Tutoring Business Is Booming

Detroit Free Press

For Srinivas Challagundla, who is opening an educational center in Farmington Hills, tutoring isn’t just about helping students do better in school and on tests, it also is an enterprise.

“I think this is a good business,” said the 39-year-old father who works in information technology for Carhartt and plans to sign up his own children at the center. “There’s a lot of interest in supplemental education.”

Businesses such as Challagundla’s are popping up in Michigan and nationally.

“Tutoring is exploding,” said Lucy Lapekas, the executive director of the National Tutoring Association in Lakeland, Fla. “It started exploding about 10 years ago and we thought it would for a few years and would level off. But it kept exploding.”

The association’s membership growth — 20% a year — reflects the industry’s, she said.

She estimates there are more than 20,000 tutoring enterprises nationwide, although she said it is difficult to track the numbers.

The association, which started in 1992 and certifies tutors, now has about 15,000 members.
A growing demand

Challagundla’s enterprise is a franchise of Best in Class, a Seattle-based company that plans to open a dozen franchises nationally this year.

It is just one of a growing number of companies seeking to capitalize on the educational services boom aimed at students — or their parents — who want to catch up to classmates and, in what has become a competitive area, surpass them.

The trend is driven by many factors, according to Lapekas and other experts, including a growing demand for them and government programs that have been covering the cost for some of them.
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Lapekas said that students and parents seek tutors because they feel pressure — through standardized tests and an emphasis on grades — to get academic help. Moreover, increased demands on teachers and larger classes mean less time for individual instruction.

Next year, the private tutoring market — including vocational and language schools — is projected to reach $102.8 billion globally, according to Global Industry Analysts, a market research publisher.

Technology also is giving operators the ability to offer more services to more people at a lower cost, which is driving the trend.

Online services are expected to grow in the U.S. at more than 6% a year through 2020, according to the market research firm Technavio.

Some companies now deliver virtual face-to-face tutoring via computer.

Best in Class Education Center, which was started in 1995 by Hao and Lisa Lam, has grown quickly, with more than 48 centers in nine states.

It offers programs for young children through high school.

It is difficult to sort out how just much of the demand for these services is coming from students and parents, and how much is created by savvy entrepreneurs who are increasingly marketing their businesses.

Tutoring, the marketing material of various companies, promises to “prepare your child for future success,” “inspire kids to realize their potential,” and give them the foundation they “need to succeed in school and throughout their lives.”

From a young age, students and their parents are bombarded with messages that suggest if they aren’t doing well in class they are jeopardizing their chances of getting into a good school, a good college, a good job — and are dooming their chances at happiness.

In addition, under the federal No Child Left Behind Act in 2001, schools that fell short of state achievement goals were required to offer low-income students free tutoring.

As a result, schools contracted with supplemental services companies. That, tutoring services said, also has helped spur some services.

No Child Left Behind was replaced in 2015 by the Every Student Succeeds Act.

But, experts said, while the new law lifts the tutoring requirement and some of the restrictions on who can receive private tutoring services, it still encourages tutoring, which will continue to give supplemental education enterprises a big boost.

Over the years, Angela and Otis Kirkland of South Lyon said they have used three tutoring services — Kumon, Club Z! and Tutor Doctor — to try to give their children an academic boost.

“I see that the public schools leave a lot of necessary content out of education,” Angela Kirkland, 45, said. “I — and a lot of other parents — see that in public schools they are teaching kids just to take a test.”

When her oldest child, now 16, was in fourth grade, she said she wanted to enhance his reading skills so she enrolled him in Kumon, a supplemental program in which students get daily assignments to do at home, and go to a center one or more times a week to evaluate how well they are doing. It cost about $125 a month.

Her son, she said, kept up with it for about a year, and it helped.

But the cost, she said, was just too much for them to continue with four children.

About a year ago, however, she said they decided that another one of their sons could benefit from tutoring, and started him in a once-a-week home-tutoring program that cost about $50 an hour.

After trying a couple of tutors and switching companies, she said they found the right one.

In addition to supplementing school lessons, Kirkland said that for many parents tutoring programs also are an investment. In her observation, tutoring helps children get ahead and get in special programs.

“We want our kids to be challenged,” she said. “We want them to learn to think and be creative and use the scientific process and a lot of that does not occur in a general assessment class.”

Sylvan Learning, a corporate and franchised supplemental learning operation, was started in 1979 by a former teacher in Portland, Ore. It is now based in Hut Valley, Md., and boasts more than 650 centers worldwide, including 23 in Michigan.

“But what is great is we are seeing interest in what is the next generation of entrepreneurs,” said Georgia Chasen, Sylvan’s director of franchise development. “They are taking advantage of Sylvan’s cutting-edge technology and through that, they are having greater student reach.”

Sylvan’s first center in Michigan was in Ann Arbor in 1984, she said.

But in the last five years, the company’s growth has been driven by digital technology that allows centers to add students without adding more centers and allows operators to tutor to students at schools — and other places.

“Part of it is that there is increased pressure on all of our students in achieving their academic goals,” Chasen said. “This is a tool that parents can use, whether their student needs help catching up or they are already at the top of the class and need additional work to stay engaged.”

Schools, she said, have less funding and more demands placed on them: There’s more high-stakes testing, more students per class, and more expectations to get into and attend select colleges.

“It starts as young as 4 1/2 and that’s when you have to start thinking about your child’s academic future,” she said. If, by elementary school, students aren’t exposed to some careers, “they might self-select out of a job path because it might not occur to them that’s something they can do.”

Franchisees, Chasen said, are driven to open centers because it gives them a chance to own their own business, they offer a service that can make a difference in a community, and their passion for it can create its own demand.

“You can work hard and see an immediate impact on a student’s academic progress,” she said. “Sylvan’s model attracts entrepreneurs because we give you the general tools and you can work locally based on your community’s needs.”

Challagundla, who grew up and was educated in India, said part of his motivation for opening an educational center was memories of his father tutoring him — and a cousin — so they would do better in school.

He wanted, he said, to give that experience to students, including his own children, in the U.S.
The total cost for the franchise, he estimated, is between $60,000 and $90,000.

Initially, he said, he plans to employ two or three people to teach students and grade their work. Within a year, he said, he hopes to have about 100 students taking classes at the center and employ six people.

At his center, the once-a-week sessions are 75 minutes long: 15 minutes to take rest, 45 minutes for instruction, and 15 minutes to go over the test and homework that was assigned. The service costs $110 a month.

To operate the franchise, he pays a 12% royalty.

In addition to bringing additional income, Challagundla said he thinks that tutoring helps students stay on top of their lessons. His twin 3-year-old daughters will be among the students when his center opens next month.