The blog of the Urban Institute
November 22, 2016

Gainful employment data show that some for-profit grads enjoy higher earnings

November 23, 2016

Nearly anyone can find data to support a position if he or she looks hard enough. Take, for example, the US Department of Education’s recently released gainful employment results, which the department describes as empirical support for their conclusion that certificate programs at nonprofit institutions produce higher earnings than those at for-profit institutions.

For those who don’t follow the esoteric ins and outs of higher education, the Obama administration created new regulations in 2014 that require nondegree programs at nonprofit institutions and all programs at for-profit institutions to publish information about the mean debt and earnings of their graduates.

Following the release of the first set of earnings data last week, Secretary John King proclaimed that students who earn certificates from public institutions out-earn those who earn certificates from for-profit institutions. Well, if you rely on apples-to-oranges comparisons, you could make that claim since a much higher proportion of certificates issued by public institutions are in the higher-paying field of practical nursing. But that’s like comparing mean earnings between universities that have medical and law schools with those that don’t and suggesting that the latter are lower-value institutions. 

Many for-profit institutions would like to offer programs in practical nursing, especially given all we hear about nursing shortages. Unfortunately, state boards of nursing hold all the power in deciding which institutions offer these programs, and few for-profit institutions have been allowed into the clubhouse. That said, among the few proprietary institutions that do have these programs, their graduates’ earnings are well within the range of those posted by public institutions. In fact, Carrington College, a proprietary institution, comes in at number two on the earnings list. 

Of course, to make valid comparisons, we need to consider the differences in mean earnings that are attributable to geographic variation and other factors. But the key issue is that for an individual student, what matters is not a national average, but how the institutions in his or her community compare. After all, for most certificate students, college choice isn’t about a nationwide search for the best school, but a choice between the institution near home, the one near work, or the one online. 

Scrolling through the data reveals that both for-profit and public institutions show up across the full earnings spectrum among the programs they offer. And in some fields, proprietary institutions are at or near the top of the earnings range, so ruling out a proprietary institution is unwise. 

A more honest characterization of the data released last week might have gone like this: if you want to get a certificate in a high-paying field, get into a licensed practical nursing program if you can, but good luck with that since the entrance requirements are steep and the number of enrollments is strictly rationed. But regardless of the field you select, don’t rule out a for-profit institution, because it just might yield higher earnings than the public college down the street.  

Students move their tassels at a commencement ceremony for Strayer University, a private, for-profit educational institution.   Strayer University specializes in higher education for working adults seeking career advancement. Photo by Brooks Kraft LLC/Corbis via Getty Images


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