The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?

By: David Deming, Claudia Goldin, & Lawrence F. Katz | February 2012

This article looks at the students who attend for-profits, the reasons they choose these schools, Private for-profit institutions have been the fastest growing part of the U.S. higher education sector. For-profit enrollment increased from 0.2 percent to 9.1 percent of total enrollment in degree-granting schools from 1970 to 2009, and for-profit institutions account for the majority of enrollments in non-degree granting postsecondary schools.

In this study, the authors describe the schools, students, and programs in the for-profit higher education sector, its phenomenal recent growth, and its relationship to the federal and state governments. Using the 2004 to 2009 Beginning Postsecondary Students (BPS) longitudinal survey, they assess outcomes of a recent cohort of first-time undergraduates who attended for-profits relative to comparable students who attended community colleges or other public or private non-profit institutions.

Relative to these other institutions, for-profits educate a larger fraction of minority, disadvantaged, and older students, and they have greater success at retaining students in their first year and getting them to complete short programs at the certificate and AA levels. But for-profit students end up with higher unemployment and “idleness” rates and lower earnings six years after entering programs than do comparable students from other schools, and they have far greater student debt burdens and default rates on their student loans.

This study also appears in the winter 2012 issue of the Journal of Economic Perspectives.

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