Stephanie Riegg Cellini

The labor market returns to a for-profit college education

A lengthy literature estimating the returns to education has largely ignored the for-profit sector. In this paper, we estimate the earnings gains to for-profit college attendance using restricted-access data from the 1997 National Longitudinal Survey of Youth (NLSY97). Using an individual fixed effects estimation strategy that allows us to control for time-invariant unobservable characteristics of students, we find that students who enroll in associates degree programs in for-profit colleges experience earnings gains of about 10 percent relative to high school graduates with no college degree, conditional on employment. Since associates degree students attend for an average of 2.6 years, this translates to a 4 percent return per year of education in a for-profit college, slightly lower than estimates of returns for other sectors found in the literature.

The Labor Market Returns to a For-Profit College Education

A lengthy literature estimating the returns to education has largely ignored the for-profit sector. In this paper, we estimate the earnings gains to for-profit college attendance using restricted-access data from the 1997 National Longitudinal Survey of Youth (NLSY97). Using an individual fixed effects estimation strategy that allows us to control for time-invariant unobservable characteristics of students, we find that students who enroll in associates degree programs in for-profit colleges experience earnings gains of about 10% relative to high school graduates with no college degree, conditional on employment. Since associates degree students attend for an average of 2.6 years, this translates to a 4% return per year of education in a for-profit college, slightly lower than estimates of returns for other sectors found in the literature.

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

We draw on population-level administrative data from the U.S. Department of Education and the Internal Revenue Service to quantify the impact of for-profit college attendance on the employment and earnings of over one million students. Using a matched comparison group difference-in-differences design, we find that certificate-seeking students in for-profit institutions are 1.5 percentage points less likely to be employed and, conditional on employment, have 11 percent lower earnings after attendance than students in public institutions. These results hold for both men and women and for seven of the top ten fields of study. We find that earnings and employment outcomes are particularly poor for students attending for-profit colleges that offer the majority of their courses online and for multicampus chains. We find that for-profit students experience small, statistically insignificant gains in annual earnings after attendance compared to a matched control group of young individuals who do not attend college. A back-of-the-envelope comparison of these earnings gains to average debt burdens suggests that for-profit certificate programs do not pay off for the average student.

SCHOOL QUALITY AND INFORMATION DISCLOSURE: EVIDENCE FROM THE HOUSING MARKET

In this article, we investigate the relationship between school quality and information disclosure in housing markets. When presented with the option of identifying their local public school in a real estate listing, we find that sellers with homes assigned to higher‐performing schools are more likely to provide this information. We find more evidence of selective disclosure in 2001–2002 than in 2006–2007, when the costs of gathering and disclosing information on school assignments and quality were lower. Furthermore, we find more evidence of strategic behavior among sellers of large single‐family units that presumably appeal to families with children. After controlling for school quality, information disclosure does not appear to affect housing prices. Taken together, our results support the findings of the education literature on the importance of school quality capitalization in residential real estate and they provide the first evidence of strategic information disclosure in housing markets.

High Costs, Low Resources, and Missing Information: Explaining Student Borrowing in the For-Profit Sector

This article examines the borrowing behavior of students enrolled in for-profit colleges, asking how and why their borrowing differs relative to students pursuing postsecondary education in other sectors. We employ statistical decompositions to understand the extent to which variation in borrowing across sectors can be attributed to observed characteristics of students and of higher education institutions. Drawing on nationally representative data on undergraduate students, we show that college costs of attendance are the primary observed driver of the large differences in borrowing between students in for-profit institutions and those in other sectors. However, a substantial portion of borrowing differences remains unexplained by these high costs, low student financial resources, and variation in college attendance patterns. Further, there is little evidence that changes in these characteristics can explain the rise in student borrowing in the for-profit sector over time. We discuss how these findings present challenges to regulation of the for-profit sector, and the extent to which policymaking can encourage prudent borrowing and college choice decisions.