Legal Newsline

Wednesday, February 19, 2020

Paper says for-profit education not paying off for students

By Jamie Kelly | Jun 13, 2016

General court 09

BOSTON (Legal Newsline) — Allegations in a lawsuit filed by the Massachusetts Attorney General against ITT Educational Services Inc. claiming that the school misled students about their job prospects and the quality of its Computer Network Systems program point to a problem with higher education — students often pay more and earn less, according to a recent paper by two economists.

The paper, “Gainfully Employed? Assessing the Employment and Earnings of For-Profit College Students Using Administrative Data,” found that the income of students at for-profit schools went down after they left compared to before they attended, Stephanie Riegg Cellini, an associate professor of public policy and economics at George Washington University and a co-author of the paper, said.

Susan Riegg Cellini | Courtesy of the Brookings Institution

“We looked at the change in earnings that students experience before vs. after they attend bachelor's, associate's, and certificate programs in for-profit colleges,” Cellini told Legal Newsline.

“We found that, for students who left school during the recession, their earnings were lower than they were before they went to college.”

Students who attended for-profit schools to earn certificates also did poorly compared to those at community colleges.

“For certificate programs, we find that the for-profit students tend to do worse on employment and earnings measures than similar community college students,” she said.

The National Center for Educational Statistics reported that as of 2014, the most recent year for which information was available, more than 2 million students were enrolled in post-secondary programs at for-profit institutions. Cellini said that it’s hard to tell exactly why students choose for-profit schools as opposed to others.

“The for-profit colleges might say that they offer a more flexible schedule, they offer more classes online, or it might be quicker to get in to a for-profit program if there's a long wait list at a community college, for example,” she said.

“On the more pessimistic side, it could be that students are misinformed. They may not have a lot of information about their college options. They may not know that the same program they are considering at a for-profit college exists at a community college for a quarter of the price.”

For-profit schools also have an edge when it comes to recruiting, she said, because they spend more money than community colleges are able to. And cases like the lawsuit against ITT raise questions about the information students are being offered when they’re looking at their college options.

“One question is: Do students know what's out there?” Cellini asked “Do they know what they're getting into? Are the recruiters and the financial aid officers providing them accurate information about what their job prospects will be and what their loan payments will look like?”

Schools are required by federal law to publish various statistics about employment and income on their sites, but Cellini questioned whether that is enough.

“The information may be out there in some form, but can students find it easily and understand it?” she asked.

“We might be especially concerned about whether first-generation college students or students from communities where there's not a lot of college-going are able to gather the information they need to weigh the full costs and benefits of attending various institutions. We may need to go beyond information provision on a website and think about offering more personalized counseling to help students navigate their college options.”

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