Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges

We use administrative data from five states to provide the first comprehensive estimates of the size of the for-profit higher education sector in the U.S. Our estimates include schools that are not currently eligible to participate in federal student aid programs under Title IV of the Higher Education Act and are therefore missed in official counts. We find that the number of for-profit institutions is double the official count and the number of students enrolled during the year is between one-quarter and one-third greater. Many for-profit institutions that are not Title IV eligible offer certificate (non-degree) programs that are similar, if not identical, to those given by institutions that are Title IV eligible. We find that the Title IV institutions charge tuition that is about 78 percent higher than that charged by comparable institutions whose students cannot apply for federal financial aid. The dollar value of the premium is about equal to the amount of grant aid and loan subsidy received by students in eligible institutions, lending some credence to a variant of the “Bennett hypothesis” that aid-eligible for-profit institutions capture a large part of the federal student aid subsidy.

The Value of School Facilities: Evidence from a Dynamic Regression Discontinuity Design

This paper analyzes the impact of voter-approved school bond issues on school district balance sheets, local housing prices, and student achievement. We draw on the unique characteristics of California’s system of school finance to obtain clean identification of bonds’ causal effects, comparing districts in which school bond referenda passed or failed by narrow margins. We extend the traditional regression discontinuity (RD) design to account for the dynamic nature of bond referenda, since the probability of future proposals depends on the outcomes of past elections. By law, bond revenues can be used only for school facilities projects. We find that bond funds indeed stick exclusively in the capital account, with no effect on current expenditures or other revenues. Our housing market estimates indicate that California school districts under-invest in school facilities: passing a referendum causes immediate, sizable increases in home prices, implying a willingness-to-pay on the part of marginal homebuyers of $1.50 or more for each$1 of facility spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners, and the school bond impact on test scores cannot explain more than a small portion of the total housing price effect. Our estimates indicate that parents value improvements in other dimensions of school output (e.g., safety) that may be not captured by test scores.

For-profit higher education: An assessment of costs and benefits

This paper provides a summary and analysis of the economics of the two-yea

The Value of School Facilities: Evidence from a Dynamic Regression Discontinuity Design

This paper analyzes the impact of voter-approved school bond issues on school district balance sheets, local housing prices, and student achievement. We draw on the unique characteristics of California's system of school finance to obtain clean identification of bonds' causal effects, comparing districts in which school bond referenda passed or failed by narrow margins. We extend the traditional regression discontinuity (RD) design to account for the dynamic nature of bond referenda, since the probability of future proposals depends on the outcomes of past elections. By law, bond revenues can be used only for school facilities projects. We find that bond funds indeed stick exclusively in the capital account, with no effect on current expenditures or other revenues. Our housing market estimates indicate that California school districts under-invest in school facilities: passing a referendum causes immediate, sizable increases in home prices, implying a willingness-to-pay on the part of marginal homebuyers of $1.50 or more for each$1 of facility spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners, and the school bond impact on test scores cannot explain more than a small portion of the total housing price effect. Our estimates indicate that parents value improvements in other dimensions of school output (e.g., safety) that may be not captured by test scores.

Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges

We use administrative data from five states to provide the first comprehensive estimates of the size of the for-profit higher education sector in the U.S. Our estimates include schools that are not currently eligible to participate in federal student aid programs under Title IV of the Higher Education Act and are therefore missed in official counts. We find that the number of for-profit institutions is double the official count and the number of students enrolled during the year is between one-quarter and one-third greater. Many for-profit institutions that are not Title IV eligible offer certificate (non-degree) programs that are similar, if not identical, to those given by institutions that are Title IV eligible. We find that the Title IV institutions charge tuition that is about 78 percent higher than that charged by comparable institutions whose students cannot apply for federal financial aid. The dollar value of the premium is about equal to the amount of grant aid and loan subsidy received by students in eligible institutions, lending some credence to a variant of the "Bennett hypothesis" that aid-eligible for-profit institutions capture a large part of the federal student aid subsidy.Economic

The labor market returns to a for-profit college education

The article of record as published may be located at http://dx.doi.org/10.1016/j.econedurev.2014.10.001A lengthy literature estimating the returns to education has largely ignored the for-profit sector. In this paper, we estimate the earnings gains to for-profit college attendance using restricted-access data from the 1997 National Longitudinal Survey of Youth (NLSY97). Using an individual fixed effects estimation strategy that allows us to control for time- invariant unobservable characteristics of students, we find that students who enroll in associate’s degree programs in for-profit colleges experience earnings gains of about 10% relative to high school graduates with no college degree, conditional on employment. Since associate’s degree students attend for an average of 2.6 years, this translates to a 4% return per year of education in a for-profit college, slightly lower than estimates of returns for other sectors found in the literature.We are grateful for financial support from the Ford Foundation (Grant Number 1095-0464)

Community Colleges and Proprietary Schools: A Comparison of Sub-Baccalaureate Institutions

This exploratory article describes how community colleges and proprietary schools differ, which students are served by these two types of schools, and how these institutions compare in the areas of financial aid and school quality. I describe and synthesize existing data sources and analyze a new data set of California’s for-profit colleges. I find that there are many more proprietary schools and students than previous estimates suggest. I note key similarities and differences between the private and public sectors and investigate hypotheses explaining the observed patterns

Community Colleges and Proprietary Schools: A Comparison of Sub-Baccalaureate Institutions

This exploratory article describes how community colleges and proprietary schools differ, which students are served by these two types of schools, and how these institutions compare in the areas of financial aid and school quality. I describe and synthesize existing data sources and analyze a new data set of California’s for-profit colleges. I find that there are many more proprietary schools and students than previous estimates suggest. I note key similarities and differences between the private and public sectors and investigate hypotheses explaining the observed patterns