All colleges and universities are either nonprofit or for-profit; the difference is as obvious as it sounds. A nonprofit school reinvests a student’s tuition dollars in the campus to improve programs, facilities, and faculty. A for-profit school uses tuition and fees to make a profit. Most revenue gets returned to investors and shareholders, leaving little money for reinvestment in the school. Find out which group your prospective institutions fall into and learn about their differences so you can make an informed choice.
What are nonprofit schools?
These kinds of schools receive their funds through tuition dollars, donations, endowments, and the government. They do not make a profit. All extra money is reinvested into the school to develop new buildings, assist with faculty and student research, support extracurricular activities and teams, and buy computers and library books. These projects aim to improve the quality of the school. Professors create their own curriculum, and students can usually choose from a wide variety of majors and electives.
Public state universities and community colleges are always nonprofit, but private liberal arts colleges and online colleges may be nonprofits too.
What are for-profit schools?
For-profit colleges are businesses, which is why their advertisements so often appear in magazines and on television. They are owned by private corporations, and they sell education to students. These kinds of schools have individual financial backers who expect big returns on their investments. At for-profit colleges, more students equal more money. Therefore, they aspire to increase enrollment figures. As a result, admissions requirements may be quite relaxed.
For-profit schools may not have a fixed campus. They may instead lease space in an office building to use as classrooms or administrative offices. Only a small portion of the profit gets returned to the school, so there aren’t many academic, extracurricular, or social offerings. Professors are generally hired to teach a predetermined curriculum, and students focus their studies on vocational fields.
How do I find out if a school is nonprofit or for-profit?
A quick search through the institution’s website or a phone call to the admissions office should get you your answer. You may also use this search tool to learn about an institution’s status.
What are the main differences between nonprofit and for-profit institutions?
| Nonprofit institutions | For-profit institutions | |
| Decision-making authority |
|
|
| Admissions requirements | Strict(er) | Relaxed |
| Sources of money | Government, endowments, tuition, and donations | Tuition |
| Where the money goes | All money is reinvested into the school for infrastructure development and maintenance, faculty and student research, faculty salaries, extracurricular activities, college sports, library books, etc. | The majority of the money goes straight to investors, but some may be put toward leasing a classroom building or paying professors. |
| Classroom environment | The school has a physical presence with multiple brick-and-mortar buildings (dorms, dining halls, libraries, laboratories, classrooms, etc.). Scientific equipment and computers are up-to-date. | Courses may be offered online or in rented office space. The school is unlikely to have multiple buildings with residential or dining facilities. Students may be asked to supply all materials and equipment. |
| Courses offered | Students can choose from a variety of degree plans and courses. Professors have a say in what classes are taught and what coursework is required for a degree. | Students often focus on vocational fields. Professors teach a predetermined curriculum. |
| Extracurricular activities | Many | Few, if any |
| The bottom line | Education | Profit |
Which type of school is more expensive?
For-profit institutions usually cost significantly more. This is important when it comes to financial aid, since for-profit institutions have a history of inflating their tuition prices so that federal financial aid is never enough to cover the cost of attendance. A 2012 Senate report found that getting an associate’s degree from a for-profit institution cost an average of $34,988, while the same degree would cost only $8,313 at a public institution. Before deciding to attend a for-profit school, know how it will affect your finances. Public institutions in the same city often offer similar programs for much cheaper.
Are there any benefits to attending a for-profit school?
For-profit schools aren’t without their perks. They sell education, and they understand that their customers need to be happy with the product and service they receive. Customers want degrees and help entering the job market, so for-profit colleges readily adapt to suggestions from their students. They often develop new majors in technology and STEM subjects.
Should I be wary of for-profit colleges?
The short answer is yes. Only 25.6% of students who started at a for-profit, four-year institution in 2010 graduated within six years. This is less than half the graduation rate of students at nonprofit, four-year institutions (65.9%). While anyone motivated enough can graduate on time, the statistics coming out of for-profit institutions are not encouraging. However, for-profit institutions do still offer legitimate educations to their students.
Sometimes these schools cultivate strong connections with potential employers to impress students. It can be exciting to have internship opportunities or a career network after graduation, but take any employment figures you receive with a grain of salt. Unfortunately, for-profit colleges are known to falsely advertise their students’ post-graduation employment prospects. They may inflate the percentages of students who find a job after graduation or count any job whatsoever, even if it is part-time or outside of a student’s field.
To get the best idea of what to expect from your degree after graduation, request that your admissions counselor put you in touch with alumni. Ask them about their employment prospects after graduation. You might also want to reach out to professionals in your field for their opinions about a for-profit school’s reputation.
Page last updated: 05/2019
