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Study: 2-year for-profit students earn more

Students who enroll in associate’s degree programs at for-profit colleges raise their earnings as much as community college students — or more — concludes a new study, The Labor Market Returns to a For-Profit College Education. (Here’s the pdf.) Enrollees boost their previous earnings by 6 to 8 percent; graduates raise their pre-college earnings by 22 percent.

Stephanie Riegg Cellini, an assistant professor of public policy at George Washington University, and Latika Chaudhary, an assistant professor of economics at Scripps College, crunch the numbers in different ways: In some, for-profit college  “returns appear to be significantly higher than those of community college graduates.” For-profit graduates earned 34 percent more in one analysis, compared a 19 percent gain for community college graduates. “Moreover, for-profit graduates also appear to work more hours and be more likely to work full-time after graduation than public sector alumni.”

The picture is different for dropouts. Community college dropouts earn somewhat more than they did before enrolling, while for-profit dropouts may earn less. However, for-profit students are nearly twice as likely to complete an associate degree: 51 percent graduated at for-profit colleges, 27 percent at community colleges.

The researchers conclude:

Our analysis reveals that for-profit students generally experience positive earnings gains and labor market outcomes similar to those of students in the public sector. Given the much higher cost of a for-profit education relative to a public education, we expect that some students might find a community college a better investment, and further research is needed to assess whether the earnings gains from a for-profit education are enough to offset the high cost of attendance. Degree completion appears to be particularly important to student success in the for-profit sector and we suggest that, in the absence of earnings data, policymakers and prospective students should carefully study completion rates to assess the quality of a particular for-profit institution.

Community college tuition and fees average just $2,300 for in-state students; for-profit two-year colleges average $15,000.

 It’s not clear whether for-profit college students are more motivated, the researchers note. On most measures, for-profits enroll more high-risk students. They cite a 2012 study:

. . . relative to community colleges, for-profit institutions (including aid-eligible two-year and four-year institutions) enroll a higher proportion of women (65 vs. 57 percent), blacks (22 vs. 14 percent), GED recipients (17 vs. 10 percent), and single parents (29 vs. 12 percent). Income differences are also substantial: the average income of a for-profit student is roughly $15,000-20,000 less than a community college student.

Community colleges offer many associate degrees in general education or liberal arts for would-be transfer students, while for-profit colleges specialize in career-related associate degrees. It would be useful to compare the earnings of community college students who enroll in vocational programs with for-profit students in the same specialties. Do community college nursing students do better or worse than for-profit nursing students?