Report: For-Profit Students Have More Debt, More Unemployment, And Lower Salaries

A new report by the National Bureau of Economic Research echoes some common critiques of the for-profit college industry, finding that such institutions fail their students by leaving them with weaker job prospects and worse off financially.

Researched and composed by three Harvard University professors, the paper [PDF] begins by asking whether for-profit colleges are “nimble critters” working to train underserved and disadvantaged students or “agile predators” preying on vulnerable Americans in order to profit.

The study found that enrollment in the for-profit sector has tripled over the previous decade while higher education grew just 22 percent overall. And despite enrolling just 12 percent of students, for-profit colleges receive about one-fourth of Pell Grants and federal aid.

In addition, the researchers note that one in four for-profit students will default on their loan repayments within three years—much higher than the 8.7 percent of students at four-year institutions.

And students at for-profit colleges have a “15 to 19 percentage point lower rate of meeting the recently enacted Gainful Employment earnings threshold,” established to help ensure students could repay loan debt post-graduation. In 2004, for instance, students with for-profit degrees were making an average of $1,800 to $2,000 less per year than their peers from other schools.

“Regulating for-profit colleges is a tricky business,” the researchers write. “The challenge is to rein in the agile predators while not stifling the innovation of these nimble critters.”

The report gives some credit to the for-profit industry for high first-year retention rates and a strong completion rate for programs that are two years or shorter. Researchers note, though, that many students still are worse off.

“But their first-time postsecondary students wind up with higher debt burdens, experience greater unemployment after leaving school and, if anything, have lower earnings six years after starting college than observationally similar students from public and non-profit institutions,” the report reads.

(Former Campus Progress editor Kay Steiger highlights more of the report’s findings in bullet-friendly format here.)

Brian Stewart is the communications manager at Campus Progress.

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