01/28/2014 05:43 pm ET Updated Jan 28, 2014

Transferring To A For-Profit College Will Decrease How Much Money You Make: Study


A student who transfers from a community college to a for-profit school will earn less once they have their degree than if they were to attend a public or non-profit private institution, according to a new study released Tuesday.

The Center for Analysis of Postsecondary Education and Employment followed 80,000 full-time community college students for their study. CAPSEE found graduates of for-profit colleges had net earnings gains of only $5,400, while public college grads posted gains of $12,300 and $26,700 respectively.

"We find significant wage penalties to transfer to a for-profit college instead of a public or private nonprofit college," the authors wrote in their abstract.

Black and Hispanic students, and students who performed poorly while at a community college, were more likely to transfer to a for-profit school than a non-profit private of a public university, according to the study. Since minority students are more likely to come from low-income families, earning less after college makes it that much harder for them to close the gap in income level compared to their white peers.

This report adds to a growing body of data showing negative impacts of attending for-profit colleges. Students at these proprietary schools are more likely to face unemployment and carry larger amounts of student debt, according to the National Bureau of Economic Research. For-profit college graduates also default on their student debt at higher rates than students at traditional non-profit schools.

The CAPSEE authors, Yuen Ting Liu of Columbia University and Clive Belfield of Queens College, wrote: "Little of this evidence has been encouraging, with many studies finding lower academic attainment and earnings among students who enroll in for-profit colleges, despite their higher tuition and fees. Looking over a sufficient time period, our inquiry affirms this general conclusion for students who transfer to for-profit colleges.

"Although these transfer students followed a complicated path through their post-secondary education, we identify a statistically significant wage penalty from enrolling in a for-profit institution. This penalty appears consistent across subgroups of students, although it is greatest for for-profit students who did not complete an award."