For-profit and non-profit colleges and universities approach education differently. Which approach is better? We’ll let you decide. But here’s a hint: Nonprofit schools may offer the best options for students looking for a rich college experience at an affordable price tag.
What is the difference between nonprofit and for profit colleges? Is one school more expensive than the other? Is a non-profit university better or more prestigious than a for profit college? When selecting a college, it’s crucial to consider many factors. This article discusses the differences between non-profit and for-profit schools and why it matters. That way, you can make an informed decision about your higher education.
Different Types of Colleges
There are three main types of colleges in the United States:
1. Public Colleges and Universities
Public colleges are non-profits. These schools are funded mainly by state governments and private endowments or donations. Tuition also supports some of the school’s programs. Examples of public colleges include:
- University of Delaware
- University of Florida
- University of Washington
- University of North Carolina
- University of Michigan
2. Private Non-Profit Colleges and Universities
Private nonprofit colleges don’t get state funding. Instead, private institutions rely on endowments, donations, and tuition to fund their programs. Examples of private nonprofit schools include:
- Duke University
- University of Pennsylvania
- Boston University
- Harvard University
- Stanford University
3. Private For Profit Colleges and Universities
For profit institutions are always privately owned and funded by businesses and investors. They are not eligible for state funding. They rely on students’ tuition and fees to stay afloat. Any excess revenue is distributed among the owners and shareholders. Examples of for-profit schools include:
- American National University
- Grand Canyon University
- University of Phoenix
- Walden University
- Capella University
What Are For Profit Colleges?
If a college is for-profit, it means they strive to make money. They are corporations that run higher education institutions to turn a profit.
There are some cases where for-profit schools offer a decent education. After all, if a business does not deliver on its promises, it won’t stay afloat. A quality educational experience means good reviews. And good reviews attract more paying students.
For-profit schools are funded primarily by tuition and fees and whatever shareholders invest in the college. They are structured just like a big business, with a CEO who typically makes a hefty salary.
What happens to the excess profits from these enterprises? While not for profit colleges put revenues back into more high-quality programs, for-profit schools do not. Extra income makes the shareholders even wealthier. Much of that money goes back into fancy marketing campaigns to win over new students. It’s a multi-million dollar structure, with students at the bottom of the priority list.
See also: THE PROBLEM(S) WITH FOR PROFIT COLLEGES
Are For Profit Colleges All Bad?
Not all for profit institutions are inherently flawed. On the contrary, in some instances, they can be beneficial. This is especially true for students looking for specific skills-based or occupational training programs.
For instance, you might want to gain skills in auto mechanics, cosmetology, plumbing, culinary arts, etc. The no-frills programs at these schools teach targeted skills that can help you train for a specific role. In these cases, a certification program through a for-profit school might be a faster, cheaper, and more convenient way to embark on a career.
However, you will also want to be aware of the disadvantages of for-profit schools before you make a final decision. For profit schools have some bad habits to watch out for. We’ll discuss more of those cons later in this article.
What Are Non-Profit Colleges?
Nonprofit schools are funded by federal and state governments, donations, endowments, and tuition and fees. What do they do with this revenue? They spend it on students. The money is used to:
- Maintain campuses and facilities
- Pay instructors and professors
- Develop curriculum
- Conduct research
- Provide extracurricular activities
Basically, any excess money beyond overhead goes back into programs for students, not shareholders. So there is no CEO or group of investors sitting back collecting big bonuses. And no part of any revenue the school generates is distributed to officers or directors. Instead, nonprofits pour this money right back into programs for students. Because of this structure, nonprofit schools often keep getting better as time goes on.
Most colleges in the United States are nonprofit. They are typically public state universities. Although, as we discussed above, some nonprofit colleges are private. Community colleges may also be nonprofit.
The Differences Between For-Profit and Non-Profit Colleges
To truly understand the differences between for profit institutions and nonprofit institutions, it’s essential to look at their differences side by side:
|Factor||For Profit Colleges|
|STUDENTS BEFORE PROFITS||No. making money is the primary objective|
|LOW TUITION COSTS||Possibly. But usually no federal financial aid|
|ACCREDITATION||Often not accredited|
|ACADEMIC PROGRAMS||Students may encounter poor-quality academic programs|
|ENVIRONMENT||Very few additional services or amenities|
|REPUTATION||Poor reputation. May not be recognized by employers|
|STUDENTS BEFORE PROFITS||Yes. Revenue is poured back into student programs|
|LOW TUITION COSTS||Possibly. Net price with federal financial aid significantly reduced|
|ACADEMIC PROGRAMS||Students can count on high-quality academic programs|
|ENVIRONMENT||Many services, clubs, organizations, and support|
|REPUTATION||Excellent reputation. Employers value nonprofit degrees|
For Profit Colleges
Let’s talk first about for profit colleges and universities. This section will discuss the idea behind for profit institutions and go into the differences more deeply.
The Money: Shareholders vs. Students
For profit colleges are run like any other business. The owners and shareholders expect the school to turn a profit. Shareholders are those people (or groups of people) who own stock in the school. These people have a financial interest in what takes place at the college or university.
