For-Profit Colleges

By: David Deming, Claudia Goldin, & Lawrence Katz | Spring 2013

This article looks at the students who attend for-profits, the reasons they choose these schools, and student outcomes on a number of broad measures and draws several conclusions. First, the evidence shows that public community colleges may provide an equal or better education at a lower cost than for-profits. But budget pressures mean that community colleges and other nonselective public institutions may not be able to meet the demand for higher education. Some students unable to get into desired courses and programs at public institutions may face only two alternatives: attendance at a for-profit or no postsecondary education at all.

Second, for-profits appear to be at their best with well-defined programs of short duration that prepare students for a specific occupation. But for-profit completion rates, default rates, and labor market outcomes for students seeking associate’s or higher degrees compare unfavorably with those of public postsecondary institutions. In principle, taxpayer investment in student aid should be accompanied by scrutiny concerning whether students complete their course of study and subsequently earn enough to justify the investment and pay back their student loans. Designing appropriate regulations to help students navigate the market for higher education has proven to be a challenge because of the great variation in student goals and types of programs.

Ensuring that potential students have complete and objective information about the costs and expected benefits of for-profit programs could improve postsecondary education opportunities for disadvantaged students and counter aggressive and potentially misleading recruitment practices at for-profit colleges.

This CAPSEE paper appears in the spring 2013 issue of The Future of Children.

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