For-profit colleges expand access to higher education for some students who might not otherwise attend college, but the payoff can be meager.
In fact, graduates of for-profit colleges’ two-year programs earn about the same as those who finish only high school, a new study says.
The study, “Does it Pay to Attend a For-Profit College? Horizontal Stratification in Higher Education,” by Patrick A. Denice, a doctoral student in sociology at the University of Washington, reaffirms many of the central arguments advanced both by supporters of for-profit institutions and by their most-ardent critics.
For-profit colleges, Mr. Denice found, do offer a path to higher education for students from underrepresented minority groups, students from low-income backgrounds, and students with relatively weak records of academic achievement. In this way, for-profits help reduce what he called the “vertical stratification” of education, or divisions based on the amount of education one attains.
What these colleges do not do as well, he says, is reduce “horizontal stratification,” or distinctions based on how and where a student gains that education. That kind of stratification can be seen in earnings.
“Qualitative differences among postsecondary educational institutions may preserve the social-class structure,” wrote Mr. Denice. He was scheduled to present his study at the annual meeting of the American Educational Research Association, this past weekend in San Francisco.
His study is based on an analysis of data from the National Longitudinal Survey of Youth, which began tracking nearly 9,000 teenagers in 1997 and follows up with subsets of that group every year. Mr. Denice used data collected in 2009, the most-recent set available, which is when respondents typically ranged in age from their mid to late 20s.
He compared the type of colleges that respondents attended with their weekly earnings. He controlled for background characteristics, like race, socioeconomic status, mother’s education level, high-school achievement, and a test of cognitive ability used by the armed forces.
One result particularly surprised him: Without controlling for background, he found that those who graduated with associate degrees from for-profit colleges earned, on average, $425 per week, which was statistically indistinguishable from the $388 earned weekly by those who held only high-school diplomas.
The wages of graduates of for-profit colleges’ associate-degree programs were more than 20 percent lower than the wages of those who attended two-year programs at public colleges, Mr. Denice found. The differences were stark, even though he accounted for the fact that for-profit colleges tend to enroll higher numbers of academically unprepared students than nonprofit institutions do.
Mr. Denice attributed the differing outcomes, in part, to the signals that for-profit colleges on graduates’ résumés send to future employers.
Educational attainment is thought to give employers an indication of a job candidate’s potential, knowledge, and motivation. Colleges, Mr. Denice wrote, serve as a filter at two points: when they select students to attend and when they decide whether to graduate them.
For-profit colleges’ lax admission criteria cancel out the first of these two filters, Mr. Denice said. While community colleges also offer open admissions, he added, they enjoy a different academic reputation from for-profit institutions.
“A credential from a for-profit college delivers a less-credible signal than the same credential earned at a public or private nonprofit college,” Mr. Denice wrote.
A recent survey, commissioned by The Chronicle, of employers who hire graduates with baccalaureate degrees, found that employers were least likely to hire graduates of online colleges. For-profit colleges scored the next lowest, though employers’ opinions of those institutions tended to be neutral to mildly positive.
Mr. Denice found a negligible earnings gap dividing graduates of four-year programs at for-profit colleges and graduates of four-year programs at nonprofit colleges. “The bachelor’s degree is a watershed event,” he said, “regardless of where it comes from.”
Mr. Denice’s research builds on similar work published last year by the Journal of Economic Perspectives, which found that for-profit colleges excelled at retaining students but that those students tended to fare comparatively worse over time than students at nonprofit colleges.
The findings differ, however, from a paper released last year by the National Bureau of Economic Research, which used data from the same survey that Mr. Denice used. That study, by Stephanie Riegg Cellini and Latika Chaudhary, found that earning gains over time were similar for students who attended for-profit colleges and community colleges. Ms. Chaudhary, an assistant professor of economics at Scripps College, said their study better captured wage dynamics over time than did Mr. Denice’s.
Mr. Denice said the results also may differ because his analysis included wage data for unemployed graduates while his predecessors’ did not. The different conclusions, he added, highlight the need for further research.
