Getting buried by student loans at Devry and then being worse off for it? Its not just our lawsuits against Devry that argue this is the case. Below is an article from the Wall Street Journal detailing a study of 1.4 million students who attended a for profit school between 2006 and 2008. The staggering conclusion? Students on average were worse off aster attending for profit schools. In other words, for profits students spent massive sums on their education…only to be in a worse position prior to attending the for profit school. While for profit schools like Devry argue the results are skewed due to the state of the economy during the 2007-2009 recession, students at the far cheaper community colleges during the same time period saw their earnings go up. And had far less student loan debt. What do you think?
Undergraduates were less likely to be employed and earned smaller paychecks, largely due to high dropout rates, a new study found
Millions of Americans enrolled in for-profit colleges in recent years to learn a trade and find decent-paying work. A new study found devastating results for many of their careers.
The working paper, published this week by the National Bureau of Economic Research, tracks 1.4 million students who left a for-profit school from 2006 through 2008. Because students at these schools tend to be older than recent high-school graduates, they’ve spent time in the workforce. The researchers used Education Department and Internal Revenue Service data to track their earnings before and after they left school.
The result: Students on average were worse off after attending for-profit schools. Undergraduates were less likely to be employed, and earned smaller paychecks–about $600 to $700 per year less–after leaving school compared to their lives before. Those who enrolled in certificate programs made roughly $920 less per year in the six years after school compared to before they enrolled.
The key factor is that most of these students never earned a degree–they dropped out early. Excluding them, the minority of students who earned degrees saw an earnings bump after graduating.
“Certificate, associate’s, and bachelor’s degree students generally experience declines in earnings in the 5 to 6 years after attendance relative to their own earnings in the years before attendance,” write co-authors Stephanie Riegg Cellini of George Washington University and Nicholas Turner of the U.S. Treasury Department.
The picture is even worse when considering most students borrowed to attend the colleges. Nearly 9 out of 10 for-profit school students took on student debt; those in associate’s programs borrowed an average $8,000 and those in bachelor’s programs, $13,000.
“Examining the distribution of average annual earnings effects and average annual debt payments reveals that the vast majority of for-profit students experience both higher debt and lower earnings after attendance, relative to the years before attendance,” the authors write.
The analysis includes one big caveat:The group of students they studied left school either just before or during the 2007-2009 recession. Unemployment was skyrocketing, and incomes were falling broadly. “Therefore, our findings are likely to be partially explained by overall weakness in the labor market,” they say.
But Dr. Cellini pointed out in an interview that her research compared for-profit college students with community college students, and controlled for various factors including household income and area of study. Community-college students, unlike their counterparts at for-profit schools, saw their earnings go up after school.
The Association of Private Sector Colleges and Universities, the main trade group for for-profit colleges, called the study deeply flawed.
“The American economy suffered a 9.1% decline in middle-skill jobs during the Great Recession, while in the years following we have only seen a 1.9% recovery,” said Steve Gunderson, the group’s president. “Performance across the entire American economy was down–so it not surprising that earnings for those most harmed by the economic downturn would also be down.”
He added that schools should be judged on lifetime benefits, not on earnings just five years out of school.
Moreover, this study won’t resolve the debate over whether for-profit college students drop out because they are ill-prepared for college-level coursework, rather than due to poor education provided by the schools.
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