According to a report from NAFSA, U.S. campuses are expecting to see 30% to 40% fewer international students in 2025.

There were more than 1.1 million international students in the 2023-2024 school year, with over half being from China or India. Given the continued geopolitical challenges between the U.S. and both respective countries, educational institutions have been hardpressed to address the forecasted $7 billion in lost revenue.

Further, applications from Latin America are not expected to make up this windfall. In Colombia, following President Gustavo Petro’s inauguration in 2022- as the country’s first left-leaning president in history- its longstanding alliance with the U.S. has been pushed to breaking point. 

Meanwhile, Mexico and Brazil provide further examples of relationships in duress, with Brazil’s President Luiz Inácio Lula da Silva penning an Op-Ed this week in The New York Times addressed to President Trump.

While the education industry continues to deal with this turmoil, this September students, parents and educators across the country in K-12 are also starting the 2025 back-to-school season after months of prep and anticipation.

Yet they aren’t the only ones paying attention. This is also an important time of year for investors, who closely note the impact that the education sector has on stock valuations and investments. 

For example, back-to-school shopping has always been a big deal for the bottom line of retailers. Consumer research firm NPD Group reported that back-to-school spending on apparel is projected to increase by 11% compared to last year, representing 35% of the $11.8 billion market. In fact, back-to-school shopping is the second-largest season of the year for retailers and manufacturers, beaten only by the traditional holiday season. 

To keep a closer eye on exactly how this money is spent, Deloitte and the National Retail Federation conducted surveys on how much money parents spend on getting their kids ready to head back to the classroom. Deloitte, which surveyed more than 1,200 parents, estimated total back-to-school spending in 2025 to reach $30.9 billion. Meanwhile, the National Retail Federation expects families to shell out an average of $858 for K-12. 

According to a report from IBISWorld, the U.S. education total market size is projected to reach $2.7 trillion this year. While the educational market reacts to the sharp drop in revenue from international students, the expected upcoming interest rate cuts are expected to boost the economy and improve the prospects for the sector, and there remains opportunities for material growth. Here, investors can turn to these three overlooked areas that offer attractive returns in the industry.

Demand for Cybersecurity in Education Is Surging 

A recent report from the Center for Internet Security found that 82% of 5,000 K-12 institutions suffered a cybersecurity incident between July 2023 and December 2024. 

Meanwhile, the Semperis' "2025 Ransomware Risk Report" found that 61% of IT and security professionals working in the education industry confirmed they were targeted by ransomware over the past 12 months. Additionally, IBM (IBM) reported that global average cost of a data breach last year was $4.88 million, a 10% increase over the previous year and the highest total ever, according to Founder Shield Co-Founder Carl Niedbala.

PowerSchool, a student information system, confirmed it decided to pay a ransom following an attack in December, in which the threat actor contacted "multiple school district customers" directly in an attempt to extort them using data stolen during the attack.  

These attacks have material implications for the sector, and on the opportunities for growth for companies like publicly traded CrowdStrike Holdings (CRWD) and CloudFlare (NET) and privately-held companies such as Flare, which raised $30 million in its Series B funding round last December.

The spate of serious attacks on schools and universities is going to drive demand for cybersecurity solutions, creating attractive investment opportunities. Charlie Sander, CEO of ManagedMethods, explained, “AI offers a way for educational institutions to keep pace with the rising threats by monitoring school networks 24/7, detecting real-time threats and minimizing the risk of costly breaches. AI can also take care of incident responses, run predictive analysis on emerging threats and help schools tackle cybersecurity on a tight budget with automated screening and actions.” 

However, enterprise-grade solutions are beyond the limits of the typical school budget. In addition, they aren’t tailored to the education sector. 

Here, cybersecurity products and ventures that have been custom-built for the educational market are likely to prove the most successful and offer therefore the best long-term returns for investors. 

