The Long-Run Effects of Proprietary Schools on Wages and Earnings: Implications for Federal Policy

Although proprietary schools serve large (and increasing) numbers of students, including many low-income students, the large amounts of student aid going to them, the high default rates of their students, and news about fraud and abuse suggest substantial problems. Unfortunately, information about proprietaries is sparse. This article summarizes what is known from several national data sets, particularly about the amounts of aid allocated to proprietary school students, student composition, completion and noncompletion rates, and effects on wages and earnings. The findings provide little support for proprietary schools on average, though the averages may mask substantial benefits for some schools. One implication is that the assumptions necessary for student loans are not met, and even grants to students in proprietary schools may not be warranted. Another is that requiring better information about the effects of proprietary schools would help in regulating such schools and would improve student choices.