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For-Profit College Attendance Linked to Poor Financial Outcomes

October 23, 2018

A paper released last month by researchers at Stanford University, Cornell University and the Federal Reserve Bank of New York found that students have worse job outcomes and increased risk of defaulting on student loans when they attend for-profit institutions.

The report, which was released by the National Bureau of Economic Research, also found that among four-year students, enrollment at for-profit colleges led to more loans, higher loan amounts, an increased likelihood of borrowing and worse labor market outcomes. The same was true for students who attend two-year for-profit colleges, although they are more likely to graduate than their counterparts at public community colleges.

"A substantial amount of public funds go to for-profit institutions through the financial aid system," the researchers wrote. "Our estimates indicate the return to such expenditures may be quite low."

Steve Gunderson, president and chief executive officer of Career Education Colleges and Universities, an association that represents for-profit institutions, disagreed with the report and questioned the data the authors used.

"This report will find a similar place in the dustbin of research since the authors follow a long line of researchers who cherry-pick data points to reach the predetermined conclusion that only public institutions provide a higher education benefit to students," Gunderson said in an email.

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Ashley A. Smith

Ashley A. Smith, Reporter, covers community colleges, for-profit schools and non-traditional students for Inside Higher Ed. She joined the publication in 2015 after covering government and K-12 education for the Fort Myers News-Press in Florida for three years. Ashley also covered K-12 and higher education for three years at the Marshfield News-Herald in Wisconsin. She has interned with The Flint Journal, USA Today and the Detroit Free Press. Ashley grew up in Detroit and is a 2008 graduate of Michigan State University. 

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