Annual Portrait of Education Documents Swift Rise of For-Profit Colleges

May 26, 2011

Today marks the release of "The Condition of Education 2011," the latest in an annual series of data compendiums from the U.S. Department of Education. Like its predecessors, the report does not break new ground—it is mostly drawn from familiar federal data sources—but its hundreds of tables and graphs offer a rich portrait of American education. Just as David Foster Wallace forged a novel from the minutiae of the American tax code (his marked-up copies of federal tax statutes are now archived at the University of Texas), some future social novelist might want to spend a few weeks poring over today's report.

One of the report's chief themes is the rise of for-profit higher education during the last decade. In 1999 for-profit institutions accounted for 3.1 percent of the students enrolled in American undergraduate institutions. By 2009 their share had risen to 9 percent. The sector also quintupled its share of bachelor's degrees: Only 1 percent of the bachelor's degrees awarded in 1999 came from for-profit institutions, but by 2009 the figure was 5 percent. (Public colleges and private nonprofit colleges each lost two percentage points of market share during the decade.)

In 2008-9 for-profit institutions spent far less on instruction than did colleges in other sectors. Among four-year institutions, for-profits' instructional expenditures averaged $2,659 per full-time student, as opposed to $9,418 at public colleges and $15,289 at private nonprofit colleges. But tuition at for-profit institutions was not correspondingly lower. The average net price for full-time dependent undergraduates in 2007-8 was $30,900 at four-year for-profit institutions, versus $26,600 at private nonprofit colleges and $15,600 at public institutions.

At two-year institutions, meanwhile, for-profit colleges appeared to have the strongest retention and completion rates. Among students who enrolled full time at for-profit two-year colleges in the fall of 2002, 58 percent had graduated from those institutions by 2005. At public two-year colleges, the equivalent figure was just 21 percent.

Many people in higher education consider that figure for public colleges to be misleadingly low; under the federal government's idiosyncratic system of calculating graduation rates, students who transfer from a two-year college to a four-year college before they complete an associate degree are never counted in either college's graduation tally. But even if the 21-percent figure is subject to dispute, the strong completion rates at for-profit two-year institutions appear to buttress the arguments of James E. Rosenbaum, a professor of sociology and education at Northwestern University. Mr. Rosenbaum has long argued that public community colleges should imitate certain practices of their for-profit peers.

Grim News, and Sunny

Not surprisingly, most of the report's economic news was grim.

The average salary of young adults, age 25 to 34, who were employed full time in 2009 was $38,000—which was actually less than the equivalent figure for 1980, when it was $39,000. (Those figures are adjusted for inflation and expressed in constant 2009 dollars.)

Is a bachelor's degree an effective hedge against that kind of wage stagnation? Yes and no. Wages for young adults with less than a bachelor's degree have plunged—so in that sense, a four-year degree seems like an excellent investment. In 1980 young adults with bachelor's degrees had salaries that were 29 percent higher than the salaries of young adults whose education stopped with a high-school diploma. In 2009 their salaries were 67 percent higher.

And that salary gap, if anything, understates the matter. There is also a widening employment gap. In 1990 young adults with bachelor's degrees were 12.7 percentage points more likely to be employed full time than were their peers who had only high-school diplomas. Twenty years later, in 2010, they were 19.1 percentage points more likely to be employed full time. (The full-time employment rate for young adults with at least a bachelor's degree was 74.1 percent, but the rate for high-school graduates was just 55 percent. In between, the rate for people with associate degrees was 65.4 percent, and the rate for people with "some college" was 55.9 percent.)

But the news is not all sunny for bachelor's degree holders. Among young adults employed full time with only a bachelor's degree, but no higher degree, average salaries fell from $48,600 in 2000 to $45,000 in 2009. (Again, the figures are in constant 2009 dollars.) The only group of young adults whose salaries grew during that decade were those with a master's degree or higher. Their average salary went from $56,100 to $60,000.

Among thousands of other data points, the report also concludes that:

  • In 1999, 44.1 percent of 18- and 19-year-olds were enrolled in college. By 2009 that figure had risen to 49.8 percent.
  • Total college enrollment is projected to rise from 17.6 million in 2009 to 19.4 million in 2019—a considerably smaller rate of growth than the last decade has seen.
  • In 2000, 29.1 percent of Americans age 25 to 29 held bachelor's degrees. By 2010 that figure had risen to 31.7 percent, which was a weaker rate of growth than during the 1990s. (In 1990 the figure was 23.2 percent.)
  • Completion rates have risen modestly in recent years. Among students who enrolled full time at four-year institutions in 1996, 55.4 percent graduated from those same institutions within six years. Among students who enrolled in 2002, the equivalent figure was 57.2 percent.

Finally, a note about the college students of the future. In 2000, 15.4 percent of Americans age 5 to 17 were living in households below the poverty line. By 2009 that figure had risen to 18.6 percent.