Although these schools claim to (and sometimes do) offer each student a quality education, for profit institutions can’t afford to bleed red ink at the end of the year. For example, if a program isn’t bringing in earnings, it is likely to be cut to make way for something that is. Likewise, programs that don’t justify their existence get discontinued so that the school can focus on whatever makes money.
The primary difference between a for profit vs. a non profit university boils down to money, and who gets how much of it.
For-Profit College Tuition Costs
According to a 2021 College Board Report, the average tuition and fees at a for-profit school are around $15,780 per year. And tuition at a public, non-profit university averaged $27,150 for students living out of state. So at first glance, it appears cheaper to attend a for-profit college.
But remember, the goal at a for-profit college is to make money. That 27k for public college is only the published tuition price. In reality, over 80 percent of students get some type of financial aid at nonprofit colleges. This very often equates to thousands of dollars off the published price. But for-profit schools often do not offer financial aid. So the published cost is what you will be stuck with.
Before you decide to attend a school based only on low tuition and fees costs, do some math. Then, look at all of your options to determine what the real cost will end up being.
Accreditation of For Profit Colleges
Accreditation is important. It lets you know that a college meets certain academic standards. But it also solidifies a school’s legitimacy. Unfortunately, many for-profit schools are not accredited.
While this might not seem like a big deal right now, it will later on. That’s because any credits you earn at a for-profit school could be useless. Especially if you want to transfer or continue your education.
Non-profit schools won’t accept transfer credits from a non-accredited school. So instead, you will have to redo all that coursework and pay for something you’ve already done.
For-Profit College Educational Programs
There is no doubt you can find some good educational programs at for profit institutions. There really is no such thing as bad education. But what will the quality of those programs look like?
Consider again that a for-profit school is trying to make money. And they also want to churn out happy graduates to attract more students. In many cases, the programs offered through these colleges are just not rigorous enough to provide you with a solid education. Transferring any credits from these programs may also be an issue.
For example, let’s say you earn your bachelor’s degree at a for-profit college. Then, you decide to pursue a master’s degree at a non-profit school you like. However, if the for-profit school is not accredited, all that hard work you did to earn your bachelor’s will be down the drain since none of your credits will count at the new college.
One advantage of many for-profit schools is that they offer online and accelerated programs. However, not-for-profit schools do as well. And those programs are accredited. There are many more legit online courses offered through not for profit colleges than for profit programs.
For-Profit College Environment
Universities and colleges that exist to make a profit don’t have as many amenities as non-profits do. The atmosphere can be clinical and impersonal. Many of these schools don’t have extracurricular activities or student services. Such programs would be costly and cut into profits.
Often, for-profit schools don’t even have traditional college campuses. Instead, they may rent office buildings where students go to study. In fact, some for-profit schools have no physical campus at all, and classes are online only. 100 percent online classes can be an excellent way to earn your degree. But they must be accredited to count.
If you don’t need or want the full college experience, this environment might work for you. This is especially true if the school is located nearby and serves your basic education needs. But you should expect very little in terms of amenities, activities, and social interaction.
Reputation of For-Profit Universities and Colleges
For-profit universities are not all bad, but they have developed a poor reputation. Such schools have come under close scrutiny in the past few years. That is because the focus is on money rather than students. Understandably, this makes people skeptical of the quality of education these schools offer.
Often, tuition and fees cost more, and students at for-profit schools might not receive any financial assistance. In fact, they might not even be able to get a job after graduation. Also, some employers distrust these schools outright. Often, hiring managers won’t even consider candidates with a degree from a for-profit university.
Additionally, nonprofits have been known to exploit students through high-pressure sales tactics. And those they target do not understand nonprofit vs for profit colleges. Unfortunately, by the time these students realize their mistake, they are saddled with debt.
Next, we’ll cover non-profit colleges using the same criteria we used above. Notice the stark differences in each of these catagories.
The Money: Students Before Profits
Nonprofit colleges exist for the purpose of higher education. While such colleges offer hundreds of degree programs, they are also pillars in their communities. And they represent places you can go to learn just for learning’s sake.
Their goal is to teach students, not make a profit. As a result, many people think non-profit schools have very little money. However, this couldn’t be further from the truth. In fact, most of the wealthiest universities in the world are nonprofit entities, including Harvard, Stanford, and the University of Texas system.
The reason for this is simple. At a nonprofit, any earnings above and beyond normal operating costs go back into programs for students. Much of the funding comes from donations, also called endowments.
The people who make these donations know the value of higher education. Nonprofit schools are expected to maintain high standards and to grow, but not in terms of wealth. They are expected to be places of excellence, training cutting-edge researchers, scientists, and more.
Of course, the more money that goes back into a non-profit school, the better and better the school’s programs get. This becomes a positive cycle of giving, with larger endowments each year. Many of these endowments are significant, allowing schools to pursue even more services and programs for students as time goes on.
