Is There a Pay-Off to For-Profit Colleges?: David Harding

Is There a Pay-Off to For-Profit Colleges?: David Harding

November 5, 2019 0 By Stanley Isaacs


[MUSIC PLAYING] Several years ago, I was
interviewing adolescent boys in inner-city
neighborhoods in Boston and talking to their parents
about their educational and career aspirations. And I was surprised to
hear them, both the boys and their parents, talking
about for-profit colleges almost in the same breath as
traditional community colleges or four-year colleges. These new institutions were
part of their worldview, part of their landscape of how
to move up in the world, and how to have
educational opportunities. When most Americans think
about for-profit colleges, I think they think about taking
classes online in your pajamas, building up a lot of debt
because it’s expensive, and maybe not getting
the job you imagined. I think we need to understand
what outcomes actually happen to students who go
to for-profit colleges. So we need to statistically
adjust for the fact that students who go
to for-profit colleges tend to be more disadvantaged. They tend to be
students whose parents haven’t been to college before
or haven’t completed college, those who haven’t
necessarily gotten the traditional preparation,
haven’t done things like taking the SAT or the ACT,
maybe have lower test scores. What we’ve seen over
the last four decades is that public investment
in higher education has not been keeping up with
demand and with the needs of our knowledge economy. And so the for-profit
colleges argue that they’re filling that gap. They’re stepping
in and providing educational opportunities to
people who aren’t well served by the public sector. The other thing that they argue
is, as for-profit corporations, they’re also responsible
for making a profit. And the way for them to
keep their profits growing is to enroll more students and
to serve those students better. Compared to other
countries around the world. many, many more students
enroll in college in the U.S. than elsewhere. Unfortunately, we have one
of the lowest graduation rates for college of
anywhere else in the world. In our study, we’re
using survey data that tracks a cohort
of young people who started the study in 1997
and are followed over time and surveyed every year
about their labor market experiences, their
schooling experiences, and their educational
experiences. And we can see what colleges
they’re enrolling in, when they’re enrolled,
whether they graduate, and what they do afterwards. So if we look at
community college students and track them to see if they’ve
gotten an associate’s degree, only about 19% of students
have an associate’s degree after eight years after
they first enrolled. The for-profit colleges
are doing slightly better. 23.9% of the students
who have ever enrolled in a for-profit college
have an associate’s degree after eight years. That gap between for-profits
and other four-year colleges shrinks when we adjust
for the differences between the types of students
who go to those institutions. But there’s still a
pretty large gap there, even after adjusting. Our results suggest
that community colleges and for-profit
colleges are largely serving the same
population of students, but that the for-profit colleges
are doing slightly better on average at helping
those students to finish their associate’s degrees. For-profit colleges often have
a set of institutional practices that help students who are
not well-prepared for college or whose parents
haven’t been to college to enroll and
succeed in college. So they walk them
through the process of applying for and
securing financial aid. They lay out their entire
career in the college, help them figure out
exactly what classes they need to graduate. They build in things
like remedial skills into the classes that
they need to graduate. They also have much more
flexible schedules, so helping students who are parents, who
are working full-time jobs to manage schoolwork. Classes start year round,
sometimes every week or every two weeks. So you don’t have to
wait until the beginning of the next semester
rolls around. You can start right in. On the flipside, these colleges
are much more expensive. And so if you’re
investing your money — and most of these people are
borrowing this money using federal loans — and you
don’t finish the degree, then you’re left with the
debt without the ability to pay it off. And what we do see in
for-profit colleges is a much higher default
rate on student loans. So the next big question is,
what happens to these students when they finish their degrees? If you get an associate’s degree
from a for-profit college, does it help you
in the labor market the same way a community college
associate’s degree would? There’s some suggestive evidence
so far that in some fields, the for-profit students do
better than the community college students. In other fields, the community
college students do better. At the end of the day,
it’s important to remember that low-income
students are enrolling in college because they
want to improve their wages and their lifestyles
in the future. And so we really need to
know, are for-profit colleges delivering on this promise. [MUSIC PLAYING]