*Names in bold indicate Presenter
Our study estimates the returns to for-profit institutions for students who began their higher education at a community college, but transferred to enroll for at least some duration at a for-profit college, allowing us to control for prior ability. We use administrative transcript data from the North Carolina Community College System between 2001 and 2010, National Clearinghouse data with transfer information, and quarterly earnings data from Unemployment Insurance records.
Of the 810,000 students in the college system over this period, over 30,000 attended a for-profit college for some duration. We model the educational pathways of these students and their subsequent earnings trajectories up to nine years after first enrollment in community college. The paper has two main research questions: (1) who are the students that transfer to for-profits from community college? (2) What are the labor market outcomes of these for-profit graduates?
We begin by modeling selection into the for-profit system. We then use the Mincerian model to look at the linear effect of college’s sectors, student’s education, experience, and characteristics on their earnings. A major challenge in studying the returns to for-profits is selection bias. For-profits tend to attract minority and non-traditional students (Chung 2008; Deming, Goldin & Katz 2011), which are different from those choose non-profit or public colleges. Directly comparing the returns to degree across for-profit and non-profit students would underestimate the returns to for-profit degrees. Therefore, we also use a fixed effect model which allows us to control for individual-specific effect.
Our results have clear policy implications: (1) colleges should make more accommodations to non-traditional students, who are the most vulnerable and heavily recruited by for-profit colleges. (2) Policy makers should continue to push for quality control in the for-profit sector since getting a bachelor degree brings similar returns across all sectors, but great penalties persist for for-profit students that did not earn a bachelor degree.