Generating Real Value

Transcription

1 America s Private Sector Colleges ad Uiversities: Geeratig Real Value for Studets & Society Summer 2013

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3 AMERICA SEEKS ANSWERS to some importat questios about postsecodary educatio. To cite just a few: Does college provide a appropriate retur for the ivestmet of time ad moey? Ca America educate ad trai a effective workforce while scarce public fuds ihibit access to postsecodary educatio? More importatly, are we still committed to providig our citizes with geuie opportuities for upward mobility? Itroducig Private Sector Colleges ad Uiversities These questios are difficult to aswer succictly. America s private sector colleges ad uiversities make a importat cotributio to America s future through skilled workers especially adults returig to school for educatio ad career skills. Throughout this documet, you ll see the term Retur o Ivestmet. I the cotext of higher educatio, what does ROI really mea? The Ecyclopedia of Busiess Terms ad Methods offers a geeral defiitio: ROI aalysis is a popular fiacial metric for evaluatig the fiacial cosequeces of idividual ivestmets ad actios... ROI essetially compares the magitude ad timig of ivestmet gais directly with the magitude ad timig of costs. 1 Studets, employers, ad commuities ad eve taxpayers ad govermets beefit from ivestmets i private sector colleges ad uiversities. America s proprietary postsecodary istitutios have bee aroud sice Bejami Frakli fouded the Academy of Philadelphia i I the mid-1800s, about 20 proprietary busiess schools were operatig, ad by 1890 some 250 such schools had erolled 81,000 studets. 3 Today, private sector colleges ad uiversities cotiue to stregthe the fabric of America higher educatio. I , private sector colleges ad uiversities educated early four millio studets. 4 Compared with other segmets of higher educatio, our istitutios eroll a more diverse studet body ad provide attedees with access to a broader rage of programs that combie postsecodary educatio with career skills leadig to employmet opportuities. Sevety-eight percet of the total umber of credetials our studets ear are associate s degrees ad certificates. Of all associate s degrees ad certificates awarded i the Uited States (icludig Puerto Rico), about oe-third (32 percet) are coferred by private sector colleges ad uiversities. Such credetials are a studet s first ivestmet i lauchig a successful career. 5 1

4 What kid of studet erolls i a private sector college or uiversity? 6 67 percet are 25 or older (compared with 38 percet for all of higher educatio) 64 percet are wome (57 percet for all of higher educatio) 24 percet are Africa America (14 percet for all of higher educatio) 15 percet are Hispaic (13 percet for all of higher educatio) 76 percet are fiacially idepedet (47 percet for all of higher educatio) 86 percet receive some form of studet aid based o their fiacial eeds (30 percet for all of higher educatio) 63 percet receive federal Pell Grats (27 percet for all of higher educatio) 25 OR OLDER WOMEN 38% 67% 64% 57% AFRICAN AMERICAN 14% 24% HISPANIC 15% 13% FINANCIALLY INDEPENDENT 47% 76% Our Istitutios All of Higher Educatio What kids of credetials do they ear? 7 Type of credetials awarded 45 percet ear a certificate 20 percet ear a associate s degree 7 percet ear a bachelor s degree 11 percet ear a master s degree 3 percet ear a doctorate or professioal degree 45% professioal certificates 20% associate s 7% bachelor s 11% master s 3% doctorates 2

5 Preparig for America s Future BY % of all jobs will require some level of post-secodary educatio 55 MILLION JOB OPENINGS 17 MILLION JOBS will be middle-skill occupatios By 2020, 65 percet of all jobs will require some postsecodary educatio. 8 Fifty-five millio job opeigs are projected ad middle skill occupatios aloe will accout for 17 millio of those jobs. 9 At a time whe opportuity ad upward mobility for may Americas are recedig, private sector colleges ad uiversities provide real skills that lead to real jobs with real icomes ad a real chace for a place i the middle class. Meetig your daily eeds Thik about it: I ay give moth, the chaces are high that a graduate of oe of our istitutios did your tax retur repaired your car coducted a medical test desiged your website solved your compay s computer problems processed your prescriptio cut ad styled your hair repaired your air coditioig equipmet cared for your elderly parets or sick pets or delivered food to your local store. Our istitutios educate ad trai professioals for careers that meet the everyday eeds of America s citizes. Real Jobs, Real Icomes Graduates with a professioal certificate or associate s degree ear +54% Average Aual Icome I the midst of the Great Recessio i 2009, private sector colleges ad uiversities respoded to America s eed for skilled workers by equippig graduates with 3.25 millio credetials. I 2012 aloe, our istitutios coferred more tha 490,000 degrees ad more tha 453,000 certificates. These results ot oly improved the educatio of our workforce but advaced these ew graduates ecoomic prospects. 10 3

