“Of the for-profit gainful employment programs that our department could analyze, and which could be affected by our actions today, the majority — the significant majority, 72 percent — produce graduates who on average earned less than high school dropouts.” So said Education Secretary Arne Duncan at a White House news conference on March 14. That earned two “Pinocchios” for lying from the Washington Post’s fact-checker.
Essentially, Duncan compares apples to oranges — with a few lemons thrown in — to make for-profit colleges look bad.
The Education Department estimates that high school dropouts average $24,492 year. The Labor Department puts the median annual wage at $18,580 to $22,860. A Census estimate is $20,241.
Then, Duncan compares employed dropouts’ earnings to all recent for-profit graduates. Comparing all dropouts to all for-profit graduates — or employed dropouts to employed graduates — would show a very different picture.
Comparing dropouts of all ages, including many with job experience, to less-experienced for-profit graduates also skews the results.
Duncan’s number looks at the number of programs that produce low-earning graduates, not at the number of graduates. “The Education Department does not have individual student data, so it could well be that most graduates do fine, especially from the larger programs,” reports the Post.
A third of community college programs’ graduates earn less than high school dropouts, by the Department’s measure, observes the Post. ”Graduates of 57 percent of private institutions — a list that includes Harvard’s Dental School but also child-care training programs — earn less than high school dropouts.”
For-profit colleges enroll many low-income, minority and adult students, who are the least likely to succeed in college. Tuition is higher, since the for-profits aren’t subsidized by taxpayers. Students depend heavily on federal loans and default rates are high.
Community college students averaged $2,300 in tuition in 2009-10 compared to $15,000 for students at for-profit two-year colleges, according to one study. However, 62.4 percent of students at for-profit two-year colleges complete a credential in six years, compared to 39.9 percent of community college students, according to the National Student Clearinghouse.
The new “gainful employment” rules are “awful,” ”unfair and discriminatory,” writes Richard Vedder on Minding the Campus. An Ohio University economist, Vedder directs the Center for College Affordability and Productivity.
The gainful employment rules apply to vocational programs at career colleges (primarily for-profit) and community colleges. If the goal is to stop wasting government money,”why not scrutinize students majoring in, for example, sociology, from Wayne State University?” asks Vedder. “Only 10 percent of students graduate in four years at Wayne State, and over twice as many default on loans as graduate in that time span.”
Moreover, while dropouts and loan defaults are high at many for-profits, when one corrects for the socioeconomic and academic characteristics of the students, the findings are decidedly more mixed. For example, the for-profits have roughly double the proportion of African-American students as do other institutions, and black students disproportionately come from low-income homes with high incidence of college attrition.
. . . I happen to disagree fundamentally with the “college for all” approach of the Obama Administration, but if you are going to pursue it, why attack the very providers who most aggressively are trying to help meet your goals? The for-profits disproportionately enroll poor first-generation students, and who are members of minorities. Moreover, accounted for properly (including state subsidies for public schools, taxes paid by for-profits, etc.), the for-profits use fewer of society’s resources per student.
The six-year completion rate for students at two-year for-profit colleges is 62.4 percent, the National Student Clearinghouse reports. At community colleges, which also enroll many disadvantaged students, the completion rate is 39.9 percent.
Finally, the “gainful employment” regulations say a borrower shouldn’t have to spend more than 12 percent of total income (20 to 30 percent of so-called discretionary income) to repay student loans. A person earning $35,000 a year with $4,800 annual loan repayments would not be considered gainfully employed. “If the individual in question went from a $20,000 job before going to school to a $35,000 job with a $4,800 loan commitment, that person has advanced considerably,” Vedder argues.
Repeal the Higher Education Act and “radically rethink federal provision of aid to students,” he concludes.
Students at a community college in rural Texas may lose all access to federal aid, including Pell Grants, because of a new regulation on defaults, reports Inside Higher Ed.
The “college premium” has been exaggerated by high-profile studies, write Andrew G. Biggs and Abigail Haddad in The Atlantic. So has the payoff for majoring in a STEM field.
Smarter people are more likely to earn a college degree and to major in engineering, science and math, they write.
Only 58 percent of new college students who began in 2004 had graduated six years later, according to federal data. “Dropout rates are even higher at less selective colleges, whose students are presumably most on the margin between attending college following high school and entering the workforce.”
Calculating returns to education only for those who attend college and graduate is like measuring stock returns for Google while ignoring those for General Motors.
High school students who go on to college are quite different from those go directly to the workforce, they write.
