Students who attend programs at for-profit colleges with hopes of training for a career appear to end up worse off than if they never moved on to higher education at all.
After attending certificate programs at for-profit colleges, which train workers for specific jobs like working in heating and air conditioning, cosmetology and culinary arts, students on average earn too little in the labor market to pay off their debts. That’s according to a forthcoming study in the Journal of Human Resources from economists at George Washington University and the Federal Reserve Board of Governors.
Students who study these trades at for-profit colleges also do worse than their counterparts enrolled in public schools, the study found. They’re 1.5% less likely to be employed on average and, if they do get jobs, they typically earn 11% less than students who attended public colleges.
“The for-profit sector falls short on nearly every measure, employment, earnings, debt,” said Stephanie Cellini, a professor of public policy and economics at George Washington University and one of the authors of the study. “It suggests that there’s a role for policy and for regulation.”
The findings come as stakeholders are considering exactly what that role should be. A group is meeting this week at the direction of the Department of Education under Betsy DeVos to rewrite Obama-era rules aimed at making borrowers whole when they’ve been defrauded by their colleges. Stakeholders are also in the midst of rewriting another set of Obama-era rules that require colleges offering certificate programs to prove they’re truly preparing students for decent jobs.
The Trump administration has argued that the rules conceived during the Obama administration have made things too complicated for borrowers and colleges, and that they leave taxpayers on the hook for too-high costs. But supporters of the rules note that for-profit colleges have a well-documented history of luring students into taking high levels of debt with misleading promises about their future. And without strong regulations, those efforts will only continue, they say.
The forthcoming study adds to the growing body of evidence that students who attend for-profit colleges tend to have worse outcomes at higher prices, leaving them saddled with debt that’s difficult to repay. In addition to being a challenge for those students individually, other research shows that for-profit colleges have made an outsized contribution to our country’s student debt problem.
“Their earnings gains are not very high and their debt is very high,” Cellini said of students in her study who attended for-profit colleges. “You put those two things together and that’s where we see the problem.”