6 Graduates of our two-year istitutios who received a professioal certificate or associate s degree experieced a average aual icrease i icome of 54 percet. 11 Those who eared a bachelor s degree collected a additioal $60,000 i icome i the first decade after graduatio. 12 Data from the Natioal Logitudial Survey of Youth foud that the ROI for our graduates was about 22 percet, or 11 percet per year, a figure o par with those of studets i other sectors ad levels of educatio. For example, five years after graduatig, the average aual icome gai of a high-risk studet at our istitutios was $7, Real-World ROI of a Private Sector College or Uiversity Credetial For some perspective o the retur o ivestmet i a private sector college or uiversity educatio, let s compare the results of our graduates with those of high school grads. 14 CREDENTIAL PROGRAM SALARY WITH CREDENTIAL SALARY WITH HIGH SCHOOL DEGREE HVAC Repair ad Maiteace Techicia $ 43,640 $ 32,600 Electricia $ 49,840 $ 32,600 Diagostic Medical Soographer $ 65,860 $ 32,600 Auto Mechaic $ 36,610 $ 32,600 Cardiovascular Techicia $ 52,070 $ 32,600 HVAC Repair ad Maiteace Techicia: I , private sector colleges ad uiversities coferred 36 percet of all certificates ad associate s degrees that led to the occupatio of HVAC repair ad maiteace techicia. 15 Salary: The average HVAC mechaic with a certificate from a private sector istitutio will ear $43,640 aually, compared with $32,600 for a perso who oly graduated from high school a 34 percet advatage i aual earigs. Cost: The average cost for a certificate i HVAC techologies is $21,587. Studet media debt: $15,598. Repaymet of ivestmet: $179 per moth for te years. 4

7 Electricia: I , private sector colleges ad uiversities coferred 40 percet of all certificates that led to the occupatio of electricia. 16 Salary: The average electricia with a certificate from a private sector istitutio will ear $49,840 aually compared with $32,600 for a perso who oly graduated from high school a 53 percet advatage i aual earigs. Cost: The average cost of a certificate for a studet wishig to become a electricia is $21,910. Studet media debt: $13,635. Repaymet of ivestmet: $157 per moth for te years. Diagostic Medical Soographer: I , private sector colleges ad uiversities coferred 51 percet of all certificates, associate s ad bachelor s degrees that led to the occupatio of diagostic medical soographer. 17 Salary: The average soographer will ear $65,860 aually compared with $32,600 for a perso who oly graduated from high school a 102 percet advatage i aual earigs! Cost: The average cost for a certificate i diagostic medical soography is $31,721. Studet media debt: $4,405. Repaymet of ivestmet: $51 per moth for te years. Auto Mechaic: I , private sector colleges ad uiversities coferred 40 percet of all certificates ad associate s degrees for automotive mechaics. 18 Salary: The average automotive techicia with a certificate or a associate s degree from a private sector istitutio will ear $36,610 aually compared with average aual earigs of $32,600 for a perso who oly graduated from high school a 12 percet advatage i aual earigs. Cost: The average cost for a certificate program i automotive techologies is $32, Studet media debt: $16, Repaymet of ivestmet: $188 per moth for te years. 21, 22 I cotrast, a average mothly loa paymet is $452 for a ew car ad $351 for a used car. 23 Cardiovascular Techicia: I , private sector colleges ad uiversities coferred 76 percet of all certificates, associate s ad bachelor s degrees that led to the occupatio of cardiovascular techicia. 24 Salary: The average cardiovascular techicia will ear $52,070 aually compared with $32,600 for a perso who oly graduated from high school a 60 percet advatage i aual earigs! Cost: The average cost for a certificate i cardiovascular techology is $21,569. Studet Media Debt: $9,816. Repaymet of Ivestmet: $113 per moth for te years. 5

