For-Profit Colleges Are A Spectacularly Bad Investment

Business Insider

For-profit colleges look worse than ever following a study from Stanford's Caroline M. Hoxby and Harvard's Christopher Avery.

The new study found that for-profit schools spend much less on instructional cost per student than all other schools.

At the same time, for-profit schools can have a higher out-of-pocket cost due to limited financial aid.

The real losers, according to this study, are the many low-income students who could attend more competitive schools for less money if they were aware of their options .

Here's a chart from the study showing how for-profit schools are actually more expensive for low-income students after financial aid: 

For-profit schools spend less on instruction than any other type of institution, at  $3,257, or  15 percent of the total costs to the student, on an average pupil's instruction:

That lack of investment shows itself in student outcomes. A study from  Kevin Lang and Russel Weinstein at Boston University found that students get no benefit or increase in income from attending a for-profit school. 

They write:

There are large, statistically significant, positive effects of obtaining certificates/degrees from a public or not-for-profit institution among those starting in associates degree programs. We find no evidence that students gain from obtaining any certificate or degree from a for-profit institution.

Not much of a value proposition there.    



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