Where do students go when for-Profit colleges lose federal aid?

Stephanie R. Cellini, Rajeev Darolia, Lesley J. Turner

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

Abstract

We examine the effects of federal sanctions imposed on for- profit institutions in the 1990s. Using county-level variation in the timing and magnitude of sanctions linked to student loan default rates, we estimate that sanctioned for- profits experience a 68 percent decrease in annual enrollment following sanction receipt. Enrollment losses due to for- profit sanctions are 60- 70 percent offset by increased enrollment within local community colleges, where students are less likely to default on federal student loans. Conversely, for- profit sanctions decrease enrollment in local unsanctioned for- profit competitors, likely due to improved information about local options and reputational spillovers. Overall, market enrollment declines by 2 percent.

Original languageEnglish
Pages (from-to)46-83
Number of pages38
JournalAmerican Economic Journal: Economic Policy
Volume12
Issue number2
DOIs
StatePublished - May 1 2020

Bibliographical note

Publisher Copyright:
© 2020 American Economic Association.

ASJC Scopus subject areas

  • General Economics, Econometrics and Finance

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