8 Real Academic Outcomes Our two-year istitutios have a graduatio rate of 63 percet, compared with 22 percet at stateru public istitutios ad 56 percet at private, ot-for-profit istitutios. 25 Several studies, icludig those coducted by Harvard Uiversity ad George Washigto Uiversity researchers, show that private sector studets complete certificate ad associate degree programs at higher rates tha studets at other istitutios. 2-year istitutio graduatio rate Private Sector 63% Public 2-year 22% Private Not-for-profit 56% Accordig to a report i The Future of Childre, a joural published by Priceto Uiversity ad The Brookigs Istitutio, About 54 percet of studets who iitially seek to eroll i certificate programs at for-profit colleges complete their course of study withi six years, compared with just 42 percet at commuity colleges. 26 Our atio ca oly effectively produce a better educated, better prepared workforce by icreasig opportuities for otraditioal studets, which private sector colleges ad uiversities have demostrated they do well. Credetials certificates ad degrees coferred by our istitutios have soared i the decade edig i 2011: 27 Certificates up 122 percet at our istitutios; up 68 percet at public ad 25 percet at private oprofit istitutios Associate s degrees up 152 percet at our istitutios; up 53 percet at public ad 14 percet at private oprofit istitutios Bachelor s degrees up 397 percet at our istitutios; up 34 percet at public ad 26 percet at private oprofit istitutios Master s degrees up 572 percet at our istitutios; up 38 percet at public ad 45 percet at private oprofit istitutios Doctorate degrees up 400 percet at our istitutios; up 35 percet at public ad 33 percet at private oprofit istitutios. 6

9 Real Service to America s Military ad Veteras Active duty military ad veteras comprise a proud elemet of our studet body. Oe-half of all active-duty Military Tuitio Assistace dollars go to studets erolled i private sector colleges ad uiversities. 28 Our schools have served 325,000 veteras ad their families, represetig 28 percet of all veteras usig their Post 9/11 GI Beefits THOUSAND veteras served 28% of all veteras usig their GI Beefit How does a group of istitutios that educates 13 percet of all postsecodary studets serve 28 percet of all veteras uder the GI Bill? Quite simply, we meet the educatio eeds of today s vetera better tha ayoe else! Vets do t wat to live i a dorm ad take five courses per semester. They wat a focused, accelerated delivery of academic programs that support their trasitio from the frot lies to employmet as soo as possible. Earlier this year, we surveyed several member istitutios ad looked at 16,500 vetera graduates. Here s what we foud: TYPES OF CREDENTIALS 25% bachelor s or graduate degrees Fields of study other health-care fields 75% certificates & associate s degrees computer sciece & iformatio techology 10% 29% 20% skilled trades 41% 7

10 Real Advatages to the Public Good The Bureau of Labor Statistics data related to icome ad earigs for idividuals awarded certificates or associate s degrees provide some isight ito the collective impact of private sector colleges ad uiversities i advacig the public good. Gais i Federal Tax Reveues: The average lifetime earigs advatage for a perso who received a certificate istead of a high school diploma is $243,000. For those earig a associate s degree, the advatage is $423, With 21.4 millio Americas havig eared a associate s degree, 31 this represets a total lifetime earigs gai of $9.1 trillio. Taxed at a rate of 15 percet, the retur o ivestmet to the federal govermet represets a $1.3 trillio icrease i tax reveues. $423,000 X 21.4 MILLION = $9.1 TRILLION LIFETIME AMERICANS WITH TOTAL LIFETIME EARNINGS ASSOCIATE S EARNINGS ADVANTAGE DEGREE GAIN TAXED AT 15% RATE $1.3 TRILLION INCREASE IN TAX REVENUES FROM TAXPAYERS WHO EARNED AN ASSOCIATE S DEGREE Educatio at a Lower Cost to Taxpayers: Private sector colleges ad uiversities receive o direct taxpayer subsidies. Ulike oprofit istitutios, they actually pay taxes. Coutig all forms of federal, state, ad local support for higher educatio, the total reveues allocated per studet to differet types of four-year istitutios are as follows (these costs iclude state ad local support ad all federal grats ad loas): Private sector colleges ad uiversities: $2,934 Private oprofit colleges ad uiversities: $7,065 Public colleges ad uiversities: $15, Lower cost to taxpayers* (per studet) Private Sector $2,934 Private Noprofit $ 7,065 Public 2 & 4-year $ 15,540 * Amouts reflect total reveues allocated per studet. Reveues iclude state ad local support ad federal grats ad loas. 8

