College Competition: The Effects of the Expansion of For-Profit Colleges on Student Enrollment and Outcomes at Public Community Colleges

• In Event: Promising Scholarship in Education: Dissertation Fellows and Their Research

Abstract

Purpose
Community colleges enrolled 37 percent of students attending Title IV eligible, degree-granting institutions in 2000. However, by 2012, this had dropped to 33 percent (NCES, 2013). At least some of this decline is hypothesized to be due to the rise of for-profit institutions, which enrolled approximately 9 percent of students in 2012, as compared to 3 percent in 2000 (NCES, 2013). These trends suggest that for-profit colleges and public community colleges may compete for some of the same students. If this is the case, then shifting enrollment patterns towards for-profit colleges may increase overall student debt levels since these students could have attended a public community college more cheaply. Alternatively, for-profit colleges may increase access to higher education for students who would not otherwise enroll by providing another college option. This study explores this policy puzzle: do for-profit colleges increase access to higher education or simply enroll students who would otherwise attend a public community college?

This study has three goals. The first is to understand whether public two-year and for-profit colleges compete for the same students, by examining how enrollments and program awards at public two-year institutions are affected by the opening of a new for-profit college. The second goal is to understand whether any enrollment shifts are localized within particular subgroups of students, or within particular program strands. The final goal of this study is to determine whether the expansion of the for-profit colleges between 2000 and 2012 increased the education levels of the populations in communities where they opened.

Study Design
I make use of IPEDS data from 2001 to 2012 merged with data from the Census, the American Community Survey, the Bureau of Labor Statistics and the Grapevine Survey as well as data from Esri Business Analyst. My main sample consists of 1213 public community colleges. Table 1 displays descriptive statistics for this sample.

I measure the competitive threat to public community colleges posed by for-profit colleges as the distance between each public community college and the nearest new degree-granting for-profit college to open within my sample period. I make use of an event study model in which I interact the distance measure with dummy variables for each year, for four years before and four years after, a new degree-granting for-profit college opened. In this way, I explore the effect of the new for-profit college opening on public community college outcomes both before and after the new institution opened. My outcomes include total enrollment, enrollment by age, ethnicity, gender and degree-seeking status, as well as program completions in service, education, computers, business and health-related fields. I include state fixed effects to control for non time-varying characteristics of states. My preferred specification also includes college fixed effects, so that I am estimating off of variation in my outcomes over time, rather than over time and across institutions. Standard errors are clustered by state in order to account for the fact that the errors on individual institutions within the same state may be correlated.

Findings and Implications
I find that having a new degree-granting for-profit college open nearby does not affect total enrollments at public community colleges or enrollments by ethnic or age subgroups, on average. On the other hand, I find some evidence that having a new for-profit college open up nearby has a negative effect on the enrollment of non degree-seeking students at the public community college (see Table 2). I also examine certificate and associate’s degree production in health, business, computers, education and service-related fields. Having a new for-profit college open nearby does not affect the production of associate’s degrees, but I find that there are small declines in the number of certificates awarded in health-related fields at public community colleges two years after a new for-profit institution opens nearby. Finally, I examine how the number of certificates and associate’s degrees produced in a county is affected by a new for-profit college opening. Table 3 displays these estimates. I find that the number of certificates produced in a county increases after a new for-profit college opens, though there is no impact on associate’s degrees.
My results suggest that for-profit colleges may enroll some certificate-seeking students who would have otherwise attended a public community college. This, in combination with the finding that the number of certificates produced at the county level increases after a new for-profit college opens, suggests that for-profit colleges enroll students from both the intensive and extensive margins.

Author

• Adela Soliz, The Brookings Institution