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Examining the test prep industry for local business angles

July 23, 2019

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While heavy hitters like Kaplan and Princeton Review have traditionally dominated the test prep market, startup companies are changing the game. (Photo by Ben Mullins via Unsplash)

The recent college admissions scandals have highlighted the gaps between the haves and the have nots when it comes to college applications. Even parents who would never consider bribing an admissions officer may not flinch at paying thousands of dollars for test prep tutors or admissions consultants, so this is an area ripe for exploration.

According to market research firm IBISWorld, the tutoring and test prep industry will generate an estimated $1 billion in revenue this year. Before we dive into questions to consider in your coverage, here a few recent developments in this space:

Because wealthier students have access to tutors and test prep classes, they tend to score higher on average, so the College Board has announced that it will roll out “adversity scores” to all colleges by 2020. This move is intended to give admissions departments more context in considering students’ test scores, but many are skeptical.

In the current tight labor market, Walmart has announced a new perk designed to attract high students: free college test prep courses for employees.

While Princeton Review and Kaplan have traditionally dominated the test-prep market, upstarts like Testive and Varsity Tutors have disrupted the status quo with newer approaches and business models.

Here are some questions to consider in your business coverage of the test-prep industry:

Who are the major players in your neck of the woods? Are there any local companies peddling their services on the local NextDoor or Yelp? What do they charge? What lower-cost options exist? Does your local library or community center have any resources available?

Are any businesses aside from Walmart providing test-prep help to employees?

Do local parents favor online or in-person tutoring? If in-person tutoring, are there any local coffee shops or other businesses that benefit from hosting tutors and their students?

Beyond SAT or ACT test prep, what other tests provide brisk business for tutors and test-prep companies? Are locals clamoring for help cramming for the GMAT, MCAT, or state standardized tests?


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