. T

he s

essi

ons

are

done

thr

ough

the

Inte

rnet

and

with

a W

ebca

m.

Mat

hgur

u is

a d

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of E

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tions

Ltd

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Fou

nd

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n 2

00

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Pro

vid

es o

ne-

on

-on

e tu

tori

ng

an

d o

nlin

ein

stru

ctio

n fo

r ch

ildre

n in

gra

des

3-12

, w

here

the

tut

ors

inte

ract

live

with

the

stu

dent

s. T

he c

ompa

ny is

bas

ed in

Fre

mon

t, C

A,

and

oper

ates

tea

chin

g ce

nter

s in

Koc

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Indi

a.

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ched

by

Sank

yaa

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ning

, H

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col

labo

rativ

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n N

rich

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ine

Mat

hs C

lub

and

the

Mill

enni

um M

athe

mat

ics

Proj

ect

of t

he U

nive

rsity

of

Cam

brid

ge,

U.K

. It

is a

n on

line

educ

a-tio

nal p

latf

orm

foc

used

on

mat

h fo

r st

uden

ts in

gra

des

5-12

, as

wel

l as

prof

essi

onal

dev

elop

men

t fo

r m

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teac

hers

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* R

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p-by

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lp f

or t

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hom

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kpr

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ms

in p

opul

ar m

ath

text

book

s. In

clud

es s

uch

reso

urce

s as

grap

hing

cal

cula

tor

trai

ning

, re

view

less

ons,

mat

h w

orkb

ooks

,an

d m

ath

acti

viti

es.

Cre

ates

a c

ust

om

ized

in

stru

ctio

nal

pla

n f

or

stu

den

ts u

sin

gdi

agno

stic

tes

t re

sults

in c

olla

bora

tion

with

par

ents

and

tea

cher

s.Th

e co

mp

any

also

un

der

sco

res

the

nee

d f

or

imp

rove

men

t in

stu

den

t se

lf-e

stee

m a

nd

mo

tiva

tio

n.

Hel

ps

child

ren

mas

ter

mat

h a

nd

rea

din

g t

hro

ug

h K

um

on

sp

rop

riet

ary

inst

ruct

ion

al m

eth

od

. Th

e tu

tors

are

to

ute

d m

ore

as m

ento

rs o

r co

ach

es t

han

tea

cher

s.

Op

erat

es a

pp

roxi

mat

ely

40

lear

nin

g c

ente

rs o

ffer

ing

pri

mar

ilyon

e-to

-one

inst

ruct

ion.

Fou

nded

in 1

986

by N

anci

Bel

l, Pa

tric

iaLi

ndam

ood,

and

Phy

llis

Lind

amoo

d, t

he a

utho

rs o

f cr

itica

llyac

clai

med

pro

gram

s de

sign

ed t

o te

ach

child

ren

to r

ead,

spe

ll,co

mpr

ehen

d, a

nd e

xpre

ss la

ngua

ge.

Prov

ides

aca

dem

ic le

sson

s in

mat

h an

d re

adin

g fr

om a

cer

tifie

dte

ache

r us

ing

its p

ropr

ieta

ry c

urric

ulum

. D

eliv

ers

tuto

ring

thro

ugh

them

e-ba

sed

lear

ning

exp

erie

nces

, al

low

ing

stud

ents

to

prac

tice

and

appl

y sk

ills

lear

ned.

Con

cept

s ar

e al

igne

d w

ith t

hose

lear

ned

durin

g th

e sc

hool

ter

m.

Foun

ded

as a

tes

t pr

epar

ator

y co

urse

. Pr

ovid

es e

xper

t se

rvic

es o

nte

st p

rep

arat

ion

, cu

rric

ulu

m d

evel

op

men

t, a

nd

man

y o

ther

edu

cati

on

al a

spec

ts.

The

pro

pri

etar

y cu

rric

ulu

m c

om

bin

escu

sto

miz

ed a

nd

alig

ned

mat

eria

ls w

ith

in

div

idu

aliz

ed l

earn

ing

plan

s. O

nsite

pro

gram

sup

port

and

res

earc

hed

teac

hing

tec

hniq

ues

rein

forc

e st

uden

ts

core

ski

lls.

Ope

ned

first

tut

orin

g ce

nter

in C

A in

199

2, a

cqui

red

by K

apla

n in

1996

. C

urre

ntly

ope

rate

s m

ore

than

160

cen

ters

in 1

1 st

ates

.

Pro

vid

es o

nlin

e se

rvic

es t

o s

tud

ents

th

anks

to

e-

stru

cto

rs(o

nlin

e tu

tors

) 2

4 h

ou

rs a

day

, 7

day

s a

wee

k fr

om

an

yIn

tern

et c

on

nec

tio

n.

The

com

pan

y al

so p

rovi

des

so

luti

on

s to

inst

itu

tio

ns

and

th

eir

facu

lty.

Foun

ded

in 1

979,

Syl

van

Lear

ning

Sys

tem

s us

es a

ski

lls a

sses

smen

tto

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to i

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tify

stu

den

ts

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ng

ths

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to

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ivid

ual

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curr

icul

um.

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y-m

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e tu

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g se

ssio

ns a

redi

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d be

twee

n in

stru

ctio

n an

d in

depe

nden

t pr

actic

e.

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Tuto

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w.t

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iver

sity

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com

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ate

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ate

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ate

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ic/P

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VA

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alor

e, In

dia

VA

Med

ium

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Low

Med

ium

Smal

l gro

up

Onl

ine

Onl

ine

Indi

vidu

al;

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l gro

up

Off

ers

a pr

ogra

m t

hat

begi

ns w

ith s

kills

ass

essm

ent

to p

inpo

int

area

s of

diff

icul

ty a

nd f

rust

atio

n fo

r st

uden

ts.

A

mas

tery

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arn

ing

pla

n

is d

evel

op

ed b

ased

on

th

e u

niq

ue

nee

ds

of

the

stu

den

ts.

Info

rmat

ion

ab

ou

t st

ud

ents

p

rog

ress

is s

har

ed w

ith

pare

nts

and

teac

hers

.

One

of

the

first

onl

ine

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ring

com

pani

es,

foun

ded

in 1

998.

Liv

etu

torin

g vi

a th

e In

tern

et f

or e

lem

enta

ry t

o co

llege

-age

stu

dent

sw

ith t

he h

elp

of s

oftw

are

that

incl

udes

a w

hite

boar

d an

d ch

atar

ea.

The

SEC

sue

d Tu

torn

et in

200

0 fo

r m

isle

adin

g in

vest

ors

and

in 2

002

was

aw

arde

d a

$178

mill

ion

judg

men

t.

Onl

ine

tuto

ring

and

hom

ewor

k he

lp f

or K

-12

and

colle

ge s

tude

nts

thro

ugh

one-

on-o

ne o

nlin

e se

ssio

ns w

ith t

utor

s. A

n as

sess

men

tte

st is

use

d at

the

beg

inni

ng o

f th

e pr

ogra

m t

o ta

ilor

the

tuto

ring

effo

rts

on t

he s

tude

nts

nee

ds.

Pro

vid

es p

riva

te t

uto

rin

g,

SES,

an

d o

ther

pu

blic

lyfu

nd

ed t

uto

rin

g.

TUTO

RIN

G P

RO

VID

ERTU

TOR

ING

TYPE

HEA

DQ

UA

RTER

SLO

CA

TIO

NTY

PES

OF

DEL

IVER

YR

ELA

TIV

E U

.S.

MA

RK

ETSH

AR

E*D

ESC

RIP

TIO

N

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Documents

2007 k12 Private Tutoring