11 The oly fiacial support that private sector colleges receive are the grats, loas, ad veteras ad military beefits that govermets provide to idividual studets for use at the istitutio of their choice. Niety-six percet of studets at our istitutios receive some form of fiacial aid, ad 93 percet receive some federal studet fiacial assistace. Amog all postsecodary studets 66 percet receive some form of aid, ad 47 percet receive federal aid. 33 Repayig the Public Ivestmet: Eligibility for studet fiacial aid varies greatly by sector, as does the percetage of studets who actually receive it. Niety-two percet of our studets are otraditioal. 34 Most are workig adults, sigle parets, the first i their geeratio to atted college, a member of a uderserved miority group, ad the like. Our studets accout for 23 percet of all those who receive federal loas based o fiacial eed ad 21 percet of all federal loa disbursemets. 35 A aalysis of the ROI ad beefit to society of private sector colleges i a 2012 Imagie America Foudatio report foud that a graduate of oe of our two-year colleges will have paid eough additioal taxes i icome to repay the public costs of his or her educatio withi te years after graduatio. I cotrast, the report said, It will take approximately 14 years after graduatio for the public college graduate to repay the govermet ivestmet i his or her educatio. 36 Real Beefits for Our Commuities What s more, our publicly traded private sector colleges ad uiversities paid $807 millio i taxes i Texas: A 2011 report by The Perryma Group foud that the productivity gais associated with graduates of our schools i Texas resulted i substatial ecoomic beefits for the state. The estimated gais icluded $9.4 billio i aual ecoomic output ad 116,910 permaet jobs. 38 Miesota: I 2012, the Miesota Career College Associatio released a aalysis of the impact of the state s private sector colleges ad uiversities that foud our istitutios had a sigificat ecoomic impact o the state. Specifically, the study foud that Miesota private colleges ad uiversities: Directly ad idirectly produce about 14,900 jobs ad almost $450 millio i earigs aually i the state; these earigs produce about $21 millio aually i state icome tax reveues ad a additioal $9 millio i sales taxes Pay about $7.6 millio aually i property taxes to state ad local govermets ad provide a additio $4.3 millio aually i other state taxes 39 9

12 Meetig the Commuity s Needs Our missio is service to studets, ad our graduates meet the eeds of employers. Ulike ay other sector of higher educatio, we ca quickly respod to the market demads for workforce skills. We focus our ivestmets i oly a few areas of educatio. Though our istitutios offer academic programs i 25 out of 38 recogized educatio programs or fields of study, three areas health care, busiess, ad persoal ad culiary accout for 70 percet of all the credetials our istitutios cofer. 41 We teach those who wat to be mechaics how to be mechaics, hopeful urses how to be urses, ad aspirig electricias how to be electricias. I 2012, our istitutios awarded: percet of all associate s degrees - 30 percet i busiess, maagemet, ad marketig - 46 percet i computer scieces ad iformatio techology - 30 percet i egieerig techology ad healthcare - 39 percet i homelad security, law eforcemet, ad firefightig - 42 percet i legal professios ad studies - 31 percet i mechaic ad repair techologies 7 percet of all bachelor s degrees - 45 percet i commuicatio techology - 27 percet i computer sciece ad iformatio techology - 22 percet i homelad security, law eforcemet, ad firefightig - 22 percet i legal professios ad studies - 26 percet i military techology ad applied scieces 11 percet of all master s degrees - 19 percet i busiess, maagemet, ad marketig - 34 percet i commuicatio techology - 29 percet i homelad security, law eforcemet, ad firefightig - 16 percet i psychology 3 percet of all doctorates - 34 percet i busiess, maagemet ad marketig - 13 percet i educatio - 14 percet i psychology - 13 percet i public admiistratio 10

