How Americans Differ in Their Views on For Profit Education

Cristian Reyes

This is the first blog in a blog series that goes in depth into certain findings of Varying Degrees 2024 that were not covered in the report. More pieces will come out this Fall.

This blog explores how Americans of different racial and ethnic groups feel about for-profit colleges and universities. Looking into data from Varying Degrees, New America's annual nationally representative survey that looks into how Americans perceive higher education, the blog shows that Black and Latinx Americans feel more positive compared to their white peers about the sector in 2024 and that sentiment, despite declining slightly, has largely remained the same since 2019. This is important to know because students of color (especially Black students) make up a greater share at for-profit institutions, than at public two-year and four-year schools, even when for-profit schools often fail to provide a quality education and leave students worse off than before. The data shows that students of color need access to more information about the outcomes of students at for-profit institutions, and at the same time, policymakers can do more to make sure these institutions are held accountable for students' outcomes.

Unlike public or nonprofit institutions, for-profit colleges rely heavily on tuition and federal financial aid for revenue: in the academic year 2014-2015, nearly 30 percent of for-profit colleges received 80 to 90 percent of their revenue from federal financial aid. At the same time these institutions often face scrutiny for their predatory recruitment practices-particularly towards marginalized groups such as students of color, low-income individuals, and veterans. According to data by the National Postsecondary Student Aid Survey, in 2020, there were 23 percent Black students enrolled at for-profit institutions- more than the numbers of Black students at public two-year (14 percent) and four-year (11 percent) colleges. Students at for-profit colleges often find themselves stuck with low quality programs with minimal support. Many drop out, but even those that manage to graduate often realize that their degrees offer little value, and they are now faced with a huge amount of student debts.

Varying Degrees 2024 shows that only 38 percent of Americans believe for-profit colleges align with their needs-the lowest among all sectors (Figure 1). What is notable is that up to half of Black (51 percent) and Latinx individuals (48 percent) think for-profit institutions are for people like them, around 20 percentage points more than white Americans (32 percent). Similarly when it comes to the perceived value of college, only 37 percent of Americans think for-profit institutions are worth the cost, compared to 78 percent who think the same of community colleges (Figure 2). Again, half of Black and Latinx individuals think for-profit colleges are worth the cost, 20 percentage points more than white Americans. From 2019 to 2024, while the number of Americans who think for-profit colleges are for people like them and that for-profit colleges are worth the cost fluctuates across the board, more Black and Latinx than white Americans still believe so over the years (Figure 3).

Opinions on funding show that only one in four Americans believe for-profit institutions are underfunded by both state and federal governments (Figure 4). On the other hand, Black Americans feel more strongly about state and federal underfunding (48 percent). Fewer than Black Americans, however, a sizable number of Latinx, compared to Americans in general also believe that for-profit colleges are underfunded (37 percent for state and 33 percent for federal).

Black and Latinx are also more confident when it comes to how well for-profit institutions operate (Figure 5). More than 40 percent of Black and 35 percent Latinx Americans think those institutions spend money wisely, compared to 26 percent of Americans. Likewise, 47 percent of Black and 44 percent of Latinx Americans think for-profit colleges run efficiently, compared to 31 percent of Americans.

Regarding accountability and funding, there has been a slight increase in skepticism. The share of people who believe for-profit colleges spend money wisely dropped from 39 percent in 2019 to 26 percent in 2024, and the share of Black Americans shifted from 56 to 43 percent and of Latinx, 47 to 35 percent (Figure 6). Those who think these institutions run efficiently decreased from 47 percent in 2019 to 31 percent in 2024-the percentage for Black Americans shifted from 58 to 47 percent and 54 to 44 percent for Latinx Americans (Figure 7). These shifts reflect a growing skepticism and frustration with colleges in general and especially for for-profit colleges, regarding their value and efficiency.

It's concerning to know that Black and Latinx Americans feel more positively about for-profit colleges, as we continue to see the poor outcomes of students enrolled in these institutions. Students should be able to gain access to more data about the completion and employment outcomes of students at for-profit colleges in order to make better-informed decisions and the government can do more to hold these institutions accountable for student outcomes. Last summer the Department of Education published the final rules for a revived Gainful Employment (GE) regulation and a new Financial Value Transparency (FVT) framework that aim to strengthen student protection and enhance transparency about programmatic outcomes.

Originally established under the Obama administration and reinstated by the Biden administration, GE requires institutions to demonstrate that their graduates' median earnings exceed those of high school diploma holders in their state or the national average for online programs, and that their debt-to-earnings ratio is manageable. Schools failing these criteria for two out of three years risk losing Title IV funding, which is crucial for student financial aid. And the FVT requires all institutions to report program-level cost, the amount of debt students can expect to take on and how much they can expect to earn after graduation, aiming to increase transparency and inform students of associated risks of certain programs. Having gone into effect in July 2024, these regulations seek to ensure that colleges, especially for-profit colleges, provide real value and improve educational outcomes, protecting students and taxpayers from ineffective programs.

Increasing concerns about high costs, high student debt, and uncertain labor market outcomes have led to a notable decline in public trust in higher education. While confidence in the for-profit sector is the lowest compared to the public and private non-profit sectors, it's concerning to see that more people of color feel positively about for-profit institutions than white Americans. Given that for-profit institutions have a track record of leaving students worse-off than they were before enrolling, the consistent gap between how people of color and white Americans feel about this sector is concerning as Black and Latinx students have historically faced higher levels of financial strain and less favorable outcomes. Policymakers need to make sure students of color have access to the right information about college outcomes, to help them make informed decisions about where to enroll, and at the same time, put in place accountability measures to ensure institutions that consistently provide bad outcomes lose access to federal financial aid.