Postsecondary Education:

Student Outcomes Vary at For-Profit, Nonprofit, and Public Schools

GAO-12-143: Published: Dec 7, 2011. Publicly Released: Dec 7, 2011.

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Institutions of higher education, including for-profit, nonprofit, and public schools, receive billions of dollars each year from the Department of Education (Education) to help students pay for school. In the 2009-2010 school year, Education provided $132 billion in grants and loans to students under federal student aid programs, up from $49 billion in the 2001-2002 school year. However, relatively little information is available about the quality of education being provided by these schools. Student characteristics are also important to consider when comparing educational outcomes at schools in different sectors (for-profit, nonprofit, and public). Measuring the quality of educational programs (i.e., how much knowledge or skill students gain) is difficult. Because few direct measures are available, indirect outcome measures, such as graduation and student loan default rates, are often used. Although no single outcome can be used to fully measure something as complex as educational quality, looking at multiple outcome measures (e.g., graduation rates, pass rates on licensing exams, employment outcomes, and student loan default rates) can shed light on the quality of education provided by schools. Available data indicate that for-profit schools enroll a higher proportion of low-income, minority, and nontraditional students who face challenges that can affect their educational outcomes. Students with these characteristics tend to have less positive educational outcomes than other students for a number of reasons. For example, students who are low-income, minority, or older generally have lower graduation rates than other students regardless of sector. To respond to Congress' interest in student outcomes at different types of schools, this report addresses the following questions. Consequently, student outcomes at different types of schools can be associated with differences in student characteristics, as well as school type. Accounting for differences in student characteristics as much as possible allows for more meaningful comparisons between types of schools and a better understanding of the school's role in producing student outcomes. This can be done in different ways, such as using statistical models or comparing outcomes for similar groups of students or graduates. 1. What does research show about graduation rates, employment outcomes, student loan debts, and default rates for students at for-profit schools compared to those at nonprofit and public schools, taking differences in student characteristics into account? 2. How do pass rates on licensing exams for selected occupations compare among graduates of for-profit, nonprofit, and public schools?

We found: Two studies show that for-profit school students had higher graduation rates for certificate programs, similar graduation rates for associate's degree programs, and lower graduation rates for bachelor's degree programs than students at nonprofit and public schools. For example, one study found that 36 percent of low-income students who started at for-profit schools completed a certificate, compared to 6 percent at 2-year public schools. In contrast, 3 percent of low-income students who started at for-profit schools completed a bachelor's degree, compared to 49 percent at 4-year public schools and 13 percent at 2-year public schools. An ongoing study suggests that students who started at for-profit schools had similar annual earnings, but higher rates of unemployment compared to students who started at nonprofit and public schools. For example, students who started at for-profit schools during the 2003-2004 school year and were no longer enrolled after 6 years were more likely to have been unemployed for more than 3 months, compared to students who started at nonprofit and public schools. Three studies show that a higher proportion of bachelor's degree recipients from for-profit schools took out student loans and that they generally had higher total student loan debt than bachelor's degree recipients from nonprofit and public schools. For example, one study shows that, among low-income students who graduated in 2007-2008, the percentage who borrowed was greater at for-profit schools (99 percent) than at nonprofit and public schools (83 and 72 percent, respectively). Two studies show that for-profit schools have higher default rates than 4-year public schools, but the results are mixed when comparing for-profit schools to other types of schools. One ongoing study shows that for-profit schools had a higher proportion of students default on their student loans than 4-year nonprofit schools and 2-year nonprofit and public schools, while the other study did not find any statistically significant differences between for-profit schools and these other types of schools. On 9 of the 10 licensing exams we reviewed, graduates of for-profit schools generally had lower pass rates over the 2008-2010 period. The nine licensing exams for which graduates of for-profit schools generally had lower pass rates were for Registered Nurses (RN), Licensed Practical Nurses (LPN), Radiographers, Emergency Medical Technicians (EMT), Paramedics, Surgical Technologists, Massage Therapists, Lawyers, and Cosmetologists. On some exams, the differences across sectors were statistically significant, but relatively small. For example, 85 percent of graduates earning a bachelor's degree from for-profit nursing programs passed the RN exam, compared to 87 percent of such graduates from nonprofit schools. While we were unable to calculate overall pass rates on the 10th exam (for Funeral Directors), separate analyses of the two sections of the exam suggest that graduates of for-profit schools had similar or better pass rates than graduates of nonprofit and public schools. While for-profit graduates as a group generally had lower pass rates, some individual for-profit schools had relatively high pass rates. For example, 9 of the 40 for-profit schools in our analysis of the radiographer exam had pass rates of 100 percent in 2010.

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