For-Profit on the Job Application

August 18, 2014

In the debate over the value of attending a for-profit college, the rubber hits the road in corporate human resources departments. And now, for the first time, researchers have looked at how employers respond when for-profits are listed on a résumé.

The newly released working paper by five economists tracked callbacks by employers in response to 8,914 fictitious job applications. It measured how young holders of certificates and associate degrees from for-profits fared in comparison to holders of the same credentials from community colleges.

The research found no statistically significant difference in how the two sectors stacked up.

An interpretation of those results, however, depends on who you ask.

Employers’ overall response rate -- meaning a positive, non-perfunctory reply via phone or e-mail -- was 11.6 percent for applications that listed community colleges compared to 11.3 percent for those that listed for-profits. Likewise, the split for interview requests was tilted slightly in community colleges’ favor, at 5.3 percent versus 4.7 percent. Those splits fell well within the study’s margin of error.

To the five researchers who conducted the study, the primary takeaway is that for-profits are a worse investment.

“Our results provide no indication that résumés that list for-profit college credentials generate more employer interest than those that list community college credentials,” they wrote. “If anything, the opposite may be true.”

Cory Koedel, an economist at the University of Missouri at Columbia, is one of the study’s co-authors. He said the economics orientation of the researchers led to the framing of their primary interpretation of the study.  

“It is more expensive to attend for-profit colleges,” he said, and the findings show a better return on investment for community college credentials because they produce a comparable result at a lower price to the student. 

Koedel also pointed to the slightly better response rate for job applications that listed community colleges, even if it wasn’t statistically significant. The study had clear data that a community college-issued credential was at least not a disadvantage compared to a for-profit one.

“If you had to make a bet, you’d bet on community college doing better,” he said.

However, at least one expert who reviewed the study had the opposite response to its results.

“I would’ve expected that there would be strong negative effects of attending for-profits,” said Stephen R. Porter, a professor of higher education at North Carolina State University. “I was astounded that there was no difference between the groups.”

Porter was a discussant of the study’s findings at a recent conference. He called the methodology and research design “rock-solid.”

Yet he differed with the report’s authors in their big-picture take on the findings.

Given that critics and the news media often describe the for-profit sector as being “greedy degree mills,” Porter said, the study suggests that in the eyes of employers, the colleges “aren’t doing as bad of a job as we thought.”

Study's Design

The National Center for Analysis of Longitudinal Data in Education Research (CALDER) published the 48-page paper, which has yet to go through the full peer review process. It’s part of a research program by the American Institutes for Research and six research universities.

CALDER, the Spencer Foundation and the Economic and Policy Analysis Research Center at the University of Missouri paid for the research. And the center receives funding from the Bill & Melinda Gates Foundation, among others.

Researchers sent the nearly 9,000 fake job applications in response to online postings in seven major U.S. cities. They responded to ads during the year prior to this June.

The faux applicants were young. They all earned a high school diploma in 2010. For those who attended college, they completed their studies last year. The study included holders of certificates, associate degrees and applicants with some college credits, but no credential.

Researchers opted not to include bachelor’s degrees and to focus on “sub-baccalaureate credentials” because for-profits issue so many of them -- roughly one-third of all certificates and associate degrees earned in the United States.

The study sent applications for positions in six broad categories of occupation, all of which might be realistic for young job-seekers with less than a bachelor's degree. The jobs were in administrative assisting, customer service, information technology, sales, medical assisting (excluding nursing) and medical billing, and office work.

Non-academic characteristics of applicants, such as work experience and high schools attended, were randomly assigned and controlled for across sectors.

In each city the study used names of roughly 14 real community colleges and for-profits. The institutions were selected randomly from a pool of candidates, all of which had a local presence. On the for-profit side, researchers picked a mix of both large national chains and smaller local institutions.

However, Koedel said the sample of colleges was weighted by enrollments. So in most cases “we’d grab the big one” among for-profits rather than a mom-and-pop provider.

Controversial Issue

Porter said the study’s sample and various controls allowed it to give a straightforward comparison of how employers view the names of for-profits versus community colleges on job applications.

There are several possible reasons that the findings were a toss-up, according to the researchers.

“A simple explanation for this result is that job applicants who attended for-profit and community colleges who otherwise have similar characteristics do not systematically differ in skills valued by employers,” the paper said.

Yet the study notes that the relatively high cost of attending a for-profit “results in little labor market payoff” for credentials earned from colleges in that sector.

The researchers also compared applicants that had at least some college under their belts to those that just held a high school diploma.

While the study found “little evidence” of a benefit from listing a for-profit relative to no college at all, that comparison was statistically insignificant and inconsistent. The estimated effects of community college compared to no college were also insignificant, although they suggested more positive returns.

Koedel cautioned against reading much into the high school-only comparisons because of possible confounding effects the study could not prevent.

For example, the study said it’s possible that employers are less favorable about applicants whose work experience occurred at the same time they were attending college. And the study was not designed to weigh the longer-term payoffs of college, which may look better over time.

“What’s not clear is what will happen 10 years later,” Koedel said.

Both Koedel and Porter are aware of the deeply politicized fight over for-profits that’s occurring in Washington, D.C., and in many state capitals. They acknowledged that advocates on both sides of the debate are likely to run with the two differing interpretations of the new study.

“People love to grab data to support their point of view,” said Porter. “As a researcher you can’t really help that.”

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