For-Profit Colleges vs. Nonprofit Colleges

What’s the difference between For-Profit Colleges and Nonprofit Colleges? Do you know? And why it should matter to you…

Yes. There’s a huge difference. And yes. It matters big time.

First, let’s define the two:

Most colleges and universities are nonprofit entities. State universities and community colleges are usually (if not always) nonprofit. Many private colleges are also nonprofit. A non-profit college or university charges you tuition. Then they spend the money you give them on educating you. They use it to pay your professors and instructors, to provide cocurricular opportunities, to conduct research and to maintain their campus and facilities. In short, they pour all the money they make back into their school.

FYI: If you see me using “nonprofit,” “non-profit” or “not-for-profit” when designating colleges and universities throughout the website, rest assured I mean the same thing.

A for-profit college or university is owned and run by a private organization or corporation. A for-profit school charges you tuition, but doesn’t necessarily spend it on your education. Instead, they spend a good deal of it on marketing and recruiting. A for-profit college’s primary objective is to make money, and they usually have to answer to their stockholders — not their students. They usually don’t pay their professors and instructors as much as the not-for-profit schools do, which may well result in less qualified, less motivated teachers. They rarely provide cocurricular opportunities. They usually don’t conduct research, and they often rent the space they use as opposed to investing in a property. (Click here for a list of for-profit colleges and universities in the United States.)

Now, let’s compare:

Nonprofit colleges and universities are more likely to be regionally accredited. For-profit schools can be regionally accredited, but they often are not. If you are interested in a particular school, be sure to check on that detail before committing.

In general, non-profit schools have a better reputation in the real world and in the work force than do their for-profit competitors. Unfortunately, some of these for-profit schools have produced some less-than-stellar graduates. Some of these graduates have gone into the workforce and given these schools a bad name. Many employers have learned to distrust these institutions. It might not be fair to the individuals who graduate from these schools. They may well be bright and capable people, but they may be held back by which school’s name appears on their resume.

According to one study conducted by the Center for Analysis of Postsecondary Education and Employment, alumni of for-profit colleges tend to earn lower salaries than their nonprofit alumni peers.

And many of these students aren’t even graduating. According to The New York Times, your odds of earning a bachelor’s degree from one of the leading for-profit schools is about 1 in 5, within six years. Your chances of defaulting on the loans you took out to pay for this bachelor’s degree? About 1 in 4, within three years. Even if you did want to gamble with your education, those are not very good odds.

According to a recent report issued by Senator Tom Harkin, most students entering a for-profit degree program dropped out. The median time from starting to quitting? Four months. His study blamed this dropout rate on a lack of support for students.

This dropout rate may also have to do with the preparedness of the students who enter these programs. Many of these for-profit schools just don’t turn people away, whether they are ready for class or not. If I don’t have the skills to begin a degree program, and I apply to a not-for-profit school, my application is probably going to get rejected. If I don’t have the skills to begin a degree program, and I apply to a for-profit school, there’s a very good chance I’ll be accepted, whether I’m ready or not. Why? Because my check cleared.

For-profit colleges and financial aid:

Let’s focus on the money for a minute. Many of these for-profit schools heavily recruit low-income students whether making it part of the recruiting directive or through [unintended] systemic design. Why? Because these students qualify for financial aid. The school charges high tuition, and then financial aid kicks in to help pay for it. Some schools are getting as much as 90 percent of their revenue from federal financial-aid programs. But when a student drops out, the school gets to keep the money. The money doesn’t get returned to the taxpayers. This is causing taxpayers to hold a grudge against some of these for-profit schools. The taxpayers see their dollars going into the schools, but they don’t see qualified degree holders coming out. So, where is that money going? Or, more importantly to the person choosing a college, do you want to be associated with this school, or with this business model?

According to the Harkin study:

• 96% of for-profit college students took out loans
• 48% of four-year public not-for-profit students took out loans
• 13% of community college not-for-profit students took out loans

In short:

Let’s be honest. It feels good to be wanted. And when we are recruited, we feel wanted. When a real college expresses interest in me as a student, it makes me feel good. These for-profit colleges and universities know this. And they use it. They recruit heavily. They recruit far and wide. They are at the college fairs. They are at the job fairs. They are everywhere. If you find yourself facing a pushy recruiter, ask yourself, why does this school want me so bad?

We need to remember that when for-profit colleges look at potential students, they see dollar signs. They may say nice things to me and make me promises. They may tell me I’m accepted and tell me they want me. But this doesn’t mean that they care about my education. This doesn’t mean that they will work very hard to educate me.

For-profit schools can also be incredibly convenient. The application process may seem simple. The registration process may be easy. There may be small class sizes and convenient locations. But convenience doesn’t necessary translate to good. Be careful not to get swept away by the convenience of it all.

For-profit schools are also often easier to get into. According to NCSL, enrollment at for-profit institutions increased 225 percent over the past twenty years. These schools aren’t turning a lot of people away. But that doesn’t mean you have to go there. With a little work, you may well find a nonprofit university that will meet your needs. And you’ll likely save a pile of money, have a better experience, and come out with a more valuable degree.

A word to students not seeking degrees:

Many careers require further education or recertification. If your job is asking you to take a course or two, a for-profit school might be a great option for you. The application process is usually simple and the schedule is usually flexible. Just make sure the school you choose is accredited, in case you ever want to transfer those credits.

News:

Visit the National Conference of State Legislatures to read about how lawmakers are working to better hold for-profit colleges and universities accountable.

And check out this Frontline report on for-profit colleges and universities.

And remember:

Never, ever, ever go to a college or university without talking to someone who has already gone there. Get the inside scoop before you commit! Don’t know someone who has gone there? Ask someone at the admissions office to refer you to some alumni. Then ask the tough questions!