For-profit, or proprietary, colleges are the fastest-growing postsecondary schools in the nation,
enrolling a disproportionately high share of disadvantaged and minority students and those
ill-prepared for college. Because these schools, many of them big national chains, derive most
of their revenue from taxpayer-funded student financial aid, they are of interest to policy makers not only for the role they play in the higher education spectrum but also for the value they
provide their students. In this article, David Deming, Claudia Goldin, and Lawrence Katz look
at the students who attend for-profits, the reasons they choose these schools, and student outcomes on a number of broad measures and draw several conclusions.
First, the authors write, the evidence shows that public community colleges may provide an
equal or better education at lower cost than for-profits. But budget pressures mean that community colleges and other nonselective public institutions may not be able to meet the demand
for higher education. Some students unable to get into desired courses and programs at public
institutions may face only two alternatives: attendance at a for-profit or no postsecondary education at all.
Second, for-profits appear to be at their best with well-defined programs of short duration that
prepare students for a specific occupation. But for-profit completion rates, default rates, and
labor market outcomes for students seeking associate’s or higher degrees compare unfavorably
with those of public postsecondary institutions. In principle, taxpayer investment in student
aid should be accompanied by scrutiny concerning whether students complete their course of
study and subsequently earn enough to justify the investment and pay back their student loans.
Designing appropriate regulations to help students navigate the market for higher education has
proven to be a challenge because of the great variation in student goals and types of programs.
Ensuring that potential students have complete and objective information about the costs and
expected benefits of for-profit programs could improve postsecondary education opportunities
for disadvantaged students and counter aggressive and potentially misleading recruitment practices at for-profit colleges, the authors write.