For-Profit Colleges’ Mostly Black and Latino Students Face Higher Debt and Unemployment

By Jorge Rivas Jan 04, 2012

Private for-profit institutions have been the fastest growing part of the U.S. higher education sector for decades now, but a new Harvard study finds students attending for-profit colleges end up with much higher student-loan debts, are less likely to be employed after graduation and generally earn less than similar students at public or private nonprofit schools. The for-profit sector disproportionately serves older students, women, African-Americans, Latinos, and those with low incomes, according to the report ["The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?"]( published by Harvard’s[ National Bureau of Economic Research. ]( African Americans account for 13 percent of all students in higher education, but they are 22 percent of those in the for-profit sector. Latinos are 15 percent of those in the for-profit sector, yet 11.5 percent of all students. Women are 65 percent of those in the for-profit sector. For profit students are older, about 65 percent are 25 years and older, whereas just 31 percent of those at four-year public colleges are and 40 percent of those at two-year colleges are. "[For-profit colleges] do better in terms of first-year retention and the completion of shorter certificate and degree programs," according to the report. "But their first-time postsecondary students wind up with higher debt burdens, experience greater unemployment after leaving school and, if anything, have lower earnings six years after starting college than observationally similar students from public and non-profit institutions. "Not surprisingly, for-profit students end up with higher student loan default rates and are less satisfied with their college experiences." The report also found for-profit students have substantially higher default rates even when comparing students across school types with similar cumulative debt burdens. For example, the default rate by 2009 for the BPS:04/09 students with $5,001 to $10,000 in cumulative federal student loans is 26 percent for students from for-profits versus 10 percent for those from community colleges and 7 percent for those from 4-year public and nonprofit schools, and for those with $10,001 to $20,000 in debt the default rate among for-profit students is 16 percent versus a 3 percent rate for community college students and 2 percent rate for other 4-year college students.