↳ Non_title_iv

October 15th, 2019

↳ Non_title_iv

Machine

WEAK OUTCOMES

On the returns to for-profit colleges

As student debt grows and the labor market stagnates, a growing body of research seeks to answer questions about the worthiness of college. What characterizes the schools and populations for whom college is worth it? What does worthiness mean—financial, intellectual, for individuals, for society as a whole? A key way to examine these questions is to find evidence on the financial returns to college. Douglas Webber examines the question along lines of ability, major, and debt, and explores the question for marginal students; JFI’s Sidhya Balakrishnan and Barry Cynamon looked at the way that returns vary based on the type of financing (loans, IDR, ISAs).

A new paper from STEPHANIE CELLINI and NICHOLAS TURNER uses administrative data to examine the returns to public college vs. for-profit college certificate programs. The key finding is that “for-profit certificate students experience lower earnings and employment post-college than their public sector counterparts,” but the richness of the data allows for many more surprising conclusions as well: one is that for-profit college may actually have worse returns than no college whatsoever; another is that for-profits may have worse effects for women than for men. From the paper:

“Across the board, our results show that despite the much higher costs of attending a for-profit institution, the average for-profit certificate student experiences lower earnings effects relative to public sector students. For-profit colleges outperform public institutions in only one of the top ten for-profit fields—cosmetology. Further, students in online and chain for-profit institutions appear to fare worse than students in more traditional campus-based and independent institutions. Our institution-level regressions reveal that the weak performance of the for-profit sector is not limited to a few poor performing institutions, rather the majority of schools appear to have negligible average earnings effects.”

The full paper is available in the Journal of Human Resources here.

  • Scott Cunningham wrote a substantial tweet-thread summary, available here. “I’d include this paper when sorting through the human capital vs signaling debate. This is arguably pure credentialing… So why are the returns so bad if it’s also a credential? I’d be curious how proponents of the ‘education is only signaling’ hypothesis reacted to this study.” For more on that debate, see our previous JFI letter.
  • How can for-profit colleges be held accountable for poor returns to the educations that they provide? A 2016 report from Davids J Deming and Figlio explains the successes and failures of Obama’s Gainful Employment Act, and suggests the importance of financial “skin in the game” for all kinds of institutions. Link.
  • A new data explorer from the Urban Institute brings together an array of education data sets. Link.
  • Cellini and Turner’s piece examines certificate programs at for-profits. For more on certificate programs, see our March letter on the work of Di Xu and Madeline Trimble, and our May letter on the many non-Title-IV certificates, certifications, and credentials about which there is almost no data.
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May 20th, 2019

Flower Meadow in the North

TANGLED PATHS

First steps to mapping the non-Title-IV education landscape

Title IV of the Higher Education Act of 1965 permits certain postsecondary institutions to be eligible for federal financial aid funds. A wide variety of programs are Title IV eligible: public, private, for-profit, vocational. Yet there are also a vast number of non-Title-IV (NT4) programs, offering credentials, certifications, and various forms of training—and neither the Department of Education, nor any other body, collects unified data on all these programs. How many students attend them? What subjects are they learning? What are their outcomes?

There's only been one recent paper that's made a serious attempt to understand the scale of NT4 programs. In a 2012 working paper, Stephanie Cellini and Claudia Goldin calculated that NT4 institutions educate 27% of students enrolled in for-profit institutions each year (670,000 enrollments).

A 2017 paper by Jessie Brown and Martin Kurzweil for the American Academy of Arts and Sciences attempts to map the alternative postsecondary landscape, including "certificate programs; work-based training; skills-based short courses; MOOCs; and competency-based education programs." That paper finds that these programs are growing:

“While each of these alternatives has roots that reach back decades if not longer, for a number of reasons, alternatives have increased in size, diversity, and importance in recent years, and are likely to continue to grow. Though the length and cost of alternative programs vary, most last for less than two years and cost significantly less than a four-year degree, the cost of which continues to rise rapidly… A characteristic feature of all the programs discussed is their flexibility to align directly with specific employer needs and competencies in skill-based fields. Despite these reasons for their appeal and likely growth, evidence of the efficacy and value of these alternatives—for students and taxpayers—is still thin.”

As the debate over the skills gap continues and the cost of college soars, the obscurity in which these programs operate becomes increasingly untenable. Link to that paper.

  • Brown and Kurzweil work includes three recommendations for policymakers, including recommendations to create a robust data system and quality assurance scheme. George Washington University has just launched the Non-Degree Credential Network project to begin building out research and data. Link.
  • Andrew Reamer's 2018 list of credential info aggregators brings into relief the diversity of the programs as well as the chaotic state of the information about them. Link.
  • In a March letter, we featured work by Xu and Trimble on a closely related topic: what are the outcomes of students who participate in certificate programs? Link to that letter, link to their paper.
  • A 2016 paper by Santa Falcone examines US certificate programs at Title IV schools from 1980-2013, and includes some relevant education history: "This growth period [1870-1910] also brought into existence private, external, independent university ratings agencies. These agencies successfully used coercion and incentives on higher education institutions to develop more standardized admissions, instruction, and accreditation criteria to counter the lack of any existing academic standards." Link.
  • A 2013 paper by Rosenbaum and Rosenbaum covers occupational colleges and certificate programs (with, again, a focus on Title IV institutions). Link.
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