Attending a for-profit college can be bad for your economic health — especially if, like most for-profit students, you don't earn a degree.
"[T]he vast majority of for-profit students experience both higher debt and lower earnings after attendance, relative to the years before attendance," authors Stephanie Riegg Cellini and Nicholas Turner write in "Gainfully Employed? Assessing the Employment and Earnings of For-Profit College Students Using Administrative Data," a research paper released Monday.
The paper is likely to play into the ongoing debate over for-profit schools, which critics accuse of deceptive marketing. Too often, the critics say, for-profits overload their students with debt and provide little in the way of marketable skills in return.
Cellini and Turner examined data on about 1.4 million students who left for-profit schools between 2006 and 2008, correlating their academic data with earnings data from the IRS. They believe the study is the most comprehensive of its kind.
The researchers looked at the students' earnings over the five or six years after their education. In the aggregate, associate's and bachelor's degree students showed a slight decline in their likelihood of employment and about $600 to $700 lower earnings.
That compares with returns on earnings from attending college of 10 percent to 15 percent a year for four-year colleges and 7 percent to 15 percent a year for community college, the paper says.
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Cellini and Turner note that their data comes from students who left college at the start of the Great Recession, so the weak labor market probably played a role in the results.
The biggest factor is that so many people drop out before finishing their programs. Among associate and bachelor degree seekers at for-profit colleges, only about 30 percent earn a degree. Those that do finish see a positive return: Cellini and Turner found a 4 percent to 5 percent rise in the rate of employment and higher earnings of $3,500 to $4,000.
About 60 percent of people in certificate programs complete them, and they see earnings increases, too. However, people who attend community colleges generally do better yet, and those schools are much cheaper to attend, the authors write.
"In only one of the top 10 for-profit fields — cosmetology — do for-profit students out-earn their public sector counterparts," the paper says.
Cellini and Turner said the weak earnings were seen throughout the for-profit sector, not just at a few outlier schools.
In a statement, Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities, said the study was flawed because "it looks only at short-term earnings and not at the lifetime benefit" of career education.