Most people go to university to increase their earnings potential. However, according to a recent study, you can actually see your earnings decline after going to some colleges.
A working paper published by the National Bureau of Economic Research (NBER) earlier this month suggests that students who attended for-profit colleges typically make less after graduation than they did before. (Source: “Gainfully Employed? Assessing the Employment and Earnings of For-Profit College Students Using Administrative Data,” The National Bureau of Economic Research, May 2016.)
The research was done by Stephanie Riegg Cellini, an associate professor of public policy and economics at George Washington University, and Nicholas Turner, a financial economist at the U.S. Treasury Department. They used population-level data of over 1.4 million students to quantify the impact of for-profit college attendance on employment and earnings.
What they found was quite staggering.
Students who went to for-profit colleges to earn vocational certificates made on average $920.00 less annually after attending those schools than they did before.
The study also found that for students who attended public community colleges for certificates, their annual income rose on average by $1,500 after graduation.
Note that while earnings typically decline after going to for-profit schools, many graduates still have student loan debt to pay. In a sample of 567,000 students who went to for-profit institutions for vocational certificates between 2006 and 2008, 83% of them had student loan debt.
If you went to a public school, you’re less likely to be indebted. The study found that among the 278,000 who attended public community colleges for similar certificates, only 25% carried student loan debt.
Part of the reason why for-profit college students are more likely to need student loans is tuition. In 2014, certificate students at for-profit schools faced an average tuition of $8,118, whereas those at public community colleges faced a much lower average tuition of $712.00.