With Spike in Enrollment Likely Coming, New Report Casts Doubt on Value of Certificate-Granting Institutions

By Owen Daugherty, NASFAA Staff Reporter

Low-income students at certificate-granting institutions are significantly less likely to earn an ample salary in comparison to their wealthier peers, according to a new report.

Published by Third Way, a public policy-focused think tank, the report aims to provide a framework for policymakers as millions of Americans are out of work, likely leading to a spike in enrollment at higher education institutions, particularly career education and certificate-granting programs.

The previous economic recession saw a surge in enrollment, the report notes, though the institutions awarding these shorter-term credentials don’t always provide adequate value to low-income and underrepresented students.

“While some certificate-granting institutions are shown to provide increased economic opportunity for their low-income students, many show them earning even less than an average high school graduate after they attend,” the report found.

Authored by senior fellow Michael Itzkowitz, the report analyzed federal data from 230 schools to examine the economic value these institutions provide to their students.

The findings depict a stark contrast between the post-enrollment earnings at these institutions for low-income students, defined as as making $30,000 or less annually, compared to their higher-income peers, defined as having a family income of at least $75,000 per year.

Notably, more than 70% of students enrolled at these institutions ended up earning below that of a high school graduate, whose average salary is roughly $28,000, within six years of initial enrollment.

Furthermore, only 9 out of the 230 institutions analyzed, about 4%, leave the average low-income student earning more than $35,000 six years after initial enrollment.

“These same institutions show better prospects for higher-income students, a demographic that only makes up 20% of students within this subset of schools,” the report notes.

These certificate-granting institutions typically have an outsized role in training the workforce during and after an economic downturn because they offer courses to teach the technical skills necessary to enter certain professions, such as a chef, nurse, or veterinary assistant.

While these institutions have become an attractive option to both legislators and students alike, who view them as a lower-cost, less time-consuming option than earning a degree from a four-year institution, the data does not always back up the belief that they are a better value.

Most troubling, the report highlights, is that these income disparities grow over time.

Sixty-three percent of these institutions show an earnings difference between low- and higher-income students of $10,000 or less. Four years later, those results trend the other direction. And 10 years after initial enrollment, the majority of institutions show a disparity of $10,000 or more between the low- and high-income students. During this same time frame, 30 institutions show an earnings differential of $15,000 or more, “meaning they leave their low-income students earning substantially less than their higher-income peers, even though they signed up and paid to receive the same education.”

To combat this trend, the report suggests better targeting funding — particularly future relief packages — to “educational programs that provide real mobility to the low-income students who will most likely be affected by this educational disruption and economic upheaval.”

“Policymakers should put in place guardrails to ensure that additional taxpayer investments flow to schools and programs equipped to provide students, particularly low-income students, with paths to increased economic opportunity,” the report states.

While the the Coronavirus Aid, Relief and Economic Security (CARES) Act allocated nearly $14 billion to higher education to offset the disruptions caused by the novel coronavirus, roughly $1.4 billion went to certificate-granting institutions, with nearly $500 million going to institutions where its students failed to outpace the earnings of a high school graduate six years after enrollment, according to the report.

“Rather than allocating federal funds based on student enrollment alone, Congress should also ensure that institutions receiving funds to help in this crisis have a track record of good outcomes for all students who enroll, especially those most susceptible to the rapid economic changes happening in the postsecondary landscape,” the report suggests.

 

Publication Date: 7/9/2020


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