Tuesday, June 22, 2010

For-profit Colleges

The big puzzle is why . . . the for-profit college market is not self-regulating . . .

The solution of the puzzle may be . . . that the private-college industry . . . has targeted a class of people who cannot gain admission to [public] colleges because they do not meet their entrance standards. There is evidence that just as in the case of the marketing of mortgage loans during the housing bubble of the early 2000s, the for-profit colleges use aggressive advertising to attract students from low-income families that lack financial sophistication and the ability to evaluate the benefits of attending a for-profit college. These people . . have little information about higher education and are therefore prey to skillful marketing that even if literally truthful may create a misleading impression of the benefits of attendance at a for-profit college. For-profit colleges often pay recruiters by the number of enrollments that a recruiter generates.

from Richard Posner on his blog. It could be more concise but it's worth reading.

Two things (Posner mentions #1):

1. Public colleges also prey on misinformation and youth. No one warns you that majoring in English is not going to lead to the same career satisfaction or pay as a degree in Computer Engineering.

2. All the evidence suggests that the average effect of college education makes college a great value. But the effect could be highly heterogenous. Why isn't there more public, easily accessible and understandable information on the payoff to this and that degree? And (this is a common refrain for me) why isn't "work satisfation" reported side-by-side?

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