Are for-profit colleges a good investment for students? A new study by economists Stephanie Cellini (George Washington University) and Nicholas Turner (U.S. Treasury Department) says generally, no. However, students who finish usually do all right.
The results, in brief: after enrolling in for-profits’ certificate programs, students overall earn about $900 less annually than they would have had they not enrolled at all. They earn about $2,500 less than they would have if they had enrolled in a similar program at a public college. Similar results hold for associate’s and bachelor’s degree programs at for-profits, though the authors do not compare these programs to their public-sector counterparts. Only master’s degrees programs at for-profits yield a clear increase in earnings, though even that is fairly modest.
Examining the authors’ findings in more detail, though, is warranted. Particularly illuminating is the stark contrast in outcomes for graduates versus dropouts. For all four categories of credentials, graduates experience an increase in earnings after enrolling in a for-profit college. By contrast, all but one credential (the master’s degree) is a losing proposition if the student does not graduate.
The numbers for graduates are decent, though not stellar. However, it is also possible that many students who manage to get themselves over the finish line are simply more able and motivated, and would have been able to increase their earnings over time without the college’s help. (The opposite may be true for dropouts.) As I wrote last week, evidence demonstrates that college is much less effective at raising earnings than surface statistics suggest—largely due to the distinct characteristics of students who enroll and graduate.
Naturally, the next question is why so many students are enrolling in for-profit colleges if the risks are so great. Just 58% of students at two-year for-profits graduate...
Read the entire piece here on Forbes
This piece originally appeared in Forbes