For-Profit College Alums Make Less Money

For-profit colleges boomed in the 2000s, and new research implies their students would have been better off going to public or nonprofit schools. A study from the Center for Analysis of Postsecondary Education and Employment, an independent nonprofit research group established by the Department of Education, looked at data from 80,000 students who started at community colleges and later transferred to complete their studies or pursue a bachelor’s degree. The researchers found that students who transferred to public or nonprofit schools earned more money than those who transferred to for-profit schools.

Alumni from two unnamed states were studied. Students from the larger of the two states’ sample groups who transferred to for-profits earned an extra $210 each quarter, while those who went to public colleges earned an additional $560 each quarter, and those at nonprofits ended up with $1,110 more each quarter. When the researchers looked at a decade of earnings, students at for-profits made an extra $5,400 after graduating, while students at public colleges got a $12,300 boost. Those who studied at nonprofit schools earned $26,700 more. (The results also don’t take into account that for-profits tend to have higher tuition than public colleges and nonprofit schools.) Put another way, public colleges produced at least twice the extra earnings as for-profits, and nonprofits produced a fourfold benefit.

The for-profit industry often explains away differences by saying its schools educate a student body that is not as prepared as those at public or private colleges. This study (and others) has shown those disparities do exist, but it also found that even taking into account those differences, students at for-profit schools still earned 6 percent to 7 percent less over the long haul. “These earnings gaps, controlling for prior college performance, appear to be substantively important and contribute to the evidence that there is a labor market penalty associated with attending a for-profit college,” the researchers wrote.

The findings may add pressure to for-profits, who are already under several investigations, including a newly disclosed inquiry by a dozen state attorneys general. The industry is also facing new regulations that try to determine which schools shouldn’t be allowed to access federal student loans and Pell Grants, which make up much of their funding. As I wrote last week, there’s been a lot of hand-wringing about the value of a liberal arts degree that misses questions about the quality of the school that students attend rather than what they study, and this research seems to buoy the fact that not all schools are created—or run—equally.

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