New Study: “For-Profit” Colleges Actually Hurt Students’ Economic Prospects

Private, for-profit educational institutions have been prominent in the news lately thanks to Trump University, and it’s probably easiest to define them by what they’re not. First off, to state the obvious, they’re not public schools, which are largely funded by taxes (think of the giants, like Ohio State or the University of Florida). Nor are they private, non-profit schools, which are primarily funded by tuition and endowments—i.e. any Ivy League school, Stanford, Duke, Vanderbilt, etc. etc. etc. Private, for-profit schools are the third category, the red-headed stepchild of colleges, distinguished by the fact that they’re “owned” by investors and stockholders who are trying to make money.

Some of these colleges exist mainly online, like the University of Phoenix, and beyond big names like Phoenix and DeVry and ITT Tech, you probably wouldn’t recognize many by name. New ones are always opening, and old ones are always closing. They don’t field athletic teams, they don’t have extensive histories, and controversy, spurred on by poor student outcomes, has attended every moment of their existence.

Now, a new study by the National Bureau of Economic Research which looked at over 1.4 million student outcomes came to a shocking conclusion: On average, graduates of for-profit colleges earned less money after they finished than they had before. In their language:

“on average associate’s and bachelor’s degree students experience a decline in earnings after attendance, relative to their own earnings in years prior to attendance…”

“In absolute terms, we find no evidence of improved earnings post-enrollment for students in any of the top ten for-profit fields and we can rule out that average effects are driven by a few low-performing institutions.”

In short, these schools are ridiculously expensive—average annual tuition is around $15,000—ånd they’ll actually hurt your employment prospects when you’re finished. What a deal!