Educational Institutions Spend on Alternative Cleaning Solutions to Phase Out Chemicals

The US Environmental Protection Agency notes that children can be more sensitive to chemicals and cleaning supplies than adults. Indoor air pollution has especially powerful effects on children, not only due to more time spent indoors but because they breathe more rapidly and inhale more air relative to their body size than adults. 

The implications of this are compounded by the fact that children now spend 90% of their time in enclosed buildings, where air pollutants can be two to five times higher than outdoor levels due to poor ventilation. 

Volatile organic compounds, or VOCs, commonly found inside children-focused locations stem from the frequent use of cleaning products — particularly scented spray products — that result in a higher risk of wheezing in early childhood and the development of asthma and lower respiratory tract infections in childhood. 

Researchers from the Center on the Developing Child at Harvard University note that the three most effective ways to protect children through facility management strategies at schools include monitoring indoor air quality and switching to safer cleaning products. 

Joshua Schwartz, President of Viking Pure Solutions, explained that children are more vulnerable to the “adverse effects from prolonged exposure to volatile organic compounds (VOCs) and other harsh chemicals found in conventional cleaning solutions.”

“Traditional cleaning chemicals often introduce risks to indoor air quality, health, and environmental sustainability. Harsh disinfectants and their chemical residues can accumulate on surfaces, creating potential hazards in enclosed environments. By adopting nontoxic alternatives such as electrolyzed water, facilities can significantly reduce these risks while maintaining a high standard of cleanliness and infection prevention,” he added. 

We expect to see a surge in demand for clean, non-toxic cleaning solutions that cater to schools and educational institutions as a result of rising awareness of the build-up of VOCs in closed environments where children spend a significant majority of their time. 

Given the size of the market, companies such as ABM Industries Incorporated (ABM) are worth keeping an eye out on.

Remote Learning is Here to Stay 

Finally, remote learning continues to grow its share of the education sector. While some predicted the popularity of remote learning was only due to the effects of the COVID-19 pandemic, the latest data shows the opposite to be true. 

Since 2020, interest in homeschooling, microschooling, and other alternatives to conventional education has soared. As a result of this interest in alternative educational models, enrollment to K-12 public brick-and-mortar schools have been dropping in favor of virtual schools.

If the Department of Education is downsized or dismantled, as some are advocating, we could also see more autonomy at the state and local level. That kind of shift could lead to a rapid expansion in virtual K-12 education offerings, especially in states eager to innovate or provide alternatives.

As demand for flexible, alternative learning grows it creates an opportunity not just for virtual schools, but for traditional schools willing to adapt and evolve. Tech and software will be at the heart of this transition, opening up a range of emerging investment opportunities in education. A new wave of platforms are also stepping in to make remote and hybrid learning feel a little less complicated. Nuroe, for instance, provides tools to help teachers and students stay connected, keep track of progress, and tailor learning to each student’s needs. 

"As AI capabilities mature, we’re going to see a fundamental shift in how digital education is created and delivered. The real opportunity for EdTech in 2025 and beyond lies in moving from simply efficiency gains, toward intelligent systems that adapt, personalize, and even co-create learning experiences. The next wave isn’t about content at scale, it’s about intelligence at scale,” noted Gjergj Demiraj, CEO of Gutenberg Technologies. 
 

However, it’s important to not only pay attention to teaching aids, but also software solutions that support remote school operations. 

Rajat Mishra, CEO of Prezent, explains that when it comes to replacing the traditional school environment, accountability is key. “While conscientious employees won’t actively underperform, working remotely makes it that much easier to let certain tasks slip. Leaders can invest in software tools that manage productivity and maintain reliable outputs.” 

Solutions that support personalized learning, interactive lessons, and manage student productivity are also key tools for the future of virtual schools that investors should pay attention to. Udemy (UDMY) and Duolingo (DUOL) are two companies to watch, in addition to privately held companies like Buddy.ai, the world’s first conversational AI tutor for kids.