For-profit students borrow more, but don’t earn more

For-profit college students borrow more than community college students, but don’t earn more, concludes a Center for Analysis of Postsecondary Education and Employment (CAPSEE) working paper.

Six years after enrollment, for-profit students are more likely than community college students to have earned a certificate or associate degree.

They have lower employment rates and earnings compared to all college-going students, but those disadvantages are “linked to their prior academic record and disappear when compared to community college students.”

However, in comparison with similar community college students, for-profit students borrowed about $13,300 more for their higher education. “This borrowing most likely reflects the higher tuition at for-profit colleges, which in turn may be driven by the students’ greater access to federal student loans.”

They earned a degree and then …

College students don’t work very hard or learn very much, concluded Richard Arum and Josipa Roksa in their 2011 book, Academically Adrift.

How did those students do when they graduated and hit very tough job market? Not well at all, they write in Aspiring Adults Adrift.

Arum and Roksa followed 1,000 graduates for two years. “Fifty-three percent of the college graduates who were not re-enrolled full-time in school were unemployed, employed part-time, or employed in full-time jobs that paid less than $30,000 annually,” they write.

Their earlier book observed that many college students “took easy courses, regarded themselves as privileged customers, socialized heavily, and came away with little to show for their years on campus,” reports Businessweek.

Two years after college, only a little over a quarter of the students had landed jobs paying better than $40,000 a year.

Richard Arum, Josipa Roksa

Many college graduates struggle with the transition to adulthood, write Arum and Roksa in the Chronicle of Higher Education.

One quarter were living with their parents and three-quarters still were receiving financial assistance from parents.

Other measures of adulthood were lacking, such as democratic citizenship. “Two years after graduation, 36 percent of our respondents reported never reading a newspaper in print or online or doing so only once a month; 39 percent reported discussing politics at similarly low frequencies,” write Arum and Roksa.

U.S. colleges need to do a better job improving skills such as critical thinking and complex reasoning, they argue.

What will I earn with a degree?

North Carolina is making it easier for students to predict the dollar value of college degrees, reports AP. A new state web site will provide median earnings, employment and post-degree education by major, degree and campus.

Five years after earning an associate degree in cardiovascular technology, community college graduates average $60,869. Other top-earning degrees are radiation therapy technology, fire protection technology, nuclear medicine technology and clinical trials research associate.

The median income for associate degree graduates in all subjects was $30,345 after five years. (The search function isn’t fully operational for associate degrees and doesn’t work at all for certificates.)

Nuclear engineering graduates average $89,537 a year five years after earning a bachelor’s degree. Theater graduates average $10,400.

“Of course, there are many paths to success. So this is not a recommendation, it’s just a way to arm students and families with good, useful information,” said Peter Hans, who pushed for the project when he was chairman of the University of North Carolina Board of Governors.

Anthony Carnevale, director of Georgetown University’s Center on Education and the Workforce, said North Carolina’s program, inaugurated last week, is one of the best at showing the value of a degree. He expects college instructors to hate it. “They don’t get up every day and think about getting somebody a job. They’re teaching history or something, so this is news to them,” Carnevale said.

All the top-paying degrees are in engineering and technology. assocdegreechart

Maine also has launched a site with earnings information by degree for community college and state university graduates.

Completion, default rates can be misleading

Commonly used college quality measures, such as graduation rates and loan defaults, are inadequate and sometimes misleading, writes Ben Miller, a senior policy analyst for the New America Foundation, on EdCentral.

Completion statistics for community colleges and other two-year-or-less institutions are especially inaccurate, he writes. It’s not just that the federal data misses part-timers and transfers. Completion data also confuses success rates in short-term certificate programs with longer-term associate degrees.

. . . many certificate programs run for no more than a year. These programs thus present fewer opportunities for students to drop out. That’s why colleges that predominantly grant certificates tend to have quite high completion rates and also the reason that for-profit institutions often appear to have better graduation rates than the largely associate-degree-granting community colleges.

A low completion rate is a sign of low quality, but a high completion rate may signify a quick, easy program with very little return on students’ time and money.

Cohort default rates also can be misleading, especially for community colleges with very few borrowers, writes Miller.

For example, Gadsden State Community College in Alabama has a 20 percent default rate but that’s based on five borrowers out of an enrollment of over 8,967. This makes it impossible to draw any conclusions about a college based upon less than 0.05 percent of the college.

