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Next Brown Bag

Monday, Feb 1 at noon, 6050 ISR-Thompson
Sarah Miller

David J. Harding photo

For-Profit Colleges, Educational Attainment, and Labor Market Outcomes

a PSC Research Project [ARCHIVE DISPLAY]

Investigator:   David J. Harding

Motivation: As the United States moves toward a knowledge-based economy, access to higher education has become ever more important. Yet unequal access to higher education by race/ethnicity, nativity, and family background has persisted. African-Americans, Latinos, and young people from lower income families or whose parents did not attend college are much less likely to enroll in and complete college. According to prior research, these students face barriers to college enrollment and completion ranging from financial resources and poor secondary school preparation to lack of knowledge about institutions of higher education and financial aid and intense family obligations that interfere with schooling. Ideally the educational attainment of the labor force would be increasing to meet the needs of the new economy, but since the 1970s the proportion of the population earning a Bachelor’s degree has remained flat at about 25%. Community colleges, once an option for upward mobility, have gradually shifted their mission away from preparation for transfer to a BA granting institution and to vocational training.

Yet one sector of higher education that has been growing rapidly is for-profit colleges, sometimes also called “proprietary” colleges. The number of BA degrees granted by for-profits rose tenfold between 1982 and 2002, a time when the total number of BA degrees increased by only about one-third. Although the most well-know for-profits, such as the University of Phoenix, are widely perceived to operate primarily online, the vast majority of their students actually attend classes at “brick and mortar” campuses across the country (including here in Ann Arbor). The rise of for-profit colleges raises important questions about whether these institutions have the potential to increase access to higher education and to reduce racial and class disparities in college enrollment and completion. Although only one in 20 students who attend degree granting institutions attend for-profits, 1 in 10 black students, 1 in 14 Latino students, and 1 in 14 first generation college students is enrolled at a for-profit college.

Proponents of for-profit colleges cite several potential advantages of for-profit colleges for traditionally underserved students: (1) the institutional imperatives of for-profit corporations to continually grow via increasing enrollment and retaining students (private colleges, of which for-profits are a subset, actually have higher retention rates than community colleges, despite their higher cost); (2) greater convenience for working students or students with children through flexible course scheduling and multiple course start dates; (3) degree and course options tailored to skills needed in the labor market, which is particularly appealing to students from disadvantaged backgrounds who want an immediate payoff. Nevertheless, critics have raised important counterpoints: (1) low quality due to part-time faculty, lack of liberal arts education, minimal facilities, and fewer classroom hours with instructors; (2) campus locations that are difficult to access from underserved rural and poor central city communities; (3) targeting the most advantaged students, such as older individuals with considerable labor market experience.

Research Questions: Central to these debates is whether for-profit colleges actually improve student outcomes. This project will examine whether attending a for-profit college is associated with increased probability of receiving an Associate’s or Bachelor’s degree, greater likelihood of employment, and/or higher earnings. We will begin by examining the characteristics of students who attend for-profit colleges compared to those at community colleges, four-year public and non-profit colleges, and individuals who never attend college in order to select the appropriate comparison group(s) for assessing the effects of for-profits. We will then compare the educational and labor market outcomes of individuals who have attended for-profit colleges with the appropriate comparison group(s), controlling for background characteristics.

Data and Methods: One key challenge for higher education researchers is a lack of individual-level data on students attending for-profit colleges. Traditional higher education datasets such as those gathered by the National Center for Education Statistics (NCES) have either very small numbers of for-profit students in their samples or do not follow students over time. We will use data from another source, the National Longitudinal Survey of Youth 1997 Cohort (NLSY97), which follows a representative sample of about 9,000 youth age 12-16 in 1997 through 2006-07. These data contain an oversample of black and Latino youth and, with restricted data I have obtained under contract with the Bureau of Labor Statistics, allow the researcher to identify which colleges each individual attended and when. Our preliminary work indicates that NLSY97 contains over 300 individuals who have attended a for-profit college, far more than other datasets. These data also contain extensive family and individual background information, including high school transcript data, and detailed data on outcomes (degrees earned and employment and earnings). A second key challenge is estimating causal effects with non-experimental data. We will use state of the art methods for causal inference with observational data, including propensity score matching, inverse probability of treatment weighting, sensitivity analysis, and instrumental variables. Geographic variation in access to for-profit colleges will serve as an exogenous source of variation in our examination of the effects of for-profit colleges. (Publicly available NCES data from the Integrated Postsecondary Education Data System (IPEDS) provide comprehensive data on all degree granting institutions, updated yearly.)

Funding Period: 01/01/2010 to 12/31/2012

Country of Focus: USA

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