Students Who Attend For-Profits Without Graduating Have Lower Employment, Earnings Than Before
Posted By Eliana Osborn on June 9, 2016 at 3:54 pm
There’s been a lot of bad news already for those who have invested time and money into earning a degree from a for-profit university. However, a new study combines data from the IRS and Department of Education and draws some dire conclusions: not only are students paying disproportionately high tuition for for-profit degrees, but many are actually earning less money after they attend.
The National Bureau of Economic Research paper Gainfully Employed examines two factors for for-profit student success: employment status and earnings. Issues with employment rates for graduates of for-profit schools have been a consistent source of scrutiny from regulators, with several court cases involving misleading information on the subject. The NBER looked at data for more than 1.4 million students, leaving little room for doubt about their results.
The good news is for students who graduate, who do see increases in earnings. For those who enroll in certificate, associate, or bachelor’s degree programs at for-profit institutions and don’t graduate, however – and who make up the majority of for-profit students – there’s little silver lining. From the report’s abstract comes a startlingly direct conclusion: “In absolute terms, we find no evidence of improved earnings post-enrollment for students in any of the top ten for-profit fields and we can rule out that average effects are driven by a few low-performing institutions.”
With IRS data, NBER was able to compare individual student earnings before and after their time at for-profit schools. These aren’t broad trends or field-based averages, but real numbers over the lifetime of specific people. Unsurprisingly, students who do not graduate have worse earnings outcomes than those who actually make it to degree. For reference, degree completion rates are close to 30% for associate and bachelor’s programs and double that, 60%, for master’s degrees. 88% of associate and bachelor’s students use federal aid; the other 12% are not included in the data analysis.
Specific findings include:
- Students who earn a certificate from a for-profit institution have lower earnings than their peers at public colleges.
- The overwhelming majority of students who attend but do not graduate from for-profit institutions have higher debt and lower earnings after attending. Even ignoring the debt they take on, they still earn less after their time at these schools.
- Fewer associate and bachelor’s degree students are employed after attending for-profit institutions.
However, things are more positive for students that do graduate with a degree:
- Students that attend for-profit universities and graduate with an associate or bachelor’s degree have a 4-5% increase in employment and earnings, improving between $3,500 and $4,000 a year.
- Master’s degree graduates see an average $6,000 earnings increase. Those who attend for-profit institutions for a master’s program but do not graduate see $1,000 more per year.
The negative impact on the 70% of students who enroll in undergraduate programs at for-profit universities but do not graduate may be small, but it is real. Fewer jobs and lower earnings, combined with high student loan debt, leave people significantly worse off for their time at these schools.