Additionally, such schools can use any profits and donations toward more financial aid, grants, and scholarships for students. This allows more students access to a high-quality education. These days, students with good grades but low income still have a chance to attend even the best non-profit colleges.
Non-Profit College Tuition Costs
In 2021, the average cost of in-state tuition at a public, nonprofit college was $10,570. The published cost for out-of-state students was $27,150. Of course, these are averages. Many nonprofits cost less, and others cost more. However, keep in mind that these are only the published prices for tuition.
In actuality, students pursuing a non-profit education almost always qualify for some type of financial aid. In fact, over 80 percent receive it. The net tuition price is what a student pays after all financial assistance is applied. So the net price is liable to be very different than the published price. In some cases, it will be dramatically different.
This is why it’s so important to fill out the FAFSA form to find out what you are eligible for. Many students are surprised to learn they qualify for thousands of dollars in federal student aid. If you are considering attending a for-profit school because you think it’s cheaper, guess again. In most cases, a non-profit education will be less expensive.
See also: 30 WAYS TO PAY FOR COLLEGE WITHOUT LOANS
Accreditation of Non-Profit Colleges
When a school is accredited, it signifies trust and excellence. It means that the programs at that school meet specific academic standards. With accreditation, you can expect a high-quality education.
Nearly all public and private non-profit universities and colleges are accredited. The seven primary accrediting commissions include:
- Higher Learning Commission (HLC)
- Middle States Commission on Higher Education (MSCHE)
- New England Commission of Higher Education (NECHE)
- Northwest Commission on Colleges and Universities (NWCCU)
- Southern Association of Colleges and Schools (SACSCOC)
- Higher Learning Commission (HLC)
- Accrediting Commission for Community and Junior Colleges (ACCJC)
- WASC Senior College and University Commission (WSCUC)
Accrediting is also vital from a financial standpoint. Only accredited schools can get federal funding. This means you must attend an accredited school to be eligible for financial aid. Plus, you can run into problems transferring credits unless the school you go to is accredited.
Non-Profit College Educational Programs
Because of accreditation, you can expect a certain level of quality in your educational programming. The curriculum can differ significantly from a for-profit school. After all, revenue at a non-profit goes right back into student programs year after year. And this means continual improvement over the years.
Each year, hundreds of nonprofit schools and degree programs are rated for excellence. In addition, they get ranked and published on sites like US News & World Report and our own Non Profit Colleges Online. As a result, people expect a consistent, high-caliber education when taking these published programs.
At a nonprofit school, you are also more likely to find high-quality liberal arts programs like English, philosophy, sociology, psychology, foreign languages, etc. Whereas for-profit schools focus primarily on one career skill.
Non-Profit College Environment
There are very few similarities between for-profit colleges and public colleges when it comes to the school environment. Non-profit colleges pour all of their earnings back into programs for students. They don’t just offer high-quality academic programs. Students who attend these colleges are also entitled to other services and programs such as:
- Cafes and coffee shops
- Tutoring and mentorship
- Career services and internships
- Clubs and organizations
- Fraternities and sororities
- Health services
- Volunteer opportunities
- Work-study programs
- Financial assistance
And that’s just a partial list of what you might find at some of the best non-profit colleges in the nation. The Largest Nonprofit Online Universities in the country offer even more amenities to students.
When you attend a non-profit university, you get the whole college experience. You don’t just earn a degree in your chosen field. You make friends, establish connections, and create memories that will last forever.
Reputation of Non-Profit Universities and Colleges
Non-profit schools have developed a reputation of distinction in today’s world. They are seen as trustworthy and credible. In general, the public holds non-profit institutions in high esteem. Historically, people associate non-profit universities with the best education one can get. Employers favor candidates who have a degree from a non-profit university over those that don’t. And a degree from a non-profit school generally holds more clout.
Nonprofit vs. For-Profit: Which One Should You Choose?
Looking at all the pros and cons of for-profit vs. non-profit colleges, it is clear that students have much more to gain by attending a nonprofit school.
Nonprofits always put students before financial gain. As a result, those attending non-profit private or public colleges have many advantages. Plus, because these schools are accredited, students can be assured of a high-quality education. Plus, they have access to many services, activities, and resources that for-profit schools can’t give them.
If you want to take some classes or acquire a certification, a for-profit school could work for you. This is especially true for non traditional students looking for a no-frills, basic way to pick up a few career skills. For-profit schools are usually flexible and have easier admissions requirements. Often all you need is a high school diploma. But if you think you might ever want to transfer your credits or further your education, be sure to only attend an accredited for-profit college.
Before you choose any college or university:
- Do some research.
- Crunch the numbers and find out what you can afford.
- Talk with the school’s financial aid office to see if you are eligible for assistance.
- Shop around.
Are there some good for-profit schools out there? Of course. Even nonprofit schools are not all the same. You will likely find some that are perfect for you and others you don’t care for at all. Take your time and choose wisely. Learn about nonprofit vs for profit schools. But, above all, never feel pressured into enrolling or forking money over until you are 100 percent ready to take the plunge.
This concludes our article on for profit vs non profit colleges