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Lack of knowledge when seeking work or planning for a secure retirement can be a recipe for huge economic disappointment. That's one of the harsh lessons learned from the Enron fiasco, coming on the heels of the dot-com meltdown.

Building an adequate portfolio and saving for one's retirement, like work and so many other sectors of our lives, have become vastly more complicated than they used to be. This is because many employers have switched from defined benefit plans, which require no investment decisions, to defined contribution plans that offer investment choices. The good news is that more people are acquiring some level of higher education. A solid educational background can help investors gain confidence to question the sometimes flawed advice of others, who may include financial professionals or even their employers.

The convergence of these two trends would seem to indicate that more educated Americans are managing their retirement accounts. While this is true, and more than a third of American workers have at least some college education, there are even more people with personal financial assets to manage. The Census Bureau's 2000 Current Population Survey reports that only about one-third (35 percent) of adults age 25 and older have a two-year college degree or higher. Even among full-time workers, only 42 percent have such qualifications. But according to the Federal Reserve Board, half of all U.S. workers (49 percent) own some kind of personal investments, pension or retirement account, and about 16 percent have mutual funds. Allowing for some overlap, this leaves at least 1 in 5 adults, age 25 and older, without the education that might help them make more prudent investment decisions for their retirement.

To be sure, a higher education does not necessarily translate into increased investment acumen. Investing involves risk, no matter how well educated the investor. But what an education does promote is an increased appreciation of the benefits of spending time and money to obtain a skill of any kind. One of the advantages of a college degree, besides the obvious ability to get a better paying job, is a greater awareness of how to obtain knowledge and the value of having it. Thus, increasingly complex jobs — requiring everything from additional competence on the Internet to management skills — combined with more complicated personal finances mean that more people will enroll in continuing ed courses at degree-granting institutions.

People who have already acquired some higher education are the most likely to want more. They will pay more for courses and related books or software than those who have not acquired a higher education. Therefore the growing need for increased knowledge, both at work and to secure one's retirement nest egg, will fuel increased spending by both individuals and their employers on educational products and services.

Although most institutions of higher learning in the U.S. are nonprofit organizations, they are big business nonetheless. And they have a huge array of suppliers — from those who furnish course materials to cafeteria meals. According to the National Center for Educational Statistics (NCES), colleges and universities spent $257.8 billion in the 1999-2000 academic year on expenses, including salaries and supplies, a 28 percent increase over 1989-1990.

The demand for school-related supplies is likely to rise during this decade, in tandem with enrollment numbers, which are expected to increase by about 16 percent, according to the NCES. But the biggest increases in enrollment will be among adults beyond the usual college age. The number of full-time students, ages 25 to 34 at degree-granting institutions is expected to rise 17 percent, while the number of part-timers is projected to increase 22 percent by 2010, according to NCES. (See chart, top right.) When people age 25 and older return to school, more than two-thirds are doing so part-time. Veronis Suhler, a New York media merchant bank, in its 2001 Communications Industry Forecasts, predicts that spending on college instructional materials will increase more than 35 percent by 2005, to $5.1 billion, and spending on outsourced corporate training will jump 44 percent, to $27.7 billion.

But of course, instructional content is increasingly going digital. Sometimes it is provided on a CD, but more often it's available on the Web. Providing interactive instructional software and content is likely to be a growth business.

One reason for the continued high growth in spending on educational products and services is the increase in the number of workers in professional or managerial occupations requiring frequent upgrading of skills. But these professionals also need specific financial knowledge to secure their retirements. For example, the majority of people in such occupations have retirement plans which, sooner or later, they will need to manage. People who work in such information-rich environments are accustomed to taking a course or two to increase their problem-solving abilities.

The number of people likely to seek such courses is substantial. By 2010, the Bureau of Labor Statistics (BLS) projects that more than 50 million people will be in management or professional occupations — nearly 1 in 3 workers. (See chart, above.) The BLS also reports that households headed by people in these occupations spend nearly twice as much as the average household for educational products and services. In addition, average per-household spending on education by professional- or manager-occupied households has increased over 50 percent since 1990, compared with a 4 percent decline in their spending on reading materials unrelated to coursework. These two trends will likely generate robust growth in the education industry during this decade.

But there are lots of workers in sales, technical or other occupations who are also covered by a retirement plan. As a group, they spend about one-third less on educational services than professionals or managers. But they actually spend more on some educational products, such as schoolbooks and supplies. The BLS estimates total education-related spending in 2000 by these two occupational categories to be $45 billion, a whopping 82 percent increase from 1990.

For those seeking a low-risk investment, a good bet is to invest in one's own continuing education, to better manage a diversified portfolio for maximum long-term returns.

Peter Francese is the founder of American Demographics. He can be reached at [email protected].


The number of adults, ages 25 to 34, enrolled part-time in degree-granting institutions is projected to increase 22 percent by 2010.

2000 1,183,000 1,868,000
2001 1,387,000 2,284,000
Growth Rate +17% +22%
Source: National Center for Education Statistics


The Bureau of Labor Statistics projects a growing number of managers and professionals in 2010 — two groups likely to drive the continuing ed market due to their need to acquire advanced job-related skills.

2000 15,519,000 26,758,000
2001 17,635,000 33,709,000
Growth Rate +14% +26%
Source: Bureau of Labor Statistics
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