Questions of Quality

Students at for-profit colleges typically have less money and academic preparation than do their peers at other institutions. Those and other risk factors muddy the debate over the sector's performance, and make it hard to compare with public and private nonprofit colleges.

Existing data sources are too thin to create a definitive comparative analysis of for-profits, said David J. Deming, an assistant professor of education and economics at Harvard University's Graduate School of Education. But some clarity emerges in a forthcoming study by Deming and Claudia Goldin and Lawrence F. Katz, two prominent Harvard economists.

Those findings, although mixed, do not paint a flattering portrait of the commercial colleges.

Deming presented the draft research paper at an event held in September by the Federal Reserve Bank of Atlanta. In the paper, he and his co-authors give a broad, historical view of the for-profit industry and its recent growth. They also describe substantial differences among the approximately 1,700 for-profit institutions, which are a “varied group.”

The study’s most novel contribution, however, is its attempt to adjust for differences between for-profits and other types of institutions. As a result, it gives a better picture of student performance than would just comparing “mean outcomes across the sectors,” Deming said.

“For-profits disproportionately attract minority, older, independent and disadvantaged students,” according to the study, which assessed student outcomes after factoring in observable differences in populations who have attended different types of colleges. (A final version of the paper is slated to run in The Journal of Economic Perspectives in early 2012. Its key findings will remain unchanged, said Deming.)

The research found that for-profits have some competitive strengths, such as in first-year student retention rates compared to community colleges. But the adjusted data showed for-profits lagging behind other types of colleges in areas such as employment outcomes, student satisfaction with academic offerings, debt levels and loan default rates — gaps that probably cannot be fully explained, the researchers say, by the greater propensity of students at the colleges to have prior risk factors.

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