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Higher Education Access and Finance, Online Enrollment, and Returns to For-Profits Colleges

Paper Session

Saturday, Jan. 7, 2017 3:15 PM – 5:15 PM

Hyatt Regency Chicago, Randolph 1
Hosted By: American Economic Association
  • Chair: Susan Dynarski, University of Michigan

Gainfully Employed? Assessing the Employment and Earnings of For-Profit College Students Using Administrative Data

Stephanie Cellini
,
George Washington University
Nicholas Turner
,
U.S. Department of the Treasury

Abstract

We draw on population-level administrative data from the U.S. Department of Education and the <br />
Internal Revenue Service to quantify the impact of for-profit college attendance on the employment and earnings of over 1.4 million students. We characterize both the within-student earnings gains and joint distributions of the impacts on earnings and student debt. Our descriptive analysis of degree-seeking students suggests that on average associate’s and bachelor's degree students experience a decline in earnings after attendance, relative to their own earnings in years prior to attendance. Master’s degree students and students who complete their degrees appear to experience better outcomes, with positive earnings gains. Our difference-in-difference analysis of certificate students suggests that, despite much higher costs of attendance, earnings effects are smaller in the for-profit sector relative to the effects for comparable students in public community colleges. <br />

How Does For-Profit College Attendance Affect Student Loans, Defaults and Earnings

Luis Armona
,
Federal Reserve Bank of New York
Rajashri Chakrabarti
,
Federal Reserve Bank of New York
Michael Lovenheim
,
Cornell University

Abstract

Over the past decade and a half, the for-profit sector of higher education has seen unprecedented growth, markedly changing the higher education landscape. In this paper, we investigate the impact of attending for-profit colleges (relative to their public counterparts) on a variety of outcomes such as student loans, default, graduation, employment, and earnings. Using a fifteen-year panel, we exploit local labor demand shocks and their interactions with the pre-existing supply of for-profit colleges in these local areas to obtain plausibly exogenous variation in for-profit enrollment. We find that for a given labor demand shock, enrollment in for-profit colleges rises considerably relative to enrollment in other colleges when for-profit supply is higher. Our instrumental variables estimates reveal that students attending for-profit colleges are more likely to originate student loans, originate a larger volume of student loans, and are more likely to default. However, for-profit students are equally likely to graduate, and their earnings six years after graduation are no different from their public counterparts. These findings hold both for students attending two year/less than two year colleges as well as four-year colleges. Overall, our analysis suggests that for-profit attendance leads to relatively worse outcomes, despite considerably higher tuition costs.

The Impacts of Price and Spending Subsidies on U.S. Postsecondary Attainment

David Deming
,
Harvard University
Christopher Walters
,
University of California-Berkeley

Abstract

The rising price of college is seen as a major barrier to increasing U.S. postsecondary attainment. Most
Federal and state policy efforts focus on reducing college costs, yet declining state funding has also led to sharp cuts in per-student spending at public institutions. This paper investigates the impacts of changes in tuition and spending on enrollment and degree completion at non-selective public postsecondary
institutions between 1990 and 2013. We estimate these impacts using a newly assembled data set of
legislative tuition caps and freezes combined with variation in exposure to state budget shocks driven
by differences in historical reliance on state appropriations. We find large causal impacts of spending on
enrollment and degree completion. In contrast, we find limited impacts of price changes. Our results
suggest that spending increases are more effective per-dollar than price cuts as a means of increasing
postsecondary attainment.

Regulating Innovation in Higher Education: The Impact of Online Enrollment Limits on Access, Cost, and Student Outcomes

Jordan Matsudaira
,
Cornell University

Abstract

In the 1980s, a boom in student loan defaults associated with distance learning programs run by “fly by night” operators led Congress to restrict federal financial aid eligibility to students attending programs without a minimum fraction of students enrolled in a traditional ‘brick and mortar’ campuses. Under pressure from lobbying by distance education proponents, these restrictions were eventually eased in the mid-2000s, just prior to another boom in defaults on federal loans coinciding with the Great Recession. This paper attempts to estimate the causal impact of regulations setting online enrollment caps for Title IV aid eligibility on college enrollment, and student debt and earnings outcomes using administrative data on federal aid recipients over the past three decades. The research design leverages both the national policy changes, as well as a series of pilot “experiments” in which several large online education providers were granted waivers to existing regulations at different times in the late 1990s and early 2000s.
Discussant(s)
Seth Zimmerman
,
University of Chicago
Mark Hoekstra
,
Texas A&M University and NBER
JEL Classifications
  • I0 - General