EL DERECHO DE SUPERFICIE Y EL RÉGIMEN DE PROPIEDAD EXCLUSIVA Y PROPIEDAD COMÚN

As Figure 7 highlights, official cohort default rates have been highest at for-profit (and two- year) institutions over most of the past two decades. Do the high default rates at for-profit schools indicate that these schools are doing something wrong – burdening their students with high debts while failing to provide a good education? Or, is it simply the case that these institutions enroll high-risk students that are more likely to experience repayment problems regardless of where they attend school? A few recent studies explore this issue.

Combining annual institution-level data on official two-year cohort default rates with data from the Integrated Postsecondary Education Data System (IPEDS) in 2005-08, Deming, Goldin, and Katz (2012) estimate that default rates at for-profit schools are 8.7 percentage points higher than at four-year public schools and 5.7 percentage points higher than at two-year community colleges, even when the sample is limited to open admission schools and differences in student composition, financial aid take-up, and various institutional offerings are accounted for.45

Deming, Goldin, and Katz (2012), Gervais, Kochar, and Lochner (2014), and Hillman (2014) use individual-level data from the Beginning Postsecondary Studies (BPS) to analyze the determi- nants of student loan default and non-payment measured 5-6 years after students entered college. All of these studies explore qualitatively similar specifications to those discussed earlier for Lochner and Monge-Naranjo (2015), so we do not discuss them in detail. We focus our discussion on the estimated differences in default or non-payment between students attending for-profit schools vs. public or non-profit schools conditional on a broad range of other factors (e.g. demographic and family characteristics, major/program type, degree received, debt levels, post-school income or unemployment).46

45_{Specifically, they control for the fraction of students that are part-time, at least 25 years old, female, black,}

and hispanic; the number of recipients and amounts disbursed for Pell grants and student loans; types of degree and highest degree offered; and indicators for institutional offerings of distance education, remedial course, job placement assistance, part-time employment services for students, and open admissions.

46_{Hershaff (2014) also uses individual-level data from the BPS and institution-level cohort default rate data}

Deming, Goldin, and Katz (2012) use the BPS cohort of first-time students entering two-year and four-year colleges in 2003-04 to study the impacts of attending for-profit institutions on a wide variety of educational outcomes. Accounting for a broad set of factors, they estimate that students attending for-profit schools experience higher levels of unemployment and lower earnings during the first few years after leaving school. Furthermore, for-profit students leave school with more debt and have student loan default rates that are 7-8 percentage points higher when compared with students that attended public and non-profit schools. Hillman (2014) studies a similar sample (conditioning on similar factors) but estimates separate impacts of attending two- and four-year for-profit schools. His estimates suggest that students attending for-profit two- and four-year schools are 26% and 19%, respectively, more likely to default than students attending public four-year colleges.

One concern with both of these studies is the fact that students attending college for 4-5 years would have had little, if any, chance to default on their student loans by the time default is mea- sured in the BPS.47_{Gervais, Kochar, and Lochner (2014), therefore, study the the determinants of}

student loan default and non-payment (defined as default, deferment or forbearance) for students initially enrolled in non-baccalaureate programs (i.e. certificate or associate degree programs).48 They further consider the 1995-96 entering cohort as well as the 2003-04 cohort to see whether differences across school types have changed with the rapid expansion of for-profit institutions in the U.S.

Gervais, Kochar, and Lochner (2014) focus on differences in default and non-payment between public, non-profit, and for-profit institutions. Table 7 reveals qualitatively different patterns for default and non-payment rates by type of institution. We focus our discussion on a compari- son between for-profit and public schools. Default rates were significantly higher among non- baccalaureate students initially enrolling in for-profit schools (19% vs. 7%) with a modest increase in the gap over time. By contrast, non-payment rates were more similar between public and for-profit schools for the earlier cohort (28% vs. 21%); however, the non-payment gap between students attending public and for-profit schools grew considerably. For the 2003-04 cohort, for-

to loans in the FFEL Guarantee program.

47_{Students have 6 a month grace period before they are expected to begin Stafford Loan payments and another}

9 months of missed payments before they would be considered in default.

48_{Roughly 90% of these students had enrolled in two-year (or less) institutions and only 15% went on to complete}

Table 7: Default and Non-Payment Rates Six Years After Entering a Non-Baccalaureate Program (BPS)

1995-96 Cohort 2003-04 Cohort

Institution Type Default Non-Payment Default Non-Payment

Public 7% 21% 8% 26%

Private Non-Profit 11% 30% 19% 39%

Private For-Profit 19% 28% 26% 46%

The table reports default and non-payment (default, deferment or forbearance) rates by institution type and BPS cohort for students that initially enrolled in a non-baccalaureate degree program.

Source: Gervais et al. (2014).

profit students were 20 percentage points more likely to be in non-payment than were students attending public schools. Put another way, rates of default and of forbearance/deferment have been relatively stable over time for students enrolling in certificate and associate degree programs at public schools. While default rates showed a modest increase for similar students at for-profit schools, the fraction of students in deferment or forbearance more than doubled (from 9% to 20%) at these schools.

Focusing on the most recent cohort, Gervais, Kochar, and Lochner (2014) estimate that roughly one-third of the gaps in non-payment and default rates between non-baccalaureate students at- tending public and non-profit institutions can be attributed to the types of students that enroll in these institutions. That is, for-profit schools enroll students from backgrounds that are more likely to default (e.g. blacks, low parental income and education) wherever they attend. Still, consistent with the findings of Deming, Goldin, and Katz (2012) and Hillman (2014), default rates are significantly higher at for-profit schools than public schools even after accounting for these differences in student composition.