Tuesday, August 28, 2012

Study suggests that students earning two-year degrees from for-profit colleges make about the same money as community college grads

Español: Alumnos de la UPEspañol: Alumnos de la UP (Photo credit: Wikipedia)

The Labor Market Returns to a For-Profit College Education

Stephanie Riegg Cellini, Latika Chaudhary

NBER Working Paper No. 18343
Issued in August 2012
NBER Program(s):   ED   LS
A lengthy literature estimating the returns to education has largely ignored the for-profit sector. In this paper, we offer some of the first causal estimates of the earnings gains to for-profit colleges. We rely on restricted-use data from the 1997 National Longitudinal Survey of Youth (NLSY97) to implement an individual fixed effects estimation strategy that allows us to control for time-invariant unobservable characteristics of students. We find that students who enroll in associate’s degree programs in for-profit colleges experience earnings gains between 6 and 8 percent, although a 95 percent confidence interval suggests a range from -2.7 to 17.6 percent. These gains cannot be shown to be different from those of students in public community colleges. Students who complete associate’s degrees in for-profit institutions earn around 22 percent, or 11 percent per year, and we find some evidence that this figure is higher than the returns experienced by public sector graduates. Our findings suggest that degree completion is an important determinant of for-profit quality and student success.

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