Students who earned vocational certificates from for-profit colleges made an average of $900 less annually after attending the schools than they did before, according to a new study, leaving those who took out loans hard-pressed to pay them back.
By contrast, students who received similar certifications from public community colleges earned $1,500 more than they did before attending school.
The paper from the National Bureau of Economic Research offered new evidence for critics who say the for-profit college industry swindled students by pressuring them into racking up tens of thousands of dollars in debt while adding comparatively little value to their careers.
In 2014, President Barack Obama’s administration instituted new rules limiting the amount of debt students can take on in career-training programs. Although no schools were named in the study, some of the biggest for-profit colleges — including DeVry University and the University of Phoenix — have faced federal lawsuits or investigations that suggested they deceived students about the likelihood of finding jobs in their fields of study and how much they would earn.
The NBER paper analyzed data for 567,000 students who pursued vocational certificates at for-profit schools between 2006 and 2008. More than 4 in 5 of them carried student loan debt. Of the 278,000 who earned similar certificates from public community colleges, just 25 percent were indebted, adjusting for demographic differences between the groups.
In 2014, the average tuition for certificate students at for-profit colleges was $8,118, compared with $712 for demographically similar students at community colleges.
In 2014, average annual tuition at two-year, for-profit colleges was about $14,200, quadruple what students at community colleges paid.
The researchers — Treasury Department financial economist Nicholas Turner and economist Stephanie Riegg Cellini of George Washington University — focused the analysis on students seeking the kinds of vocational certificates that are a popular offering at for-profit schools. These credentials can help students find work in fields such as nursing, auto repair, cosmetology, and heating and air-conditioning.
The disparities in earnings between for-profit college students and community college students were especially pronounced for men, who made nearly $2,200 more on average each year after attending a public community college than they had before.
The discrepancies are even more striking because students at for-profit colleges are more likely to complete their programs. For those who finish, the advantages of having attended a community college are even greater.
A major exception was cosmetology, in which for-profit schools seemed to do modestly better for their students. Cosmetology is very popular at for-profit schools — about 19 percent of students seeking certificates at a for-profit school were in a cosmetology program in the federal data. (Various medical programs accounted for much of the rest.)
Cellini and Turner speculate that many people studying cosmetology attend for-profit schools connected with recognizable brands such as the Aveda Institute. That recognition can give students an advantage in the labor market.
The Association of Private Sector Colleges and Universities, a trade organization, said that the study was incomplete. Focusing on recent data for the relatively new industry, the researchers couldn’t calculate the effects of attending a for-profit school over the long term.
The study “looks only at short-term earnings and not at the lifetime benefit of higher education,” Steve Gunderson, the association’s president, said in a statement. “Without a career focused degree or certificate, these students would not have an opportunity to improve their earning potential.”
Cellini rejected that argument in an interview. Although earnings for for-profit students will likely improve with time as they become more experienced on the job, the same is true of their peers at community colleges, she said.
