Poster Paper: Evaluating the Geographic Component of for-Profit Student Outcomes

Friday, November 4, 2016
Columbia Ballroom (Washington Hilton)

*Names in bold indicate Presenter

James Dean Ward, University of Southern California

Geographic isolation impacts many different aspects of an individual’s life. The spatial mismatch hypothesis suggests that lower-income individuals live in areas separate from high-wage job opportunity. The isolation caused by the location of an individual’s home prevents those in both urban and rural areas to have limited access to higher-quality jobs that are located in suburban areas. The geographic suppression of employment options impacts an individual’s ability to obtain maximum benefits from their education. This is important for the financial wellbeing of these students and their ability to repay student loans after graduation. In addition to the restricted job market, geographic isolation may hamper educational options and leave low-income students with limited school choice. Students in rural and urban areas may have their educational options restricted to community colleges and for-profit institutions. This study seeks to understand how these limited options interact with geographic isolation to impact students’ future financial wellbeing. For students in rural and urban areas who are faced with the decision between a for-profit and community college, it is important to understand the implications of such a decision. This paper seeks to understand whether students who choose a for-profit institution, which is generally more than twice the tuition of a community college, face greater financial hardships in the future. The author uses data from the recently created College Scorecard to evaluate student loan repayment rates. The findings suggest a financial penalty may exist for students choosing a for-profit college, and that this penalty is exacerbated by a rural setting. Although causal effects cannot be claimed, the OLS model includes a comprehensive set of institutional covariates to control for differences in student population (e.g., race/ethnicity, part-time status, and Pell recipients), cost, the reliance on distance education, and completion rates. Although OLS does not provide causal estimates, the findings unearth important associations between geography, for-profit attendance, and financial health. The findings have implication for place-based policies related to education as well as for-profit regulation and general student aid policies. The potentially inefficient use of student aid in rural areas must be considered in relation to providing students with the autonomy to choose programs and institutions that fit their needs. Moreover, the findings suggest the presence of information asymmetry in the for-profit college student market, and that students in geographically isolated areas may not fully recognize the financial payoffs of attending a for-profit institution given their regional labor market.