Higher Education Industry Overview - Landscape of Institutions

One way to segment the big, diverse tent of higher education is based on the school's relative focus on teaching versus research. The products of the teaching business, so to speak, are degrees and non-degree certificates, for example, professional credentials. The standard degrees are associate, a two-year degree, baccalaureate, or bachelor's, commonly a four-year degree, master's, a graduate degree with less research focus, and doctoral degrees, a graduate degree commonly centered on research. Schools that only offer non-degree programs and associate degrees can be considered non-baccalaureate institutions. Many community colleges and trade schools fall here. Schools that offer bachelor's degrees but no graduate degrees can be considered baccalaureate institutions. Master's degree-offering schools are named accordingly. But there's also a standard sub-segmentation, the Carnegie classification, which groups master's institutions according to the size of their master's offering, from M3 to M1, with M3 being the smallest and M1 the largest. Collectively, all of these institutions would be considered non-research schools. Research requires a specific set of capabilities, like advanced facilities and labs in some cases, and not all institutions are equipped to take this on. The Carnegie sub-segments apply to research schools as well. R3 schools have smaller research budgets and smaller doctoral programs, whereas R1 schools have the largest. Earning a higher Carnegie classification can have a big impact on the school's ability to attract faculty, students, and grant funding. Historically, the R1 tier has been capped. Only a limited number of schools could earn the distinction. In 2025, however, the classifications will be adjusted, and a limit on R1 schools will be released. Educational institutions can also be segmented in a second way. Public versus private. Public institutions are directly government-funded. They receive annual budget appropriations, sometimes called allocations. Funds can come from the government at various levels. State institutions largely receive state-level appropriations, while community colleges, like county or city colleges, receive both state and local appropriations. Most public schools do not receive significant federal appropriations, with one key exception—the so-called federal land-grant universities. These schools were established by legislation dating back to the 1860s, and they continue to receive federal appropriations today. Later legislation created two additional sets of land-grant schools— the HBCU land-grant schools, standing for Historically Black Colleges and Universities, and the so-called tribal land-grant schools. Receiving taxpayer money often comes with some additional requirements. For one, the government is often then involved in the governance of the university. For example, the state may appoint the board and wield influence on major decisions. The state might also cap the number of out-of-state students and put boundaries on tuition levels. In addition, public schools are subject to so-called sunshine laws, which require budget and decision-making transparency. As a result, it can be more laborious to become a vendor for public schools than for private ones. Some public schools are organized into larger university systems, These are massive entities. The Texas system runs nine independent schools and five independent hospital systems, together generating more than $20 billion of revenue. While the individual schools run independently, with separate leadership, some resources can be shared, and more profitable entities, like the hospitals, can help offset less profitable ones. Private institutions are self-governed and, for the most part, not directly funded via appropriations, though there are exceptions. They typically charge higher tuition as a result. Most private institutions are non-profit. There are, however, for-profit private institutions. These are very different organizations, and function more like businesses, with a focus on part-time or flexibly scheduled degree programs.