Ep. 3: Scrutinizing for-profit colleges

AEA Research Highlights

For-profit colleges hope to be profitable again.

Years of intense regulatory scrutiny over high student loan default rates and lawsuits over boiler room recruiting tactics resulted in rapid enrollment declines, revenue losses, and a wave of closings.

But now, with a sympathetic Education Department and skyrocketing demand for online education amid the Covid-19 pandemic, for-profit schools are preparing for a comeback.

Our guest today says that could be a cause for concern.

Stephanie Riegg Cellini has studied the industry for more than a decade. She says that, despite claims that for-profits are serving people ignored by traditional schools, students at for-profit schools are generally better off in less expensive community colleges and public institutions.

There is little reason to believe that for-profit colleges have learned from their past mistakes, and yet we may see many laid off workers flocking back to these schools amid a poor economy.

Her most recent paper, with coauthors Leslie Turner and Rajeev Darolia, appears in the May issue of the American Economic Journal: Economic Policy. Cellini spoke with us about that research, whether for-profits could get a boost if the US heads back into recession, and why policymakers must remain vigilant.

Music is by Sound of Picture.