13 Ad i specific fields: 38 percet of all electricia credetials 36 percet of all HVAC maiteace techology credetials 40 percet of all vehicle maiteace ad repair techology credetials 59 percet of all allied health professioals credetials 57 percet of all culiary arts credetials 24 percet of all commuicatios techology credetials What is the ROI of Private Sector Colleges ad Uiversities? For studets who belog to groups that have ot historically atteded or completed college, our istitutios ca be the first step o the path to achieve the America dream. For commuities ad corporatios lookig to attract educated workers, private sector colleges ca help bridge the skills gap ad meet the demad for more classroom seats that oprofit colleges aloe caot. For the atio, icreasig the umber of educated workers is essetial. I fact, raisig the college graduatio rate just a sigle poit will uleash $124 billio per year i ecoomic impact o the 51 largest metropolita areas i the Uited States. 42 A ivestmet i America s private sector colleges ad uiversities pays off i motivated studets who are prepared for good jobs, i the capacity of our higher educatio system to accelerate the umber of taleted idividuals we eed to compete worldwide, ad i the ecoomic beefits to society. This is a rock-solid ivestmet that geerates real value. 11

14 (Edotes) 1 Ecyclopedia of Busiess Terms ad Methods, Imagie America Foudatio, I Service to America: Celebratig 165 Years of Career ad Professioal Educatio (Washigto: McGraw Hill, 2007), p. vi. 3 Daiel L. Beett, Adam R. Lucchesi, ad Richard K. Vedder, Ceter for College Affordability ad Productivity, For- Profit Higher Educatio: Growth, Iovatio ad Regulatio, July 2010, p org/uploads/forprofit_highered.pdf 4 The data for the Uited States iclude Puerto Rico. For US, Postsecodary Istitutios ad Cost of Attedace i ; Degrees ad Other Awards Coferred, ; ad 12-Moth Erollmet, , U.S. Departmet of Educatio, July 2013, p. 8 ad for Puerto Rico, Itegrated Postsecodary Educatio Data System (IPEDS) 12-moth erollmet survey, 5 Itegrated Postsecodary Educatio Data System (IPEDS) completio survey, 6 Natioal Postsecodary Studet Aid Study (NPSAS), Udergraduates, , U.S. Departmet of Educatio. 7 For degrees, Digest of Educatio Statistics 2012, Table dt12_318.asp. For certificates, Itegrated Postsecodary Educatio Data System (IPEDS) completio survey, dataceter/logi.aspx 8 Athoy P. Carevale, Nicole Smith, ad Jeff Strohl, Recovery: Job Growth ad Educatio Requiremets through 2020, Georgetow Uiversity, Ceter o Educatio ad the Workforce, July gppi/hpi/cew/pdfs/recovery2020.fr.web.pdf 9 Iterview with Athoy Carevale. Preparig-America-for-middle-skill-work.aspx 10 Itegrated Postsecodary Educatio Data System (IPEDS) completio survey, 11 Lytle, Robert, Roger Brier, ad Chris Ross. Private Sector Post-Secodary Schools: Do They Deliver Value to Studets ad Society? The Partheo Group, 2010, p perspectives%20o%20private%20sector%20post-secodary%20schools.pdf 12 Jorge Klor de Alva ad Mark Scheider, Who Wis? Who Pays? The Ecoomic Returs ad Costs of a Bachelor s Degree, Nexus Istitute of Research ad Policy ad America Istitutes of Research, May 2011, p files/whowis_bookmarked_ pdf 13 Op. cit. The Partheo Group, 2010, p All credetial data were geerated from the US Departmet of Educatio s Itegrated Postsecodary Educatio Data System (IPEDS), Completio Survey, Accordig to BLS, the majority (78 percet) of HVAC techicias have a certificate ad a very small percet (three percet) have a associate s degree, The CIP used is ad SOC is The CIP used is ad SOC is Accordig to BLS, 42 percet of diagostic medical soographers have a certificate ad 25 percet each have a associate s or a bachelor s degree, The CIP used is ad the SOC is Accordig to the Bureau of Labor Statistics (BLS), the vast majority (88%) of auto mechaic have a certificate ad oly a small percet (4 percet) have a associate s degree, The CIP used is ; ad the SOC is The average program costs were calculated based o the total costs reported by istitutios as part of their cosumer disclosures of the top five istitutios that coferred the most certificates ad associate s degrees i each field of study. 20 This figure was calculated usig cosumer disclosures from the top five istitutios that coferred the most certificates ad associate s degrees i this field of study. Studet media debts iclude all federal, private, ad istitutioal loas. A media is the middle umber i a give sequece of umbers. 12

