Critics of for-profit colleges have long argued that the problem with many such institutions is that they load students up with high debt and don’t really provide them with marketable skills.
But while the debt levels are pretty clear (the average for-profit results in more than $40,000 worth of debt per degree issued), no one really knew about the job outcomes of people who attend for-profit colleges.
Now we know, and it doesn’t look very good. According to new study by authors affiliated with the Center for Analysis of Postsecondary Education and Employment (CAPSEE) that appears in the 2012 issue of Journal of Economic Perspectives:
Students who attend for-profit colleges are less likely to be employed and have lower earnings six years after enrolling than similar students who attend public and not-for-profit colleges.
In terms of economic outcomes in the medium-run, for-profit students are more likely to be idle (that is, not working and no longer enrolled in school) six years after starting college. Among the BPS students who left school by the 2009 survey wave, those from for-profits are more likely to be unemployed and to have experienced substantial unemployment (more than three months) since leaving school. For-profit students no longer enrolled in 2009 have earnings from work in 2009 that are $1,800 to $2,000 lower (or 8 to 9 percent of their predicted mean earnings) than had they gone to another type of institution.12 Some of the earnings reduction is due to lower rates of employment. Once we condition on employment, for-profit students have modestly lower earnings and slightly lower job satisfaction, but neither difference is statistically significant.
The average former for-profit student earned $19,950 a year in 2009. The average former community college student earned $24,795 in 2009.
Some 40 percent of former for-profit students were unemployed more than 3 months after leaving their programs. About 25 percent of former community college students were unemployed more than 3 months after leaving their programs.