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The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?

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  • David J. Deming
  • Claudia Goldin
  • Lawrence F. Katz

Abstract

Private for-profit institutions have been the fastest growing part of the U.S. higher education sector. For-profit enrollment increased from 0.2 percent to 9.1 percent of total enrollment in degree-granting schools from 1970 to 2009, and for-profit institutions account for the majority of enrollments in non-degree granting postsecondary schools. We describe the schools, students, and programs in the for-profit higher education sector, its phenomenal recent growth, and its relationship to the federal and state governments. Using the 2004 to 2009 Beginning Postsecondary Students (BPS) longitudinal survey we assess outcomes of a recent cohort of first-time undergraduates who attended for-profits relative to comparable students who attended community colleges or other public or private non-profit institutions. We find that relative to these other institutions, for-profits educate a larger fraction of minority, disadvantaged, and older students, and they have greater success at retaining students in their first year and getting them to complete short programs at the certificate and associate degree levels. But we also find that for-profit students end up with higher unemployment and “idleness” rates and lower earnings six years after entering programs than do comparable students from other schools, and that they have far greater student debt burdens and default rates on their student loans.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17710.

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Date of creation: Dec 2011
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Publication status: published as David J. Deming & Claudia Goldin & Lawrence F. Katz, 2012. "The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 139-64, Winter.
Handle: RePEc:nbr:nberwo:17710

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References

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  1. Stephanie Riegg Cellini, 2010. "Financial aid and for-profit colleges: Does aid encourage entry?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(3), pages 526-552.
  2. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
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Cited by:
  1. Cory Koedel & Rajeev Darolia & Paco Martorell & Katie Wilson & Francisco Perez-Arce, 2014. "Do Employers Prefer Workers Who Attend For-Profit Colleges? Evidence from a Field Experiment," Working Papers 141, Department of Economics, University of Missouri.
  2. Lance Lochner & Alexander Monge-Naranjo, 2014. "Default and Repayment among Baccalaureate Degree Earners," Working Papers 2014-003, Human Capital and Economic Opportunity Working Group.
  3. Kevin Lang & Russell Weinstein, 2013. "The Wage Effects of Not-for-Profit and For-Profit Certifications: Better Data, Somewhat Different Results," NBER Working Papers 19135, National Bureau of Economic Research, Inc.
  4. Cremer, Helmuth & Maldonado, Dario, 2013. "Mixed oligopoly in education," TSE Working Papers 13-381, Toulouse School of Economics (TSE).
  5. Justine S. Hastings & Christopher A. Neilson & Seth D. Zimmerman, 2013. "Are Some Degrees Worth More than Others? Evidence from college admission cutoffs in Chile," NBER Working Papers 19241, National Bureau of Economic Research, Inc.
  6. John Bailey Jones & Fang Yang, 2012. "Skill-Biased Technical Change and the Cost of Higher Education," Discussion Papers 12-08, University at Albany, SUNY, Department of Economics.
  7. Bruce, Donald J. & Carruthers, Celeste K., 2014. "Jackpot? The impact of lottery scholarships on enrollment in Tennessee," Journal of Urban Economics, Elsevier, vol. 81(C), pages 30-44.
  8. Stephanie Riegg Cellini & Latika Chaudhary, 2012. "The Labor Market Returns to a For-Profit College Education," NBER Working Papers 18343, National Bureau of Economic Research, Inc.
  9. Darolia, Rajeev, 2013. "Integrity versus access? The effect of federal financial aid availability on postsecondary enrollment," Journal of Public Economics, Elsevier, vol. 106(C), pages 101-114.
  10. Manna, Ester, 2013. "Mixed Duopoly with Motivated Teachers," MPRA Paper 52041, University Library of Munich, Germany.
  11. Cellini, Stephanie Riegg, 2012. "For-Profit Higher Education: An Assessment Of Costs And Benefits," National Tax Journal, National Tax Association, vol. 65(1), pages 153-79, March.
  12. Kevin Lang & Russell Weinstein, 2012. "Evaluating Student Outcomes at For-Profit Colleges," NBER Working Papers 18201, National Bureau of Economic Research, Inc.

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