Center for Analysis of Postsecondary Education and Employment study: Community college students who transfer to for-profit higher education don’t earn as much

29 Jan

Moi wrote about for-profit higher education in Scary study about what happens to for-profit college graduates:
We are in a periodic of extreme economic dislocation and people are retraining and starting businesses in an attempt to put themselves in a better economic position. Because of the economic uncertainty, may are willing to try almost anything to survive. Beware, some choices can leave people in a worse position.

The Center for Analysis of Postsecondary Education and Employment (CAPSEE) has produced a truly scary study about what happens to the graduates of for-profit colleges. According to the press release for the study, For-Profit College Students Less Likely to Be Employed After Graduation and Have Lower Earnings, New Study Finds:

Students who attend for-profit colleges are less likely to be employed and have lower earnings six years after enrolling than similar students who attend public and not-for-profit colleges, according to a new study by authors affiliated with the Center for Analysis of Postsecondary Education and Employment (CAPSEE). They also carry heavier debt burdens and are more likely to default on their student loans.
Over the past decades, for-profit colleges have experienced explosive growth in enrollment, with numbers increasing from 18,333 in 1970 to 1.85 million in 2009. Currently, for profit students make up 13 percent of all college attendees, up from 5 percent in 2001.
However, until now, student outcomes for these institutions have been poorly understood, not least because the students they serve are not always analogous to those who attend public and non-profit colleges. The analysis found that for-profit colleges serve a larger fraction of students who tend to struggle in college: minority, older, and independent students who are disproportionately single parents, have lower family incomes and are twice as likely to have a GED.
To ensure comparable results, the study—which used data from the 2004 to 2009 Beginning Postsecondary Students (BPS) longitudinal survey—controlled for observable student characteristics such as income, age and ethnicity. The analysis indicated that students who attend for-profit schools are more likely to persist through their first year and to earn certificates and associate degrees than their counterparts at community colleges. However, despite these higher completion rates, for-profit students are more likely to experience long term unemployment and report less satisfaction with their education in the six years after they enroll.
The poor employment and earning outcomes of for-profit students may explain their high rates of loan defaults. Currently, 26 percent of all federal student aid goes to for-profit tuition, making up three quarters of the sector’s revenue. The researchers found that almost 25 percent of for-profit students default on their loans within three years. This rate is 10.5 percent higher than that of similar students who attend public or non-profit institutions and accounts for almost half of all student loan defaults. http://capseecenter.org/for-profit-college-students-less-likely-to-be-employed-after-graduation-and-have-lower-earnings-new-study-finds/

See, Study: For-Profit Colleges Offer Weak Job Prospects, Pay http://www.educationnews.org/higher-education/study-for-profit-colleges-offer-weak-job-prospects-pay/

Here is the citation:

The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators? (A CAPSEE Working Paper)
By: David Deming, Claudia Goldin, and Lawrence F. Katz| February 2012 http://www.aeaweb.org/articles.php?doi=10.1257/jep.26.1.139

The conclusions of this report have been echoed in prior reports. https://drwilda.com/2012/02/26/scary-study-about-what-happens-to-for-profit-college-graduates/
A study by the Center for Analysis of Postsecondary Education and Employment finds that students who transfer to for-profit colleges from community college have lower earnings.

Paul Fain reported in the Inside Higher Ed article, For-Profit Wage Gap:

Community college students who transfer to for-profit institutions tend to earn less over the next decade than do their peers who transfer to public or private colleges.
Those are the findings from a study released Monday by the Center for Analysis of Postsecondary Education and Employment, a research center that was created with a federal grant and is housed at the Community College Research Center (CCRC) at Columbia University’s Teachers College.
In recent years several researchers have attempted to look at the relative labor market returns of attending for-profits, which is also a hot topic among policy makers.
There are many variables at play – such as the relatively low academic preparation of incoming for-profit students versus their peers at traditional colleges. And the results from those research efforts have ranged from largely unflattering to a mixed view of for-profits.
This new study, however, may be the first to analyze earnings gaps at various points before and after students attend college, as well as while they’re still enrolled.
It also controlled for the effects of student “swirl” in the complex higher education system by looking at transfer among a large sample of 80,000 full-time community college students who first enrolled in the early to mid-2000s.
Over all, the research found that students who transferred to for-profits earned roughly 7 percent less over the next decade than students who transferred to private or public nonprofit institutions, according to income data culled from unemployment insurance data dated from up to 2012.
“We identify a statistically significant wage penalty from enrolling in a for-profit institution,” wrote the study’s coauthors, Vivian Yuen Ting Liu, a senior research assistant at the CCRC, and Clive Belfield, an associate professor of economics at Queens College, which is part of the City University of New York System.
“This penalty appears consistent across subgroups of students, although it is greatest for for-profit students who did not complete an award,” they wrote. “For-profit students gain least over the longer term. Extended over a working life, the differences become much greater.”
Work and study
The research was based on cohorts of students who attended community colleges in two statewide systems.
Among students from the first group, which included data from a longer time range, there were stark differences in the earnings gains one decade after transfer. Students who attended for-profits had a net wage bump of $5,400 over that decade. But public college students saw a $12,300 gain and private college students earned $26,700 more (in 2010 dollars).
The results were more mixed for the second cohort of students, who attended community colleges in a different state.
In that group, students who transferred to a for-profit sometimes earned more than their peers who transferred to other institutions. For example, both men and women who transferred to for-profits earned an average of 18 percent more than students who transferred to public colleges.
One reason for the discrepancy was that the second group was tracked over a shorter period of time. Those students first enrolled in community college a few years earlier than the other, larger group, and therefore had less time in the labor market.
Additionally, students fared better while they were enrolled in for-profits, according to the study.
http://www.insidehighered.com/news/2014/01/28/earnings-lag-community-college-students-who-transfer-profits#ixzz2rpHerPLB

