Federal report: Graduates of for-profit career colleges earn less. Beware of their promises.

Many for-profit career colleges promise graduates will leave with certifications and high-paying jobs. That is not happening, says new federal data. (AJC File)

This news release from the U.S. Department of Education reveals more troubling data on the for-profit education sector, this time the career colleges that promise students will end up with certificates and high-paying jobs.

Not true, says the federal data.

Certificate holders coming out of public institutions fare much better. Here is the most startling fact in the USDOE report: The median earnings of nearly a third of graduates of for-profit certificate programs are less than the yearly income of a full-time worker earning the federal minimum wage ($14,500) even as students take on debt to complete these programs.

Here is the full USDOE release:

Today, for the first time, the U.S. Department of Education released data showing the typical earnings of graduates of the thousands of career training programs offered by colleges across the country.  This release continues the Obama Administration’s efforts to help students make more informed decisions about college enrollment and to protect students from career training programs that lead to poor outcomes yet receive taxpayer-funded federal student aid. Today’s release is a major step toward spotlighting the outcomes of students attending career college programs, providing critical information for the more than 1.3 million students currently enrolled as well as prospective students searching for a quality career college opportunity.

“For far too long, some career colleges have made dubious promises about the employment prospects of their graduates, promising high salaries that rarely live up to the hype. Americans who are working hard to get the knowledge and skills they need to succeed in the growing economy deserve better, accurate information,” said U.S. Under Secretary of Education Ted Mitchell. “The earnings data released today shine a light on how graduates are actually faring when they enter the job market, and will ensure students don’t make decisions based on too-good-to-be-true promises.”

The data released today show that graduates of career training programs at public institutions generally fare better than those of comparable programs at for-profit institutions. Specific highlights include:

Overall, mean earnings of graduates of public undergraduate certificate programs are nearly $9,000 higher than mean earnings of graduates of for-profit undergraduate certificate programs.

Graduates of certificate programs at public institutions are more likely to have attended programs that provide training for higher earning fields, such as nursing, than graduates of certificate programs at for-profit colleges.

The median earnings of nearly a third of graduates of for-profit certificate programs are less than the yearly income of a full-time worker earning the federal minimum wage ($14,500) even as students take on debt to complete these programs.

The earnings data released today will be used to calculate the debt-to-earnings rates that, under the standards of the Department’s gainful employment regulations, will determine whether a career college program is serving students well or leaving them with unaffordable debts and poor employment prospects.  Consistently poor performing career college programs that fail to improve their quality will be barred from participating in the federal student aid programs.

Starting in January, institutions will be required to disclose program earnings and other information such as costs and graduation rates, as well as whether their programs are failing to meet the gainful employment standards, to current and prospective students. This information is intended to equip students and families with the information they need to make informed career college enrollment choices.

To qualify for federal student aid, the Higher Education Act requires that most for-profit programs and certificate programs at private non-profit and public institutions prepare students for “gainful employment in a recognized occupation.”

Under the Department’s regulations, a program is considered to lead to gainful employment if the estimated annual loan payment of a typical graduate does not exceed 20 percent of his or her discretionary income or 8 percent of his or her total earnings. Programs that exceed these levels are at risk of losing their ability to participate in taxpayer-funded federal student aid programs.

The data released today represent the mean and median earnings of graduates of career college programs, and were reported by the Social Security Administration as part of the Department of Education’s landmark gainful employment regulations.  Roughly 3,700 institutions nationwide offer career training programs that are subject to the regulations, which aim to protect Americans from poor career training programs and target those that leave students buried in debt.

The final gainful employment regulations went into effect on July 1, 2015, and reflect the feedback the Department received through an extensive rulemaking process involving public hearings, negotiations and about 95,000 public comments. To access the gainful employment earnings data fact sheet, please click here

The gainful employment regulations are a central part of the Obama Administration’s efforts to ensure borrowers can manage student debt and that career colleges serve students well. These regulations complement other efforts taken by the Administration to protect students by addressing problems at poor performing institutions, largely concentrated and documented in the for-profit college sector. These efforts include:

Keeping student debt affordable
The Department is helping more students manage their student debt through flexible Income-Driven Repayment options like the Pay As You Earn plan, which caps monthly student loan payments at 10 percent of a borrower’s income. In addition, the Administration continues targeted outreach to help borrowers who may be struggling to repay their loans, ensuring that they have the information they need to select the best repayment option for them and avoid future default.

Launching the College Scorecard
In September 2015, the Department launched the redesigned College Scorecard a consumer tool that provides clear, accessible, and reliable national data on cost, graduation, debt, and post-college earnings. The College Scorecard showcases colleges and universities that are effective in improving student success; incentivizes institutions to work toward the most important goals, like graduating low-income students and holding down costs; and helps students and families choose their school based on the value it provides for their investment.

 

Reader Comments 0

7 comments
Wascatlady
Wascatlady

Why aren't we hearing from the pro-Amendment one folks today, humm?

Wascatlady
Wascatlady

This one gets a "No duh!"  For profit, WHETHER COLLEGE OR K-12, is compromised due to the "profit" part.

WardinConyers
WardinConyers

As a University System of Georgia professor, I lost many  a talented student to the glossy promotions of for profits that lured away too many promising students. Naive kids respond to shiny and slick promotions, but later realize that that was just for show when they discover the poor instruction and no advancement. Often these "colleges" are not even certified.  Their diplomas are invalid, but the kids just would not listen. 

Starik
Starik

Works for teachers. Get an internet "doctorate" and make more money.

ATLPeach
ATLPeach

@Starik Most colleges are offering online degrees. This is 2016.

newsphile
newsphile

For-profit schools were created with the number one objective of making a profit.  Who would have guessed it.