Where Do Students Go When For-Profit Colleges Lose Federal Aid?
AbstractWe examine the effects of federal sanctions imposed on for-profit institutions in the 1990s. Using county-level variation in the timing and magnitude of sanctions linked to student loan default rates, we estimate that sanctioned for-profits experience a 68 percent decrease in annual enrollment following sanction receipt. Enrollment losses due to for-profit sanctions are 60–70 percent offset by increased enrollment within local community colleges, where students are less likely to default on federal student loans. Conversely, for-profit sanctions decrease enrollment in local unsanctioned for-profit competitors, likely due to improved information about local options and reputational spillovers. Overall, market enrollment declines by 2 percent.
CitationCellini, Stephanie R., Rajeev Darolia, and Lesley J. Turner. 2020. "Where Do Students Go When For-Profit Colleges Lose Federal Aid?" American Economic Journal: Economic Policy, 12 (2): 46-83. DOI: 10.1257/pol.20180265
- H52 National Government Expenditures and Education
- I21 Analysis of Education
- I22 Educational Finance; Financial Aid
- I23 Higher Education; Research Institutions
- I28 Education: Government Policy