Special Reports

Report by HEA Group Warns Against Higher Ed Programs with Poor Economic Returns


A recent report by the Higher Education Analysis (HEA) group has shed light on the economic outcomes of various postsecondary education programs, warning students to beware of programs that may not lead to satisfactory financial returns.

(Photo : PEXELS / Karolina Grabowska)

Disappointing Economic Outcomes

The analysis, which drew data from the U.S. Department of Education's College Scorecard, evaluated the earnings outcomes of approximately five million students across 3,887 higher education institutions in the United States. It compared the median earnings of students a decade after their initial enrollment against several benchmarks, including the federal poverty line, 150% of the federal poverty line, a $15 minimum wage, and the earnings of a typical high school graduate.

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For-Profit Institutions Under Scrutiny

The report found that certain types of postsecondary education institutions and credentials were more likely to result in students failing to achieve even minimal economic benchmarks. Notably, institutions most likely to yield disappointing economic outcomes were concentrated in the for-profit sector, particularly those offering short-term certificates.

The study revealed that out of the 18 institutions with median annual earnings below the federal poverty line, 17 belonged to the for-profit sector, providing short-term certificates.

Impact of Minimum Wage Standards

The report also highlighted the impact of minimum wage standards on postsecondary education outcomes. While some states have increased their minimum wage to $15 per hour, ten years after enrollment, many colleges still showed students earning below this threshold.

Additionally, a significant number of institutions had the majority of their students earning salaries between $30,000 and $35,000 per year, indicating a gap between educational investment and financial return.

Comparison to High School Graduates

One metric used in the analysis was comparing the earnings of postsecondary graduates to those with only a high school diploma. Shockingly, over a quarter of institutions showed the majority of their students failing to earn as much as a typical high school graduate ten years after enrollment. This disparity was particularly pronounced in short-term certificate programs offered by for-profit institutions.

Importance of Economic Returns

While economic returns are not the sole criterion for determining job success or satisfaction, they play a crucial role in assessing the value of postsecondary education. Michael Itzkowitz, founder of The HEA Group, emphasized that most people enroll in higher education with the primary goal of bettering themselves financially. Therefore, it is essential for students to be aware of institutions and programs that may not deliver satisfactory returns on their educational investment.

Policy Implications and Recommendations

The report's findings have significant policy implications for the higher education sector. It underscores the need for greater transparency and accountability in educational outcomes, particularly regarding for-profit institutions and short-term certificate programs. Policymakers and educational stakeholders should prioritize initiatives that promote economic mobility and ensure that students receive tangible benefits from their educational pursuits.

The HEA group's report serves as a wake-up call for both students and policymakers, highlighting the importance of economic outcomes in evaluating the effectiveness of higher education programs. By addressing the disparities identified in the report, stakeholders can work towards a more equitable and economically viable higher education system.

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