Defending Career Colleges

by Daniel L. Bennett

Stephen Burd of the New America Foundation criticized career colleges for "destroying the dreams of many of their students" and declaring that there is a "looming student debt crisis at our nation's for-profit colleges and trade schools," because career college graduates finish with higher levels of debt, on average. Burd's partial conclusion is based on data originating from a College Board report.

According to CB's data, a greater percentage of BA recipients from 4-year career colleges have $30k+ in student debt than BA graduates of public or private not-for-profit schools; however, as the career colleges comprise only a small share of students (~9% per CCA) in this country, the number of graduates with $30k+ in student loans from public and private not-for-profit institutes vastly exceeds that of the for-profit sector by many multiples --meaning that the public and private not-for-profit colleges are "destroying the dreams" of a far greater number of their students than the for-profit schools.

Burd states that "disturbing is the extent to which proprietary school students are being asked to rely on high-cost private student loan debt to help cover their costs," without commenting on the fact that the CB report indicates that 88% of for-profit students took out an average of $5,658 in federal loans, whereas only 50% of public 4-year students took out an average of $2,603 in federal loans, and 62% of private 4-year students took out an average $3,494 in federal loans in 2007-08. In addition, the average private loan was only marginally different between for-profit students ($3,071) and private 4-year not-for profit students ($2,895) in 2007-08. Public 4-year students borrowed an average of $1,078. This data suggests that the majority of career college students are taking advantage of the federal student loan programs and that students at career colleges have a higher propensity to borrow for college, probably due to the fact that they are from less affluent families than their public and private not-for-profit counterparts. More on this shortly.

I agree with Burd that it is important to "understand the population of students that for-profit colleges and trade schools serve." He cites data from the Career College Association that "43 percent of proprietary school students are members of minority groups and almost half are the first in their families to attend college," and "Of those who are of traditional college age, more than 50 percent come from families with an annual income of less than $40,000." This data suggests that career colleges serve a very high percentage of low income and minority students who are most in need of loans in order to pay for the continually rising tuition levels.

While I don't have comprehensive comparable data in front of me for the public and private not-for-profit sectors, the evidence that I have seen is that these sectors serve a significantly lower proportion of low income and minority students who are less likely to need student loans to pay for college than does the for-profit sector. This suggests that students at public and private not-for-profit schools are more likely to have at least some help from their parents or other private sources to help pay for college. CB's report lends some strong support to this conclusion: 92% of for-profit students borrowed, whereas only 54% of public 4-year students borrowed and 66% of 4-year private not-profit students borrowed money from either a federal or private source.

This leads me to conclude that career college students, on average, come from lower income families than students at public and private not-for-profit schools and would need to borrow more money, on average, than more affluent students, regardless of the type of school they attend. Thus, I believe that Burd's conclusion that there is a looming student debt crisis at the career colleges and that policy makers should take notice (implying a crack down on the sector) failed to consider this evidence in his analysis. The truth of the matter is that career colleges are providing access and career training opportunities to students who are being under served by the traditional colleges, which are stuck in lockstep by not offering flexible scheduling, distance learning opportunities and career training programs that meet the needs of the non traditional students --who flock to the career colleges for these reasons.