On the other side, a low cohort default rate might be just as much an indication of successful loan management than success. The cohort default rate only measures whether students default within a certain time window. Students who default after that period or who are extremely delinquent but never default are not counted in the rate. The usage of income-based payment plans can also distort cohort default rates, since a borrower could be earning such a low income from their program that they have to make little to no payments, making it more difficult to default.

Passage rates on licensure or certification exams, such as in nursing, do measure learning outcomes. However some programs — especially in teaching — ensure a 100 percent pass rate by denying diplomas to students who haven’t passed the exam.

Carnevale: Link loans to value

President Obama’s student loan plan, which limits repayment to 10 percent of the borrower’s disposable income, closes the barn door after the horse is gone, says Anthony Carnevale, director of Georgetown’s Center on Education and the Workforce, on NPR.  The fundamental question about college debt is whether students are “getting value for money,” says Carnevale.

Are we helping people cope with debts they never should have taken on in the first place?

Students and their parents don’t always think through what they’re spending for college and what they’re likely to get for it, says host Michel Martin.  If students know they’ll only have to pay 10 percent of their income — with the unpaid balance forgiven in 10 to 20 years — might they be tempted to think “it’s not going to be that big of a deal?”

That’s a risk, says Carnevale. If the system isn’t linking loans to long-term earnings, it will continue to be ineffecient.

Ultimately, the taxpayer pays for that as do many of the students who find these loans still overwhelming. That is, it’s not as helpful if you’ve built the loan and it’s going to burden you for a number of years. Just have somebody help you with the burden. The real issue is ensuring that you minimize the burden in the first place by linking value — economic value — to the loan.

The loan policy will help some people, he says. More fundamentally, we need to “ensure the young people know what they’re getting into when they borrow and make sure they’re not borrowing trouble down the road.”

Stop telling 18-year-olds to follow their “passion” — and run up huge debts, writes economist Peter Morici in the Baltimore Sun.

Easy access credit has pushed up college tuition far faster than inflation generally and even health care costs. University presidents are happy to pad bureaucracies and indulge faculty who would rather undertake research than teach, if students can borrow money to pay for it all.

College primarily “is about acquiring skills that have value in the marketplace,” writes Morici.

Is college worth it for everyone?

Going to college is “clearly” a smart economic choice because the “college premium” is increasing, wrote David Leonhardt in the New York Times.

Screen_shot_2014-05-27_at_9.26.55_am

Not so fast, writes Grace at Cost of College. There’s been plenty of pushback to Leonhardt’s thesis.

Compare apples to apples, writes Matthew Yglesias on Vox.

Suppose I got someone to make a chart showing the incomes of prime-age BMW drivers versus average Americans. It would reveal a large BMW earnings premium. I could even produce a chart showing that the children of BMW drivers grow up to earn more than the average American. But that wouldn’t be evidence that BMWs cause high wages, and that the BMW Earnings Premiums extends across multiple generations. It would be evidence that high-income people buy expensive cars and that there’s intergenerational transmission of socioeconomic status.

. . . How do college graduates fare in the labor market compared to people who were otherwise similar at age 18 in terms of SAT scores, non-cognitive skills, parental socioeconomic status, etc?

The college premium varies significantly by field of study, writes Bryan Caplan. Petroleum engineering or theater arts?

“Most of the benefits of college come from graduating, not enrolling,” writes Ben Casselman on the Five-Thirty-Eight blog. The wage premium for people with “some college” has been flat “even as debt levels have been rising.” Dropouts may be worse off than if they’d never enrolled.

Only 60 percent of full-time college students earn a degree in six years and the odds are much lower for racial minorities, low-income students, older students and part-timers, he writes. “The six-year graduation rate is well under 20 percent” for some groups. These are the people struggling with the “Should I or shouldn’t I?” question.

Going to college is risky for marginal students — especially for men — according to the Center for Economic and Policy Research.

People in the top half of the income distribution don’t question the value of college for their own children, notes EduOptimists. The real question is: “who should go to college among those in the bottom 50%?” and “what should we pay for those people to go?”

Gainful employment regs for everyone?

The Gainful Employment Rule Is Coming For Everyone, warns Edububble. For now, the for-profit colleges are being forced to “generate a real return for their students,” but it won’t stop there, he writes.

Once the world starts getting the bill for Income-Based Repayment, this will be the only choice for the Republic. Come after the source of the pain and that means all of those twits studying cross-disciplinary BioTheater and other overpriced courses like English or even Bio.

. . . There are too many defaults and the government is just going to have to shut down the free money fountain.

