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Journal of Economic Perspectives: Vol. 26 No. 1 (Winter 2012)

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The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?

Article Citation

Deming, David J., Claudia Goldin, and Lawrence F. Katz. 2012. "The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?" Journal of Economic Perspectives, 26(1): 139-64.

DOI: 10.1257/jep.26.1.139

Abstract

Private for-profit institutions have been the fastest-growing part of the U.S. higher education sector. For-profit enrollment increased from 0.2 percent to 9.1 percent of total enrollment in degree-granting schools from 1970 to 2009, and for-profit institutions account for the majority of enrollments in non-degree-granting postsecondary schools. We describe the schools, students, and programs in the for-profit higher education sector, its phenomenal recent growth, and its relationship to the federal and state governments. Using the 2004 to 2009 Beginning Postsecondary Students (BPS) longitudinal survey, we assess outcomes of a recent cohort of first-time undergraduates who attended for-profits relative to comparable students who attended community colleges or other public or private non-profit institutions. We find that relative to these other institutions, for-profits educate a larger fraction of minority, disadvantaged, and older students, and they have greater success at retaining students in their first year and getting them to complete short programs at the certificate and AA levels. But we also find that for-profit students end up with higher unemployment and "idleness" rates and lower earnings six years after entering programs than do comparable students from other schools and that, not surprisingly, they have far greater default rates on their loans.

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Authors

Deming, David J. (Harvard U)
Goldin, Claudia (Harvard U)
Katz, Lawrence F. (Harvard U)

JEL Classifications

I23: Higher Education and Research Institutions

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