Graduates of For-Profits and
Community Colleges Fare About the Same
in Earnings Study

Students who earn an associate degree at a for-profit institution see similar increases in their earnings to those of students who go to a community college, according to the preliminary results of a working paper released recently by the National Bureau of Economic Research.

While the study's sample included only a small cohort of graduates of for-profit colleges, those students earned about 22 percent more than they did before entering college—about the same as a larger pool of community-college graduates, according to the paper, "The Labor Market Returns to a For-Profit College Education."

When the study's authors extended their analysis to students who enrolled in either type of institution but did not graduate, the average gain was smaller, at about 6 percent to 8 percent.

"We find no evidence that the returns to attendance are different in the public and private sector," write the authors, Stephanie Riegg Cellini, an Associate Professor of Public Policy and Economics at George Washington University, and Latika Chaudhary, an Assistant Professor of Economics at Scripps College.

In a few cases, they write, students from for-profits enjoyed higher returns than those who attended community college.

The results of the paper, which is still undergoing peer review, come with many caveats and arrive amid an increasingly rancorous battle over the educational quality of for-profit colleges.

The paper's findings also differ from those of a working paper released by the bureau earlier this summer, which argued that graduates of for-profit colleges earn less than those who went to nonprofit private and public institutions.

Ms. Cellini said that in their analysis she and Ms. Chaudhary tried to control more stringently for different student backgrounds. They analyzed data from the National Longitudinal Survey of Youth, which started studying subjects in 1997 when they were between 12 and 17, and followed them through 2009. The authors focused on survey data that tracked people as they left high school, started working, went to either a for-profit college or a community college for an associate degree, and then re-entered the labor market.

The study does not answer as many questions as the authors had hoped, said Ms. Cellini, though she thought its results might be seized upon by both sides of the battle over for-profit colleges. "There's really room on both sides of the debate," she said.

Significantly, however, the range of outcomes for students who attended for-profits was wide, the authors noted. The margin of error spanned more than 20 percentage points, with post-college earnings ranging from 2.7 percent lower to 17.6 percent higher than before college.

While the wide range of results could reflect varying levels of quality between for-profit institutions, Ms. Cellini said the chief reason for the spread was likely the small sample size. Only 226 students in the study attended for-profits, while 1,927 went to community colleges.

The large margin of error made it difficult to state conclusions with a high degree of certainty. The study also did not account for the sizable difference in cost between the two types of institutions. In-state tuition and fees average $2,300 at community colleges, while costs at for-profits average $15,000.

"Given the much higher cost of a for-profit education relative to a public education," the authors write, "we expect that some students might find a community college a better investment."

(Excerpted from the August 27, 2011 edition of The Chronicle of Higher Education, article by Dan Barrett.)

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