(The collegebound) took a more rigorous high school curriculum, scored better on tests of reading and math, came from higher-income families, were in better physical and mental health, and were less likely to have been arrested. These are all correlated with higher earnings regardless of whether a person attends college . . .
Controlling for “both the risk of not graduating from college and differing personal characteristics” cuts the “earnings boost attributable to college attendance” in half, write Biggs and Haddad.
Graduates in technical fields earn significantly more than graduates in “softer” majors, studies have shown. “High school graduates aiming for high-earning majors such as engineering enter college with higher average SAT scores, according to the National Center for Education Statistics, while those aiming for lower-paying majors have lower average SAT scores,” write Biggs and Haddad. “High-paying jobs also entail longer work hours.”
What school will make you poorest? asks Jordan Weissmann on Slate. Every year, Payscale surveys college graduates to assess their earnings relative to their college costs. At almost two-dozen colleges, the average graduate’s “earning power won’t increase enough to justify the cost of tuition,” writes Weissmann. “To be blunt, these schools make students poorer.”
“Payscale doesn’t compare the alums of low-ranked colleges to demographically similar high school grads,” notes Weissmann. So colleges that enroll less-capable students will do worse at raising their earnings.
The Atlantic looks at colleges and majors that are the “biggest waste of money.” For example, “the self-reported earnings of art majors from Murray State are so low that after two decades, a typical high school grad will have out-earned them by nearly $200,000.”
Here are the degrees with the lowest 20-year net return, according to Payscale. Bold names are for in-state students. There are a lot of education degrees on the list.
Unless you’re attending a rigorous, high-prestige university, an arts degree is a risky bet, points out The Economist. ”Of the 153 arts degrees in the study, 46 generated a return on investment worse than plonking the money in 20-year treasury bills. Of those, 18 offered returns worse than zero.”
The Payscale study overstates the financial value of a college education, warns The Economist. It compares graduates’ “earnings to those of people who did not go to college—many of whom did not go because they were not clever enough to get in. Thus, some of the premium that graduates earn simply reflects the fact that they are, on average, more intelligent than non-graduates.”
Earning an associate or bachelor’s degree paid off for students who enrolled in North Carolina community colleges in 2002-03, concludes a working paper from the Center for Analysis of Postsecondary Education and Employment (CAPSEE). The economic returns for health-care credentials such as nursing were “extremely high.”
However, certificates did not produce strong economic benefits.
The recession did not erode the “substantial and consistent” gains from earning a two-year degree, the report found. “Even accumulating some college credits (but no degree) led to higher earnings for students.”
Students who earned degrees in nursing, allied health fields, construction, mechanics and welding improved their earning significantly, reports Community College Daily. However, there were no economic returns for women who earned education or child care degrees; men in those fields actually did worse.
The CAPSEE review tracked incomes five years after initial enrollment for students enrolling between 2001 and 2008 and completing an associate degree. It found that the advantage conferred by a degree remained consistent — about $4,800 per year for women and $3,000 per year for men — despite the recession starting in late 2007.
Graduates were less likely to be unemployed, according to CAPSEE.
When Is College Worth It? asks Robert VerBruggen on RealClear Politics.
Using the National Longitudinal Survey of Youth, he compares ability, as measured by the IQ-like ASVAB, education and income. Going farther in school usually improves earnings at each ability decile, but ability matters too.
There are a few surprises. Why do 30th decile people with a bachelor’s degree earn more than 40th and 50th decile people? I’d guess they’re more motivated.
Low-ability students “might benefit from a college degree,” but “they’re both less likely to try for one and more likely to fail if they do try,” he writes.
A majority of college dropouts say the “need to work and make money” is the major reason they quit school, according to a Public Agenda survey. Few said they’d found college “just isn’t for them.” Only about 1 in 10 dropouts thought the classes were too difficult.
But college readiness plays a role, writes VerBruggen.
The college premium is growing, but higher education’s benefits vary significantly depending on “individuals, types of credentials, occupations, and geographical locations,” concludes an Urban Institute study by Sandy Baum.
Median earnings for full-time workers aged 25 to 34 with an associate degree were 19 percent higher than for high school grads in 2012. The college premium rose to 26 percent for workers 35 to 44 years old and 28 percent for those 45 to 54.
Full-time workers 25 to 34 years old with “some college but no degree” earn 7 percent more than those with a high school diploma only. That rises to 19 percent for workers 35 to 44 years old.
The “some college” group includes a mix of college dropouts and people who earned vocational certificates. Dropouts aren’t likely to see an earnings premium, while some vocational certificates raise pay significantly.
