Big Business: Educational Testing Is a Multimillion-Dollar Industry, with Revenues Only Expected to Increase with NCLB Mandated Tests

By Hamilton, Kendra | Black Issues in Higher Education, June 2, 2005 | Go to article overview

Big Business: Educational Testing Is a Multimillion-Dollar Industry, with Revenues Only Expected to Increase with NCLB Mandated Tests


Hamilton, Kendra, Black Issues in Higher Education


The No. 2 pencils, the bubbled answer sheets, the rooms full of tense and hopeful high-school seniors all are elements of the college entrance exam, a familiar rite of passage for the nation's college-bound youth. They also represent a multimillion-dollar portion of a multibillion-dollar sector of the U.S. economy.

Indeed, the numbers, as reported by Dr. Peter Stokes, executive vice president of Eduventures, a Boston-based market research firm that's the leading source for information on trends in the industry, are simply staggering.

"Education is the second largest economic sector in the United States. In terms of federal, state and local dollars, it represents about $750 billion annually or about 10 percent of (gross domestic product)--and that's including everything: early childhood, K-12, postsecondary and corporate training."

The nonprofit postsecondary market, including federal, state and local tuition dollars, accounts for nearly $300 million of that total, compared with $17 billion for for-profit education. And a generous proportion of those dollars go to educational testing.

Figures on postsecondary testing services are a bit harder to come by than those for the K12 sector, but the amount spent on test preparation hints at the numbers involved. Eduventures projects those expenditures to reach $285 million in 2005--an increase of 11 percent over 2004.

And the amounts can only rise, especially if one factors in K-12.

Trends indicate that, between 2002 and 2008, states will be spending between $1.9 billion and $5.3 billion to implement tests mandated under No Child Left Behind, says the non-partisan Government Accounting Office. Those GAO figures cover only the direct costs of developing, scoring and reporting the tests. Add in the indirect costs for classroom teachers charged with prepping students and coordinating and administering the tests, and the costs could be 10 to 15 times higher, says Dr. Walter Haney, a professor in the Lynch School of Education and senior researcher in the Center for Testing, Evaluation and Educational Policy, both at Boston College.

It's a rather furious rate of expenditure considering the fact that so many educators appear to have such deep ambivalence about standardized testing.

To underscore the point, the elite College of the Holy Cross announced that, beginning in September 2006, students applying for admission would no longer be required to submit standardized test scores.

"We have a highly personalized admissions process that already de-emphasizes standardized test scores," says the school's president, the Rev. Dr. Michael C. McFarland, in explaining the decision. "We want prospective students to understand that Holy Cross is committed to the holistic education of young men and women," (see related story, pg. 11).

After nearly 20 years researching and writing about testing issues and testifying as an expert witness in high-profile cases linked to testing issues, Haney offers more than a few insights into why testing is such a hot-button issue.

"It's an unusual situation--a 'fractured marketplace,' if you will," he says, quoting the title of his classic 1993 treatise on the issue. "(Educational Testing Service) and ACT have been able to convince colleges to use their tests for admissions. But while colleges have created this market, students and their families pay the freight to take the tests," Haney explains.

The fracturing of the marketplace produces concerns about costs. Not about the tests themselves. They are modestly priced--$28 for the ACT; $41.50 for the SAT; $115 and $250 for the LSAT and GMAT respectively--and there are waivers for those who don't have the ability to pay. But the cost of test preparation--ranging from $19. …

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