15 21 All calculatios were made usig the olie Fiaid loa repaymet calculator ad assumed studets used usubsidized loas (6.8% iterest), which were paid over te years What a academic program costs ad the levels of debt studets accrue completig it may vary widely, depedig o the combiatio of fiacial resources studets have available to them. This may iclude savigs, paretal support, loas, scholarships, grats, tuitio assistace, ad so forth. 23 New Car Buyers Stretchig Out Paymets, CNBC, September 24, Accordig to BLS, 23 percet of diagostic medical soographers have a certificate, 58 percet have a associate s degree ad 10 percet have a bachelor s degree, The CIP used is ad SOC is Erollmet i Postsecodary Istitutios, Fall 2011; Fiacial Statistics, Fiscal year 2011; ad Graduatio Rates, Selected Cohorts, , U.S. Departmet of Educatio, December 2012, p David Demig, Claudia Goldi, ad Lawrece Katz, For-profit Colleges, The Future of Childre, Vol. 23, No. 1, Sprig 2013, p The Coditio of Educatio 2013, U.S. Departmet of Educatio, Departmet of Defese Data Reveals For-Profit Colleges Are Takig i the Bulk of Military Educatio Beefits, News from the Seate Health, Educatio, Pesios ad Labor (HELP), pdf/4f468d002ae0a.pdf 29 set to Suzae Palmer, Military & Vetera Educatio Cosultat, Associatio of Private Sector Colleges ad Uiversities, July 2, 2013 by U.S. Departmet of Veteras Affairs. 30 Carevale, Rose ad Cheah, The College Payoff, p collegepayoff-complete.pdf 31 U.S. Cesus Bureau, Table 1: Educatio Attaimet of the Populatio 18 Years ad Over by Age, Sex, Race ad Hispaic Origi, Robert Shapiro ad Nam Pham, Taxpayers Costs to Support Higher Educatio: A Compariso of Public, Private, No-for-Profit ad Private For-profit Istitutios, September Profile of Udergraduate Studets: , Web Tables, (NCES ), U.S. Departmet of Educatio, September NPSAS udergraduates survey, Award Year Direct Loa volume by School, Award Year Cumulative Activities through Quarter Edig 6/30/2012, U.S. Departmet of Educatio JBL Associates, Ic., Fact Book 2012: A Profile of Career Colleges ad Uiversities, Imagie America Foudatio, 2012, p Stifel Nicolaus, Postsecodary Educatio Factbook, Fall The Perryma Group, The Ecoomic Impact of Career College ad School Graduates o Busiess Activity i Texas ad Its Major Urba Regios: A Aalysis with Emphasis o Cost Savigs ad Productivity Beefits, New Pharos Cosultig, The Impact of Career Colleges o the Miesota Ecoomy, Jauary IPEDS, 41 All credetial data were geerated from the US Departmet of Educatio s Itegrated Postsecodary Educatio Data System (IPEDS), Completio Survey, Digest of Educatio 2012, U.S. Departmet of Educatio. 13

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