The value of an education: Spiraling college costs and student debt spark doubts over payoffs
Recalculating in 2008 with more variables, one critic came up with a lifetime gain of $279,893. But this correction is not enough, Schneider said, as it doesn't control for what the student brings to the table. All things being equal, those who finish college usually start with better resources and skills than those who don't. Rather than adding value, a college education may simply echo existing advantages.
Even more problematic, according to Schneider, is that earnings differ radically from school to school and between programs within schools. Very little careful attention has been given to usefully extracting that data for the consumer, he said.
Schneider proposes four questions every student should ask before they attend a school or choose a program within a school: "What are my chances of actually graduating? What am I actually going to have to pay for this? How much will I have to borrow? And how much will I earn?"
Schneider is working to bridge the data gap on the last point with a program that mines state-level employment statistics and links them to transcript records at public universities, allowing earnings to be tracked according to schools and majors. At least 30 states have this data lying at their fingertips, Schneider said. He is currently working with several states to put this data online for consumers, with Virginia likely to be the first out of the box.
The federal government also wants better data and results, and the Obama administration is pressuring for-profit universities.
In 2011, the administration announced new "gainful employment" regulations requiring career and professionally oriented higher education programs to track data on their graduates' earnings and employment records. The regulations treat all for-profit colleges under this umbrella.
Enrollment at for-profit colleges increased 225 percent from 1998 to 2008, reaching 1.8 million, according to the U.S. Department of Education. While 27 percent of students attending public colleges took out loans, 92 percent at for-profit colleges did. These schools account for nearly half of all federal student loan defaults, even though they enroll only 10 percent of all higher-education students, according to a 2010 report by Sen. Tom Harkin, D-Iowa.
For-profit colleges tend to serve non-traditional students — minorities, parents, low-income students — and defenders argue that they offer opportunities that are not available to these students at traditional schools. Their career-oriented programs are a flashpoint of controversy, generating sharp disputes.
Urban League President Marc Morial wrote in the Washington Post that the new regulations "would have disastrous consequences for those who are at greatest risk of a life in poverty if they don't obtain a college education." NAACP President Benjamin Jealous said in the Huffington Post. "Students trying to improve their job prospects shouldn't be duped into taking on crushing debt in exchange for the promise of a future job that will probably never materialize."
Critics argue that completion rates at for-profit colleges are poor, loan default rates are high and many students who do complete the programs are burdened with debt out of proportion to their earning power.
U.S. Department of Education data show that for-profit colleges invest far less in the classroom per dollar of tuition charged. In 2008-09, public four-year schools spent $1.17 in the classroom for every dollar charged in tuition and fees, while private four-year colleges spent $0.99 and for-profit colleges spent $0.12.
Public colleges are heavily subsidized by taxpayers, some of whom debate the investment. Critics question why at-risk students attending for-profit colleges are not in state universities.
The target demographic at for-profit schools, said Mark Kantrowitz, is "low-income students who are the first in their family to go to college. They may be single parents, but even if they are technically dependents, they have little financial or emotional support from parents."
These students have been abandoned by traditional colleges, Kantrowitz said. "If traditional schools did more for low-income and at-risk students, you wouldn't have for-profit schools."