Students at For-Profit Colleges Are Worse Off
A new study says students who attended for-profit private colleges in the United States to learn a trade saw their earnings drop.
The report by the National Bureau of Economic Research said, on average, people who attended for-profit colleges made $920 less per year after they left school compared to before they started.
People who attended public two-year colleges earned about $1,500 more per year than they did before starting their studies, the report said.
The report looked at schools preparing students for a number of trades, including health-care assistant, dental assistant, automechanic and cosmetologist.And, the report noted that about nine out of 10 students borrowed money to attend for-profit colleges. The average debt for people attending two-year for-profit colleges was $8,000, according to the report.
A cosmetologist works in a hair salon, cutting hair and creating styles for customers.
Among the vocational trades examined by the research, only cosmetology programs appear to bring better pay in the for-profit sector, the report said.
But overall, researchers found that many students who attended for-profit schools were worse off financially than they were before going to these colleges. They found lower pay benefits and higher debt for people attending private, for-profit schools, compared to public colleges in all 50 U.S. states.
Their report comes as President Barack Obama's administration is trying to change some for-profit colleges' business practices.
The association representing for-profit colleges said the study was faulty. In other words, it said the study was not designed or conducted well.
High cost of tuition
The report reached another conclusion: Students at for-profit colleges paid more for their classes than students at public colleges did.
Annual tuition at two-year profit-making schools averaged $8,118, compared to $712 at public community colleges, the report said.
One reason for the difference in cost is that for-profit schools are run by private businesses. In comparison, community colleges are run by local and state governments, which keep tuition down by providing direct funding.
Do your research
The study's authors provide some qualifications for their study.
They point out that the students they studied left school during the big U.S. economic downturn in 2008, when unemployment in the United States was rising.
And when they adjust the data to count only people who completed their for-profit college certificate programs, earnings increased. However, about 40 percent of for-profit students leave school before completing their certification programs, according to the report.
Even given these qualifications, the report's authors said their study shows how important it is for parents and students to do research before choosing a college.
That research should include: Comparing the cost of different colleges and schools; the kinds of jobs and pay students can expect after attending the schools; how much debt a student is likely to accrue to pay tuition and other costs.
Challenges to the report
Steve Gunderson is president and chief executive officer of the Association of Private Sector Colleges and Universities. The association represents for-profit colleges.
Gunderson said the study was faulty because it looked at earnings only five years after students left school. The report would show better results if it looked for wage gains over a longer time period, he said.
He said for-profit colleges provide education chances for people who generally don't get to go to college.
Gunderson called "career education" the most direct way to get people into the middle class.
I'm Bruce Alpert.