The Labor Market Returns to For-Profit Higher Education: Evidence for Transfer Students

Abstract

Objective: This study examines the labor market gains for students who enrolled at for-profit colleges after beginning their postsecondary education in community college. Method: We use student-level administrative record data from college transcripts, unemployment insurance earnings data, and progression data from the National Student Clearinghouse across full entry cohorts of community college students in two statewide systems between 2001 and 2006. Using regression analysis and fixed effect methods, we calculate the wage gains to attainment across different student transfer patterns. Results: We find significant wage penalties to transfer to a for-profit college instead of to a public or private nonprofit college. For some student groups, earnings are higher if they drop out of community college instead of transferring to a for-profit college. Conclusion: Students in for-profit colleges do have lower opportunity costs in terms of foregone earnings while enrolled in college. However, these do not sufficiently compensate for lower earnings growth after college.

Does Regulating For‐profit Colleges Improve Educational Outcomes? What We Know, What We Don't Know, and What We Need to Find Out

“…The following organizes this literature by degree type. First, certificate and two‐year program FPCs appear to have higher completion rates than their public‐sector counterparts (see Deming, Goldin, & Katz, ; Liu & Belfield, ). This is perhaps not surprising, given that the sub‐baccalaureate level at FPCs is dominated by short‐term certificate programs.…”

“…Denice () finds no difference for four‐year degree holders across institution type, and Cellini and Turner () find positive returns for MA students and for degree‐completers at FPCs. Liu and Belfield () find that community college students who transferred to four‐year institutions by 2006 have lower wages after attending a for‐profit college than a not‐for‐profit college. For four‐year students, fictitious resumes for local for‐profit and local public graduates had similar call back rates from employers, although call back rates were slightly lower for for‐profit online students (Deming et al., ).…”

“…Liu and Belfield () find that for‐profit returns by age 26 are lower (in 2012) than public returns, but this aggregates across certificates, two‐year, four‐year degrees for for‐profits, even though a disproportionate share of degrees at for‐profits at the time were certificates.…”

“…Lang and Weinstein () and Deming, Goldin, and Katz () use Beginning Post Baccalaureate study, which ended at age 26 and therefore mostly captured traditional age students; Liu and Belfield () use state administrative data following students up to four years after graduation; Cellini and Chaudhary () use NLSY 97.…”

How Does For-profit College Attendance Affect Student Loans, Defaults and Labor Market Outcomes?

“…Liu and Belfield (2014b) use individual fixed effects to show that students who transfer from a community college to a for-profit experience lower wage growth than community college students who do not transfer. Jepsen, Mueser and Jeon (2016) find large returns to for-profit enrollment in Missouri using student fixed effects, but they do not compare those returns to those from other postsecondary sectors.…”