In a new working paper filed with the National Bureau of Economic research, a statistical analysis of for-profit college students show that earnings are significantly less than students who attend comparable nonprofit schools. The study found that “income in 2009 is approximately $5,500 lower for students starting at for-profit institutions than for students starting at not-for-profit/public institutions.”
Kevin Lang, the lead researcher on the study and a professor at Boston University, told Raw Story: “I’d certainly be very cautious about putting a lot of my eggs in the for-profit basket as a policy tool for improving labor market outcomes for disadvantaged workers. At this point the case has not been made.”
Other research has found that for-profit students make up about half of all student loan defaults, even though they make up about 12 percent of the general student population. The default rate among students at for-profit schools is 15 percent, more than double that of student who attend public universities and more than tripple that of students who attend private, nonprofit schools.
“At this point, the case for the effectiveness even equaling the effectiveness of more traditional postsecondary sector is not there,” Lang said.
The one exception was for-profit students who earned a certificate in health care fields. Lang said this could be because the study was conducted in 2009 during an economic recession, when the one field that still did well in earnings was the health care industry.
Though the study looked at earnings outcomes, there are many possible explanations. One is that students who attend for-profit colleges are less prepared for higher education than their nonprofit peers. Another is that employers simply don’t view for-profit colleges as desirable as a nonprofit degree when evaluating potential employees. Regardless, data so far show that for-profit students aren’t doing as well as their nonprofit peers.
This study also confirms the findings of a previous NBER report that found for-profit students in 2004 were earning $1,800 to $2,000 less than their nonprofit peers.
The U.S. Department of Education issued regulations that would have restricted for-profit colleges’ access to federal student aid if they couldn’t meet student debt requirements, but a federal judge gutted one of the key aspects of the regulation in a ruling this weekend.
[Frustrated college student via wavebreakmedia ltd / Shutterstock]