For-Profit Degree Holders Disadvantaged in Job Market, Study Shows

Degree holders from for-profit online institutions are 22 percent less likely to receive callbacks when applying for business and health-related jobs, according to a study led by David Deming, an associate professor at the Graduate School of Education.

“One of the things we found in a previous paper was that students who attend for-profit colleges are more disadvantaged than [the average student],” Deming said, in speaking about the motivation for conducting the study. “But it was not very clear how much that was due to the school itself versus students themselves.”

In the study, researchers made fictitious resumes from a pool of real resumes from one job website and randomly changed job applicants’ post-secondary institutions on each. They then posted these resumes on another job website.

“The goal of this study was to try to answer [the original study’s question] more persuasively by experimentally controlling the students and making them all have the same resumes, except for their post-secondary degree,” said Deming.

According to the study’s results, bachelor’s degree holders from large online for-profit institutions are about 22 percent less likely to receive job callbacks in business and health-related fields than those with non-selective public school degrees.

“The most interesting result was that if you applied to a job that does not require you to have a degree, you have no advantage in having one,” Deming said.

In addition, the study showed that employers also take the applicants’ likelihood of accepting a job into consideration when sending callbacks.

To illustrate this, Deming gave the example of a Harvard graduate applying to be a clerk.

“I might think that person looks very good on paper, but I am not going to call him back, because I don’t think he is going to take the job if I offered one,” he said.

According to Deming, this study provides important insights for current government policies. At present, for-profit colleges receive funding mostly from federal Title IV funding such as Pell Grants and Stafford Loans. Whether these colleges meet their responsibilities in exchange for this federal funding, however, remains undetermined.

“It’s a very difficult problem to deal with regulation. For-profit universities are responsible for the increase in higher education. It’s a bad idea to stop them and put them out of business... I think that current policy is moving toward a right direction but we probably need to think about it more comprehensively,” Deming said.

The study did not directly address free, online courses offered by non-profit institutions, which according to CEO of edX Anant Agarwal, face a different set of challenges than for-profit online colleges.

“It tends to be the case that non-profits find it easier to focus in the long run on access to the quality, the access, and the research,” he said, adding that he does not expect edX to face the problems of credibility uncovered by the study. “It’s difficult for for-profits to do so because for-profits often have to make a tradeoff between short-term goals and long-term goals,”

Still, Agrawal downplayed the inherent differences between for-profit and non-profit online education.

“I worry less about non-profit or for-profit. As long as you focus on full quality, full access to the public, and full research, then whether you are a for-profit or a non-profit, it does not matter as much,” he said.