Citation:

The Labor Market Returns to For-Profit Higher Education: Evidence for Transfer Students (A CAPSEE Working Paper)
January 2014

This study examines the labor market gains for students who enrolled at for-profit colleges after beginning their postsecondary education in community college. We use student-level administrative record data from college transcripts, Unemployment Insurance earnings data, and progression data from the National Student Clearinghouse across full entry cohorts of community college students in two statewide systems between 2001 and 2006. We calculate the wage gains to attainment across different student transfer patterns.

We find significant wage penalties to transfer to a for-profit college instead of a public or private nonprofit college. This earnings gap between higher education sectors is consistent but varies in size across subsamples of students. Importantly, it is only identifiable with a sufficient time window across which enrollment and earnings data are available. Students in for-profit colleges have lower opportunity costs in terms of foregone earnings while enrolled in college, but these do not sufficiently compensate for lower earnings growth post-college.
Download the paper: The Labor Market Returns to For-Profit Higher Education: Evidence for Transfer Students
http://capseecenter.org/wp-content/uploads/downloads/2014/01/labor-market-returns-to-for-profit-higher-education.pdf

CAPSEE project: Project 6: The Role of the For-Profit Sector in Higher Education
http://capseecenter.org/project-6-the-role-of-the-for-profit-sector-in-higher-education/

Here is the press release from Center for Analysis of Postsecondary Education and Employment:

Community College Students Who Transfer to For-Profit Colleges Earn Less, New Study Finds
Community college students who transfer to for-profit colleges earn less than students who transfer to public or private nonprofit colleges, concludes a new study from the Center for Analysis of Postsecondary Education and Employment (CAPSEE).
The study is the first to examine the income effects of transferring to a for-profit college from a community college. Earlier studies, including a recent study from CAPSEE, have compared earnings for students who attend community colleges and for-profit colleges and found that students who attend for-profit colleges are less likely to be employed after college and earn less on average than community college students.
For this study, CAPSEE researchers analyzed the earnings of 80,000 first-time, degree-seeking students who enrolled in community college during the 2000s and transferred to another college or university. Student incomes were tracked via state unemployment insurance data through the beginning of 2012.
The study found that there were significant differences in the community college students who chose to transfer to a for-profit institution: Black and Hispanic students, and students who performed poorly and accrued fewer credits at the community college were far more likely to transfer to a for-profit than a nonprofit or public college.
Even when controlling for these differences in student characteristics, however, the study found that students who transferred to for-profit colleges earned 6–7 percent less than students who transferred to nonprofit or public institutions.
The study also found that students who transferred to for-profit colleges had higher earnings whilst in college. Students who attended for-profit colleges saw a decline in income of $130–$270 per quarter; by comparison, the decline in income for students enrolled in public colleges was four times larger, and the decline for students at nonprofit colleges was ten times larger. This difference—the lower ‘opportunity cost’ of attending for-profit colleges—may explain why these colleges are attractive to low-income students.
However, the earning gains after leaving college were significantly higher for public and nonprofit college students. Over time these gains more than offset the ‘opportunity cost’ differences. Looking over ten years, for-profit students experienced net earnings gains of only $5,400, whereas public and nonprofit college students experienced gains of $12,300 and $26,700 respectively. These figures do not account for the higher tuition costs at for-profit colleges.
The wage penalty for transferring to a for-profit college was consistent across subgroups of students, although the penalty was greatest for for-profit students who did not complete a degree.
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Victor Hugo said it best when dealing with many for-profit colleges:

Caution is the eldest child of wisdom
Victor Hugo

Resources:

College accreditation – U.S. Department of Education
http://ope.ed.gov/accreditation/

College Accreditation: Frequently Asked Questions
http://www.back2college.com/library/accreditfaq.htm

Ask questions before deciding on a for-profit college [Video]
http://latimesblogs.latimes.com/money_co/2011/02/questions-deciding-for-profit-college-video.html

For Profit Colleges: Get the Facts
http://www.education.com/magazine/article/for-profit-colleges/

Related:

Buyer beware of some for-profit colleges
https://drwilda.wordpress.com/2011/11/25/buyer-beware-of-some-for-profit-colleges/

For-profit colleges: Money buys government, not quality for students https://drwilda.com/2011/12/12/for-profit-colleges-money-buys-government-not-quality-for-students/

Where information leads to Hope. © Dr. Wilda.com

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