2-Year Proprietaries: Higher Graduation Rates At What Cost?

Thursday, September 10, 2009
For several years researchers have debated the relative merits of public community colleges vs. 2 year for-profit schools, in part because the latter are deemed a relevant comparison group for the former-- they share some of the same students, offer the same kinds of degrees, etc. These comparisons have become part of the basis for assessing whether there is a "community college penalty" -- a negative effect of choosing that kind of school over an alternative. The basic numbers certainly seem damning. For example, according to a study by Ann Person and Jim Rosenbaum, among students starting college as part of the Beginning Postsecondary Study in 1995-1996, 42% of those attending a 2-year proprietary completed an associate's degree or higher within 3 years, compared to just 8% of those who began in community colleges.

Of course, those differences in outcomes could be attributable to many things aside from institutional practices--and therefore the same authors have also tested for differences using propensity score matching, which attempts to generate an apples-apples comparison based on observable characteristics of students and colleges. In a recent article they find that while the students attending public and private 2-year colleges overlap substantially in their attributes, their degree outcomes differ. Students are about 14% more likely to complete a degree of any kind if they attend a private rather than public 2-year college (this impact is significant only for students who typically attend a community college--not for those who typically attend a proprietary).

What explains these differences? In a recent book, Jim Rosenbaum and his colleagues rely on largely qualitative data from Chicago colleges to argue that community colleges have a lot to learn from 2-year for-profits, in particular when it comes to advising and job placement services. For example, they contend that for-profits structure students' experience in ways that help them overcome gaps in their "college knowledge," such as those resulting from not having college-educated parents. They also note, however, that it's also possible that academic standards are lower at private colleges, and admit that there's no evidence that employers treat the degrees earned at the two types of colleges any differently. Moreover, there are no discernable differences in earnings based on the type of 2-year college attended.

Now a new report from the College Board adds an interesting wrinkle to the story. Ok, so it's possible that students are more likely to graduate from career colleges. But they graduate with a lot more debt. Data from the 2007-2008 National Postsecondary Student Aid Study reveal that 61% of community college students graduate with less than $10,000 in debt, compared to only 22% of students graduating from 2 year for-profits. In contrast, 19% of graduates from 2 year for-profits have $30,000 or more in student loans, compared to only 5% of community college graduates. Nearly all students (98%) finishing at 2 year for-profit colleges have taken on a loan, compared to just 38% of community college graduates.

Student debt has consequences for later decisions, including choice of occupation, ability to secure a home mortgage, start a family, etc. These latest statistics therefore lead to an important question: is the increased probability of college graduation observed among 2 year for-profit students offset by their higher levels of debt upon finishing? Are the two data points related-- e.g. are community college students with more debt less likely than comparable 2 year for-profit students to finish college, meaning that the College Board's comparisons are skewed? This is possible, if we believe that stronger advising at for-profits helps keep students enrolled and/or encourages them to take on debt and work less, promoting persistence. In any case, while we await answers to these questions, we might want to rethink the tendency to tout the for-profits as a model to which community colleges ought to aspire.