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For-Profit Grads' Wage Disadvantage

July 3, 2012

In analyzing the salary gains associated with various kinds of academic programs, advocates of for-profit higher education have noted that the sector's students tend to be less prepared for postsecondary work than are students in other sectors. A study released Monday by the National Bureau of Economic Research agrees with that generalization. But it finds that, even when controlling for such factors, there is an advantage for the nonprofit sectors in boosting salaries, over the for-profit sector.

The study (abstract available here) arrives at a time of continued debate between for-profit advocates and critics on the extent to which for-profit programs advance students economically.

For the study, the authors -- Kevin Lang and Russell Weinstein, economists at Boston University -- examined data from the Beginning Postsecondary Students Longitudinal Study for some 16,6803 students who began postsecondary education for the fi…rst time in the 2003-4 academic year. Specifically, the researchers focused on those starting certificate and associate degree programs.

In certificate programs, the study found little economic gain for those who completed -- regardless of what kind of institutions they attended. But for those who started in associate degree programs, the study found "large, statistically significant benefits from obtaining certificates/degrees from public and not-for-profit but not from for-profit institutions." The study noted that "these results are robust to addressing selection into the labor market from college, and into positive earnings from unemployment."

While the study did not find that the differences were restricted to health fields, it did find key differences there. And for both certificate and associate programs at both for-profit and nonprofit institutions, the most popular field of study is health. "We observe a large and statistically significant return to earning a certificate in health from a public or not-for-pro…fit institution," the study says. "In contrast, the point estimate for earning such a certificate from a for-pro…fit is close to zero....  We also observe a noticeably (albeit not statistically significantly) larger return to an associate degree in health from a not-for-pro…fit/public than we found for the whole sample."

The authors note reasons to be cautious about the findings. For example, these graduates entered the work force in economically difficult times. But the paper also notes factor after factor that could explain the gaps -- and that did not turn out to be the case. For instance, the authors note that "one possibility is that students at not-for-profi…t and public institutions have access to better career offices." But in fact, the study finds that those at for-profit institutions received more help from career offices than did those in the nonprofit sector.

A spokeswoman for the Association of Private Sector Colleges and Universities said that group could not comment on the study Monday, due to numerous news developments involving the for-profit sector.

One expert on measuring the value of various degree programs said that based on a preliminary look at the study, he was concerned that more breakdowns were not analyzed. Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce, said that the results could be different if the researchers focused on certificates based on their value in the work force. (Carnevale has done research suggesting wide variation in the value of certificates by field of study).

He also suggested more of a focus on gender, given that certificate programs that tend to attract women "are the ones with the highest concentrations of no value." He said that it was important to look for "more details and longer time horizons."

 

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