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Inside Higher Education
The Cost of Attending
For-Profits
New analysis says that students in certificate programs gain more
economically from attending public institutions -- or no institution at
all -- than for-profits.
By Scott Jaschik
February 12, 2018
A new analysis finds that students enrolling in certificate programs
are more likely to experience economic gains from enrolling in programs
at public institutions, generally community colleges, than at
for-profit institutions. Further, the analysis finds that people may be
better off economically by not pursuing any postsecondary education
than by enrolling in a certificate program at a for-profit.
The analysis comes amid significant debates over vocationally oriented
higher education. While the Obama administration pushed for tougher
regulation of for-profit higher education, the Trump administration is
revising and/or delaying measures that have been opposed by for-profit
higher education.
President Trump, meanwhile, this month criticized the vocational
education programs of community colleges as inadequate -- much to the
frustration of community college leaders who said they are running
programs that do exactly what the president suggested they were not.
The new analysis is forthcoming in The Journal of Human Resources, by
Stephanie Riegg Cellini, associate professor of public policy and
public administration at George Washington University, and Nicholas
Turner, a senior economist at the Federal Reserve Board of Governors.
The Brookings Institution published a paper by Cellini summarizing the
findings.
Their analysis was based on Department of Education data for
gainful-employment regulations (seeking to determine if people who
finish programs are earning enough to repay their debts) and tax
records from the Internal Revenue Service. The data covered 14 years of
earnings history for more than 800,000 students in programs eligible
for federal aid. The pool was large enough to compare earnings impact
on students with comparable backgrounds and in comparable educational
programs. For example, the researchers were able to drill down so
comparisons were, for example, of women in their 30s who earned
health-professions certificates in the Washington area.
The key findings:
For-profit-college students are 1.5 percentage points less likely than
those enrolled at public institutions to be employed after leaving
their program.
If the students at for-profit institutions do find work, their earnings
are about 11 percent (or $2,100 per year) lower than those of students
at public institutions.
The income gap is just part of the picture. Students at for-profit
institutions borrow, on average, $5,000 more than their counterparts
who enroll at public institutions. As a result, their economic
situation is significantly worse than those who attend public
institutions.
The above patterns are consistent in every state in the country, which
the authors suggest is significant, given different economic conditions
and levels of state regulation of for-profit higher education in
different states.
With regard to programs, of the 20 most popular certificates for
for-profit-college students, the income gains were greater at public
institutions for 16 of them. In the four programs where there were
greater gains for for-profit-college students, those gains were at most
$558, and that was offset multiple times by greater debt levels for
such students.
One argument used by advocates for for-profit higher education is to
note that many community colleges have more demand for certain programs
than they can meet. "What if attending a public community college is
not an option?" ask the authors.
"We investigate this question by matching for-profit students to
similar individuals with no college education. We find that the
earnings gains to attendance cannot be shown to be different from zero
and are, at most, about $365 per year. Comparing these best-case
average earnings gains to average debt in a back-of-the-envelope
calculation suggests that -- even in the best case -- the increased
earnings of for-profit certificate students are not enough to offset
their debt and interest payments, leaving the average student with a
net loss of about $1,200 over her lifetime," the paper says.
The Brookings paper ends by questioning the direction of Education
Secretary Betsy DeVos on for-profit higher education. The findings
"suggest that the Department of Education’s recent proposals to weaken
accountability under gainful employment are misguided," the paper says.
"Rather than removing sanctions for institutions whose graduates have
high debt and low earnings -- as the DeVos administration proposes --
our results support calls for stronger accountability measures to
ensure that for-profit students generate sufficient earnings to cover
the high cost of their education."
A spokesman for Career Education Colleges and Universities, which
represents for-profit institutions, did not respond to voice mail or
email requests for comment on the study.
David Baime, senior vice president for government relations and policy
analysis at the American Association of Community Colleges, offered
this statement via email: "The study reinforces the growing body of
evidence showing that community college workforce outcomes compare
favorably to those of for-profit colleges. Last year's gainful
employment data conveyed similar conclusions. Community colleges need
to make sure that the public fully understands the economic payoffs of
their programs."
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