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

Abstract

Community colleges enrolled 37 percent of students attending Title IV-eligible, degree-granting institutions in 2000, but by 2012, this had dropped to 33 percent (National Center for Education Statistics (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 only 3 percent in 2000 (NCES, 2013). The decline in the share of undergraduate enrollment at public community colleges combined with the increasing share enrolled in for-profit colleges suggests that for-profit and public community colleges may compete for some of the same students, and several studies support this conjecture (Rosenbaum, Deil-Amen and Person, 2006; Cellini, 2009; Iloh and Tierney, 2014).

This study is the first large-scale examination of the impact of for-profit colleges on the enrollment and outcomes of students at other postsecondary institutions. I make use of data from the Integrated Postsecondary Education Data System merged with data from the Census, American Community Survey, Bureau of Labor Market Statistics and Grapevine Survey. In the first part of this study, using an event study model in which I interact year with the distance to the nearest newly-opened degree-granting, for-profit college, I estimate the effect of a new for-profit institution opening on community college enrollments and degree completions. In the second part of this study, I estimate the effect of having a new for-profit college open on county education levels. My results suggest that community college enrollments and degree completions do not decline when a new degree-granting for-profit college opens nearby, and these zeros are precisely estimated. Furthermore, I find evidence that the county-level production of short- and long-term certificates increases after a new for-profit college opens, though the number of associate’s degrees does not increase. This evidence should serve to broaden conversations about the role of for-profit colleges in the larger landscape of the American higher education system.