• Profile of Students
• Paying for College
• Profile of Borrowers
• 4-Year, For-Profit Institutions
• References

For-profit institutions have been influenced by these changes more than any other segment of the postsecondary education community. This sector's share of federal Stafford subsidized loan dollars awarded has declined from a peak of 28 percent in 1988-89 to 8 percent in 1995-96 (The Col-lege Board 1998). Between fiscal year (FY) 1992 and FY 94, the number of for-profit institutions participating in the Federal Family Education Loan (FFEL) program decreased by 14 percent. Furthermore, the share of federal Pell Grants awarded to students attending for-profit institutions fell from 19 percent in 1992-93 to 13 percent in 1995-96 (The College Board 1998). In light of these changes, it is important to explore how students at private for-profit institutions may have been affected.

Except as noted, all findings reported below apply to students at less-than-4-year institutions. Other less-than-4-year institutions are defined as public and private, not-for-profit institutions. Comparisons are made between the years 1992-93 and 1995-96.

Students attending less-than-4-year, for-profit institutions in 1995-96 primarily were white (58 percent), age 23 or younger (46 percent), and female (67 percent). They were also independent (71 percent), delayed their enrollment for a year or more after high school (69 percent; figure A), attended full time for at least part of the academic year (80 percent), and worked while enrolled (61 percent; figure A).

Compared to students at other less-than-4-year institutions in 1995-96, these students were more likely to be female, black, single parents, independent, and in the lowest income quartile (for both dependent and independent students).

With respect to enrollment characteristics, students at less-than-4-year, for-profit institutions in 1995-96 were more likely to have delayed their enrollment for a year or more after high school, have attended full time for at least part of the academic year, and have not worked while enrolled compared to students at other less-than-4-year institutions.

Between 1992-93 and 1995-96, there was little change in the demographic and enrollment characteristics of students at less-than-4-year, for-profit institutions. The same is true for their counterparts at other less-than-4-year institutions.

Figure A.—Percentage distribution of undergraduates enrolled in less-than-4-year institutions according to selected characteristics, by control of institution:1995-96

In 1995-96, students at less-than-4-year, for-profit institutions were more likely than students at other less-than-4-year institutions to have received any financial aid (78 percent compared to 36 percent), a loan from any source (56 percent compared to 9 percent), and a grant from any source (56 percent compared to 29 percent).

The federal government was the most extensive provider of financial aid to students at less-than-4-year, for-profit institutions in 1995-96 (figure B). Seventy-one percent received federal aid, 11 percent state aid, 10 percent institutional aid, and 2 percent employer aid. Sixty-six percent of aid recipients were awarded only federal aid.

Between 1992-93 and 1995-96, changes occurred in how students at less-than-4-year, for-profit institutions financed their educations. While the federal government remained the most extensive provider of student financial aid, the percentage of students receiving nonfederal aid rose from 12 percent to 27 percent (figure B).

Borrowers at less-than-4-year, for-profit institutions were more likely than nonborrowers to be age 23 or younger (50 percent compared to 41 percent). They were less likely to be in the highest income quartile. Nine percent of both dependent and independent borrowers were in the highest income quartile, compared to 28 percent and 16 percent, respectively, of nonborrowers.

Research on loan default identifies at least four risk factors associated with higher default levels (Dynarski 1994; Mathtech 1995). These factors include students who (1) are black, (2) are independent, (3) are from low-income families, and (4) do not have traditional high school diplomas. Of borrowers at less-than-4-year, for-profit institutions in 1995-96, 17 percent had none of these risk factors, 33 percent had one, 30 percent had two, 17 percent had three, and 3 percent had all four risk factors (figure C).

Figure B.—Percentage of undergraduates enrolled in less-than-4-year, for-profit institutions who received financial aid aid from various sources:1992-93 and 1995-96

These students were more likely to have had a greater number of loan default risk factors than borrowers at other less-than-4-year institutions. Fifty percent of borrowers at less-than-4-year, for-profit institutions had two or more default risk factors, compared to 35 percent of borrowers at other less-than-4-year institutions. The percentages of students with no risk factors were 17 percent and 30 percent, respectively.

There were no significant differences between 1992-93 and 1995-96 in the number of loan default risk factors for either students at less-than-4-year, for-profit institutions or their counterparts at other institutions.

Over the past several years, the prominence of 4-year, for-profit postsecondary institutions that offer programs leading to a baccalaureate degree and beyond has increased.

In 1995-96, undergraduate students at 4-year, for-profit institutions were different than those students at less-than-4-year, for-profit institutions. They were less likely to be female (43 percent compared to 67 percent), have not worked while enrolled (15 percent compared to 39 percent), and have delayed their enrollment for a year or more after high school (53 percent compared to 69 percent).

Differences also were evident with regard to financing behavior. The average amounts of federal loans and grants received by students at 4-year, for-profit institutions were higher than those for students at less-than-4-year, for-profit institutions. They also were more likely to receive employer aid. However, their average state grant was likely to be lower.

Figure C.—Percentage distribution of undergraduate borrowers enrolled in less-than-4-year institutions according to number of loan default risk factors, by control of institution: 1995-96