The gainful-employment rule applies to career programs at public and private nonprofit colleges, as well as to for-profits. If too many students in a career program default on loans or run up a high level of debt relative to their earnings, that program’s students would lose access to federal student aid. Community colleges, which have a rising number of borrowers and high default rates, are plenty worried about it already.

The U.S. Education Department’s revised proposal is “flawed, arbitrary, and biased,” and will shut millions of students out of college, contends the Association of Private Sector Colleges and Universities, which represents the for-profit sector, reports the Chronicle of Higher Education.

A 100-age report by economists at Charles River Associates, funded by the for-profit trade group, attacked the regulations for using the level of students’ earnings rather than their earnings gains to measure a program’s effectiveness.

While the Education Department estimates 31 percent of students would be affected, potentially losing access to student aid, the report predicts as many as 44 percent would be enrolled in programs that fail the federal test.

Coupled with income-based repayment, the proposed rules would protect programs whose graduates have very low earnings, writes Ben Miller on EdCentral. “Allowing programs to pass solely based on the annual debt-to-earnings measure makes it possible for a program with sub-poverty wages to still avoid failing the metrics.”

Colleges rattled by Obama’s rating plans

President Obama’s college rating system has “rattled” college presidents, reports the New York Times. They were “appalled” when a top education official said it would be as easy as evaluating a kitchen appliance.

“It’s like rating a blender,” Jamienne Studley, a deputy under secretary at the Education Department, said to the college presidents after a meeting in the department’s Washington headquarters in November, according to several who were present. “This is not so hard to get your mind around.”

The rating system is in fact a radical new effort by the federal government to hold America’s 7,000 colleges and universities accountable by injecting the executive branch into the business of helping prospective students weigh collegiate pros and cons.

The “entire higher education system from elite private institutions to large state universities to community colleges” is worried the ratings will be simplistic and misleading, reports the Times. President Obama wants Congress to use the ratings to allocate the billions in federal student loans and grants.

Community colleges, which admit many poorly prepared students, are very afraid their challenges will be ignored. Federal data doesn’t track part-time and returning students. Students who transfer to a university before earning an associate degree may be counted as dropouts. College leaders “predicted that institutions that serve minority and low-income students, many of whom come from underfunded schools and have had less college preparation, would rank lowest in a new rating system, hurting the very populations the president says he wants to help,” reports the Times.

“Applying a sledgehammer to the whole system isn’t going to work,” said Robert G. Templin Jr., the president of Northern Virginia Community College. “They think their vision of higher education is the only one.”

Colleges and universities will be rated based on factors such as “how many of their students graduate, how much debt their students accumulate and how much money their students earn after graduating.”

Liberal arts colleges may do poorly compared with engineering schools. Colleges with “large numbers of students who major in programs like theater arts, social work or education, disciplines that do not typically lead to lucrative jobs” may rate poorly.

The system will “thoughtfully measure indicators like earnings, to avoid overemphasizing income or first jobs, penalizing relatively lower paid and public service careers, or minimizing the less tangible benefits of a college education,” wrote Studley in blog post on the Education Department website.

College isn’t paying off for most black grads

Black college graduates with a four-year degree are more likely to be unemployed and underemployed than their classmates, reports A College Degree is No Guarantee by the Center for Economic and Policy Research.

In 2013, 12.4 percent of black college graduates between 22 and 27 were unemployed ompared to 5.6 percent of all college graduates in that age range. Furthermore, more than half (55.9 percent) of recent black college graduates who were employed were working in a job that doesn’t require a bachelor’s degree. That compares to 45 percent of all recent graduates.

Fewer underemployed college graduates are finding high-paying, non-college jobs, the study found.

Screen Shot 2014-05-20 at 3.17.37 PM

CREDIT: CEPR

Grads are too optimistic about job prospects

The class of 2014 is overly optimistic about job prospects, reports CBS News.

Only 18 percent of 2014 graduates expect to earn $25,000 or less, but more than 41 percent of 2012 and 2013 graduates are earning salaries in that range, according to the Accenture 2014 College Graduate Employment Survey. Two-thirds of graduates say they’ll have student loans to repay.

Eighty percent of new graduates believe they will receive formal on-the-job training, but only 48 percent of recent grads said they received any.

Forty-six percent of workers who graduated from college in the past two years say they are working in jobs that do not require their college degrees, Accenture reports. That’s up from 41 percent in last year’s survey.

Only 17 percent of graduating seniors had jobs lined up by April, according to another survey by AfterCollege. That’s down from 20 percent in 2013.