For profit Schools Graduates who earned vocational certificates made an average of $900 LESS annually after attending than anyone else, according to a new study, leaving those for-profit graduates who took out loans hard-pressed to pay them back.
By comparison, those students who received similar certifications from public community colleges earned $1,500 more than they did before attending school.
This New Announcement from the National Bureau of Economic Research, published this week, offered new findings for critics who say the for-profit college/Schools industry tricked students by pressuring them into racking up tens of thousands of dollars in student loan debt while adding little to no value to their careers.
This research was conducted by Stephanie Riegg Cellini of the Trachtenberg School of Public Policy and Public Administration at George Washington University and Nicholas Turner of the Office of Tax Analysis at the U.S. Department of the Treasury. The findings were published by the National Bureau of Economic Research (available here).
The researchers offer some facts for their findings. They note that their finding of a negative economic impact by enrolling at a for-profit college is due to the huge share of students at for-profit colleges who leave without the certificate or degree they were seeking, ending up in many cases with a large amount of student loan debt. Generally, those who finish their programs experience better results.
In 2014, the average tuition for certificate students at for-profit colleges was $8,118, compared with $712 for demographically similar students at community colleges.
In 2014, the average annual tuition at two-year, for-profit colleges was about $14,200, quadruple what students at community colleges paid.
The disparities in earnings between for profit schools students and community college students were especially pronounced for males, who made nearly $2,200 more on average each year after attending a public community college than they had before.
“We find that for-profit students experience lower earnings effects than their public sector counterparts, a result that holds even after accounting for differences in student demographics and programs of study,” the study says.
“Separate analyses of the 10 most popular fields of the study reveal that for-profit students experience higher returns than public students in only one field (cosmetology), yet none of the top ten fields can be “shown to generate positive total earnings gains for for-profit students.”
The study does note that some students fail to complete their programs in all sectors of higher education, but says that the cost of this failure is much higher on students in for-profit higher education.
“The negative earnings effect we find are troubling given the debt that students incur to attend for-profit institutions,” the study says. “Examining the distribution of average annual earnings effects and average annual debt payments reveals that the vast majority of for-profit students experience both higher debt and lower earnings after attendance, relative to the years before attendance. Finally, among certificate students, we find that despite differences in public support for higher education across states, in all 50 states public support for higher education across states, in all 50 states public institutions reveal higher earnings and lower debt than local for-profit institutions.”
The Association of Private Sector Colleges and Universities, a trade organization, said that the study was incomplete. Focusing on recent data for the relatively new industry, the researchers couldn’t calculate the effects of attending a for-profit school over the long term.
The study “looks only at short-term earnings and not at the lifetime benefit of higher education,” Steve Gunderson, the association’s president, said in a statement. “Without a career-focused degree or certificate, these students would not have an opportunity to improve their earning potential.”
Cellini rejected that argument in an interview. Although earnings for for-profit students will likely improve with time as they become more experienced on the job, the same is true of their peers at community colleges, she said.