Including full- and part-time students, 56 percent of college enrollees complete a degree or certificate in six years, one study estimates. After 10 years, 62 percent have completed a credential.
What will it cost to major in dental hygiene at the nearest community college? What’s the average first-year and median earnings? What’s the graduation rate? Texas has created a useful cost-benefit guide for prospective college students, writes Fawn Johnson in the National Journal magazine.
The searchable MyFutureTx.com can be customized to reflect the searcher’s location, household income, and SAT scores. It will help a future college student browse possible careers, majors and college options, warn about college costs and debt and predict future earnings.
If you’re a high school student in Texas and dream of a career in the arts, you might want to know that fine-arts and studio-arts graduates at Midwestern State University in Wichita Falls make, on average, about $10,000 more per year than alumni who majored in the same subjects at Sul Ross State University in Alpine—and that the disparity lasts for 10 years after graduation. Yet the total cost of a bachelor’s degree is the same at both schools, around $42,000. The average time to complete the degree is also about the same, a little more than five years.
Several states have developed websites with data on graduates’ earnings, job opportunities across majors, and comparisons of colleges’ costs, writes Johnson. Texas’ site is the most sophisticated.
Anthropology majors who graduated in 2002 make an average of only $46,000 after 10 years on the job, the site warns. Economics majors from 2002, by contrast, earn about $100,000.
Investigating a career as a dental hygienist, I used the site to find eight community colleges that offer an associate degree in dental support services for an annual net price less than $5,000. Statewide, the average time to a dental support degree is 5.4 years, but 84 percent of graduates are employed. The average first-year pay is $44,747. By the 10th year, that’s up to $53,213 — better than graduates with a bachelor’s in anthropology.
But not all dental hygienists do that well. El Paso Community College graduates start at $24,435 and rise to $39,768 in 10 years.
Texas Reality Check encourages young people to estimate their spending, then shows pay, after taxes, for hundreds of careers. A child-care workers can expect to take home $1,233 a month, the site estimates. That’s one third the take-home pay of a dental hygienist.
Community colleges are a boon to the economy and to their students, according to Where Value Meets Values, a report by the American Association of Community Colleges (AACC).
In 2012 alone, the net total impact of community colleges on the U.S. economy was $809 billion in added income, equal to 5.4 percent of GDP. Over time, the U.S. economy will see even greater economic benefits, including $285.7 billion dollars in increased tax revenue as students earn higher wages and $19.2 billion in taxpayer savings as students require fewer safety net services, experience better health, and lower rates of crime.
Students also see a significant economic benefit. For every one dollar a student spends on his or her community college education, he or she sees an ROI of $3.80.
Associate-degree holders average $41,900 per year in mid-career, about $10,700 more than someone with just a high-school diploma, the report estimated.
Community colleges deliver a negative return on investment to taxpayers – though a positive return to students –because of the high dropout rate, an October report found. The earlier report focused more narrowly on tuition costs and post-graduation salaries, observes the Chronicle of Higher Education.
An author of that report, Mark S. Schneider, a vice president of the American Institutes for Research and president of College Measures, thinks the AACC report exaggerates the societal benefits. The AACC researchers “didn’t acknowledge that students who attend college are already less likely to pose risks or added costs to society,” he told the Chronicle. “It assumes that if you didn’t graduate from a community college, you’re going to be a fat, smoking criminal, which is just not true.”
Overweight and obese girls earn lower grades and are less likely to go to college, concludes a new study. That’s the primary reason educated adults are slimmer and healthier, the researchers concluded. It’s not that “higher education confers lifelong social, economic, and psychological benefits that help adults” make healtheir choices.
Brooklyn’s P-Tech is the The School That Is Changing American Education, writes Rana Foroohar in Time. Students can graduate in six years with a high school diploma, an associate degree and a job offer from IBM, which worked with the City University of New York to create the program. “Six should be the new four,” says IBM executive Stanley Litow.
In Chicago, IBM partnered with Richard J. Daley College to open Sarah E. Goode STEM Academy, a six-year program that leads to a $40,0000- a-year IBM job. It’s a ticket to the middle class, writes Forhoohar.
A four-year high school degree these days only guarantees a $15 an hour future, if that. According to projections by the Center on Education and the Workforce at Georgetown University, the U.S. economy will create some 47-million job openings in the decade ending 2018, but nearly two-thirds will require some post secondary education. The Center projects that only 36% of American jobs will be filled by people with only a 4-year high school degree – half of what that number was in the 1970s.
Workers with a vocational associate degree will earn 73% more than those with only a high school diploma, the center projects.