Employers Value For-Profit Degrees Less, New Study Finds

NEW YORK, NY (October 6, 2014) — Employers are less likely to call back job applicants with business degrees from online, for-profit colleges than those with degrees from nonselective public universities, a new experimental study from the Center for Analysis of Postsecondary Education and Employment (CAPSEE) has found.

Enrollment in for-profit colleges has tripled in the past decade: 2.4 million students, or 12 percent of all college-students, attend a for-profit; large national chains—which are publicly owned and offer degrees online—are responsible for nearly 90 percent of this growth. While for-profits colleges account for a large portion of the last decades’ growth in bachelor’s and business degrees— 20 percent and 33 percent respectively—little is known about whether employers value these degrees.

The new study was designed to discern whether employers show a marked preference for degrees from certain types of institutions. The authors sent out fictitious resumes to thousands of health and business job openings across the country, randomly varying the job applicant’s characteristics, including postsecondary institution.

The study found that resumes listing bachelor’s degrees in business from online, for-profit institutions prompted fewer callbacks: employers were 22 percent less likely to respond to these resumes than to those listing business degrees from non-selective public universities. On the other hand, resumes listing credentials from smaller for-profit colleges with a local presence were equally likely to garner callbacks. For jobs in the health field, there was also no statistically significant difference in call backs for credentials from different types of institutions.

Some jobs did not list a postsecondary degree as a requirement. For these jobs, resumes with associate degrees from public or for-profit colleges were no more likely to receive callbacks than those with similar work experience but no degree; resumes listing bachelor’s degrees from for-profits were only marginally more likely to solicit callbacks for jobs with no postsecondary requirements, but the difference was not statistically significant.

The results of the study suggest that employers value bachelor’s degrees from public universities significantly more than those from for-profit institutions. These findings are particularly significant as 43 percent of all B.A. degrees awarded by for-profit colleges are in business, and the education offered at these colleges is significantly more costly, both for taxpayers and students. For students, net annual tuition at for-profit colleges is 80 percent more than at public four-year universities; for taxpayers, the total cost of education at a for-profit college is 60 percent larger. For-profit colleges account for 44 percent of all student loan defaults.

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Elizabeth Ganga

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