For-profit colleges lose when two-year colleges offer B.A. degrees

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When Florida opened the door 17 years ago for two-year colleges to offer bachelor’s degrees, they expanded rapidly into a host of new areas: business, nursing, teaching, and more. St. Petersburg College alone created 25 bachelor’s programs. Thousands of students flocked to them, paying a fraction of what they would pay for an equivalent degree at the University of Florida. By 2014 nearly 6,000 students a year were earning their bachelor’s degrees from a community college. Despite their popularity, many people feared that the 28 taxpayer-financed community colleges were unnecessarily duplicating programs at the state’s 12 four-year public universities—and then awarding them substandard degrees. As a result, Florida’s legislature put a one-year moratorium on new programs, and then officials slowed down the creation of new ones after 2015.

Now a team of University of Florida researchers has looked back at the results of this experiment and come to a surprising conclusion: four-year state schools actually saw an increase in business even as two-year institutions expanded into their terrain. But for-profit, private universities generally took a big hit. While four-year public schools awarded 25 percent more degrees a year in the programs where local community colleges offered a competing degree, the private for-profit universities saw their degree output fall 45 percent when a nearby two-year institution posed direct competition. The results of the study were slated to be released Monday at the annual meeting of the American Educational Research Association in New York.

“We did not expect to find that,” said Dennis Kramer, an assistant professor and director of the Education Policy Research Center at the University of Florida, who co-authored the research. “Public four-year programs may actually benefit from the presence of a bachelor’s program at the local community college.”

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Why B.A. degrees increased at four-year state schools, such as Florida State University or the University of Central Florida, is a puzzle. Kramer’s theory is that after two-year colleges began offering four-year degrees, their students took more prerequisite courses in their freshman and sophomore years that counted toward bachelor’s requirements. Then, many of these community college students successfully transferred to a more prestigious four-year university and graduated. Kramer is currently conducting a study of transfer students to verify if this was the case.

Less surprising is that the community-college competition hurt for-profit schools, which have been under attack for saddling students with large debts. For-profits tend to market to the same group of low-income and older students as community colleges. Students suddenly had the option to complete a B.A. degree for, say, $130 a credit instead of $800. “The long-term impact of this substitution [away from for-profits to community colleges] could be a reduction of student debt,” said Kramer.

Florida is a good place to study the recent phenomenon of two-year college expansion. Florida was an early adopter of the policy, and nearly all community colleges in the state decided to try it.  Many other states began allowing two-year schools to offer four-year degrees much later and, like California, put caps on the number of programs that could do it. As of 2015, 23 states permitted the practice. Nationally, more than 17,000 students earned a bachelor’s degree at a community college in 2014, up from roughly 1,700 in 2000.

Related: Transfer students start getting more of the credits they’ve already earned

Local labor markets drove the policy change, as communities sought to train more adults to enter fields with worker shortages. The four most popular fields where community colleges expanded in Florida were business, teaching, nursing and computer science.

In the study, Kramer and his colleagues, Jacqueline Donovan and Justin Ortagus, counted the number of bachelor’s degrees awarded at four-year institutions before and after a nearby two-year college started a competing bachelor’s program. They continued their scrutiny up to six years after the introduction of a new community college bachelor’s to allow students enough time to complete a four-year degree. The researchers focused on fields of study where different schools were offering the same degrees, in order to spotlight the effects of competition.

Like their public counterparts, private nonprofit universities and colleges also saw an increase in business—albeit a smaller one, at 4.6 percent— when a community college launched a competing program.

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I wondered if the post-2008 recession had increased demand for bachelor’s degrees, as young adults who couldn’t find jobs went back to school, and if the increase in B.A.’s in popular fields at four-year institutions had nothing to do with the community college expansion. But Kramer said he was able to adjust his calculations for changes in overall student enrollment— accounting for the recession— and isolate the effects of the new community college bachelor’s degree.

Kramer’s research still leaves open the question of whether two-year colleges are losing sight of their mission to serve all students. The new bachelor’s programs generally have admissions requirements, and that can create divisions in the student community between students who’ve been admitted to the B.A. programs and those who haven’t. It can also create fissures among faculty at community colleges, some of whom are qualified to teach bachelor’s courses and some who aren’t. Some schools have been hiring more expensive faculty to teach the new bachelor’s programs. And that’s raising concerns that the new bachelor’s programs are siphoning resources away from the lowest-performing students who need the most support.

The quality of these community college four-year degrees remains unknown. Kramer hopes to study their labor market outcomes and see if community college degrees are good enough to get them the same high paying jobs that their four-year university counterparts are getting.

What matters most, after all, is whether community colleges’ expansion into new terrain is helping them produce a more educated citizenry capable of joining the middle class.