For-profit or non-profit… that’s a dilemma every potential college student must consider. The higher education market has exploded with private colleges in recent years, and the challenges brought by the pandemic have made them more attractive to wealthy families. Many for-profit schools, such as Capella University and DeVry University, are popularly advertised, contributing to their growing popularity.
Of course, there are negative perceptions about private schools, such as their high cost of attendance and entitled culture. But their popularity remains because of the higher economic gains that their graduates enjoy!
In a Georgetown Center on Education and the Workforce (CEW) report titled “A First Try at ROI: Ranking 4,500 Colleges”, graduates of private for-profit and non-profit colleges earned $551,000 and $838,000, respectively. While graduates of prestigious public colleges and universities earned $765,000 in comparison, it cannot be overemphasized that the prestige coupled with the quality instruction in many private colleges make them attractive.
But there are also many differences between for-profit and non-profit tertiary schools. In this article, we’ll delve into the heated debate about which of these two types of private institutions is a better investment.
What Are The Differences in For-Profit or Non-Profit?
Let’s first take a look at their fundamental differences since these have an impact on their pros and cons.
For-profit schools are educational institutions operated as businesses and, thus, with the expectations of turning a profit (i.e., higher revenues over costs). Their revenues typically come from tuition, fees, and other charges, including room and board for in-residence students.
Their main goal, albeit not stated on their publicly-shared vision and mission, is earning profit and passing it on to their shareholders and investors. Their ability to create a positive return on investment allows them to stay in business. Their spending patterns reveal significant investments in marketing and advertisements to attract more students, shareholders, and investors.
For-profit schools are often large schools with numerous locations across the state or country. Most offer a wide range of two-year and four-year degree programs from the undergraduate to post-graduate levels. The programs may be offered on-campus, online, and/or a combination of both.
Surprisingly, for-profit schools are largely funded by federal financial aid! But their financial aid may be limited to loans, although federal scholarships and grants may be available.
Examples of for-profit schools include:
- Academy of Art University
- Capella University
- Fashion Institute of Design & Merchandising
- McCann School of Business and Technology
- Colorado Technical University
Non-profit schools are also partly funded by federal funds paid for by taxpayers. But it has a major difference from for-profit schools: Their revenues from tuition and fees must be reinvested back into their institution. The reinvestment takes many forms, such as improvements in operations, increased instructor salaries, and student services development.
Their main goal isn’t earning a profit year in and year out but fulfilling their educational mission. Their focus is on the improvement of the quality of instruction for its students and graduate outcomes.
Besides receiving direct public funds and private endowments, non-profit universities are also exempted from federal corporate income taxes. For this reason, their tuition fees are typically lower, and their financial aid options are better. There are exceptions, so we suggest carefully looking at the sticker prices.
Examples of non-profit private schools include:
- Harvard University
- Princeton University
- Yale University
- Stanford University
- Brown University
- Massachusetts Institute of Technology
- Columbia University
- California Institute of Technology
- Duke University
- University of Pennsylvania
Which Has the Highest Tuition?
We look at the tuition fees first because these are the most crucial aspects that prospective students and their families look into. While many private schools have been making considerable cutbacks in their sticker prices, the fairly expensive tuition can turn off students from enrollment.
For-profit schools have sticker prices that fall between non-profit and public schools, on average. The average tuition at non-profit colleges in 2018-2019 was $17,500. But it’s lower than the $35,830 at private non-profit schools while also being higher than the $10,230 tuition at public schools.
But that’s not exactly the complete picture! While non-profit schools have higher tuition fees, their students pay far less for their education.
This is because these schools have lower out-of-pocket costs due to their wide range of financial aid options. Their students rarely pay the full price of the tuition and other published fees.
In the College Board Trends in Pricing 2018 Report, 66% of students in non-profit schools pay less than $20,000 in yearly tuition. In contrast, only 31% of students do so in for-profit institutions.
The bottom line: You may get more financial aid and, thus, pay lower tuition at non-profit schools while getting exceptional education with high returns on investment.
But you must also be careful about looking into other aspects of your college education. Tuition should be considered in light of the quality of instruction, positive college experience, and networking opportunities.
What Are the Upsides and Downsides of Enrolling in Non-profit Colleges?
- Lower cost of attendance when public funding and financial aid are factored in
- Higher quality of instruction due to reinvestments in the quality of instructors, curricula, and facility
- Greater focus on the improvement of student experiences and success, thanks to less focus on revenue generation
- Greater level of academic independence due to their independent ownership structure
- A more selective admission process can deter prospective students (But it’s also one of the factors that attract the best and the brightest)
- Less flexible learning options (i.e., online and hybrid programs)
What are the Upsides and Downsides of Attending For-profit Colleges?
- Less selective admissions policy makes it easier to enroll
- More diversity in the student population, particularly in terms of black, female, and older students. Many schools also enroll more single parents, low-income individuals, and working adults.
- More flexible learning options with partially or fully online programs offered. Schools are also more likely to offer more technical-vocational degrees.
- Accreditation issues are more frequent and, thus, graduate outcomes may not be as desirable (i.e., employers don’t recognize the diploma)
- Transfer of credits may be problematic partly because of accreditation issues. According to a 2017 Government Accountability Standards Report, students lost 94% of their credits when transferring from for-profit to public colleges.
- Higher student debt and default rates can haunt graduates for several years
- Greater risk for school closures that can leave students with an education and debt but no degree
But don’t dismiss for-profit colleges that easily either! You may find that these institutions may be a good fit for you if:
- Your standardized test scores are average of low;
- You’re looking for a specific certification or vocational training;
- You’re looking for an online program.
Just be sure to do your research about the pros and cons before making your decision.
What Are the Steps You Can Make to Pick the Best University for You?
There isn’t one right answer to whether for-profit or non-profit colleges are superior. It’s a matter of personal preference. Consider the above pros and cons to determine which college type best fits your learning needs. Don’t be dissuaded from for-profit universities solely because of bad press, and don’t simply pick a non-profit college because it’s “traditional.”
Conduct your research to make a well-informed, individualized decision. Always make sure your for-profit or non-profit college choices are regionally accredited. Double-check their accreditation status with the U.S. Department of Education to guarantee credit transfer, financial aid, and high academic standards. Selecting the right college ensures your 4+ years will establish a direct pathway to career success and satisfaction.
For-Profit vs Non-Profit—A Breakdown of Their Differences
If you’re in the process of scouting for the right college, but you are quite unsure which institution to go to—for-profit or non-profit, it’s best to know how these two differ from each other. While both give you a solid and decent education, it helps to know the many underlying factors to consider before you make a choice.
One research showed that 65% of students completed their degree from a non-profit college, while 28% did so from a for-profit institution. To further understand how both the institutions differ, let’s compare.
For-profit colleges help students reach their academic goals, but they also work like any other type of business does. They are there to be profitable. Thus, if a course or program does not financially help the institution, the class can be potentially cut. In many cases, for-profit colleges and universities are subsidiaries of bigger companies. Like any business, these schools have board members and stakeholders that they report to.
Non-profit colleges, on the other hand, are not owned by anyone. The school, therefore, does not have shareholders. Their primary goal is simple—to help students achieve their goals and obtain an academic degree. Typically, when you’re scouting for a college or university, non-profit colleges are the types of institutions that come to your mind. These schools work hard for students and not for shareholders. They give an environment conducive to networking and learning.
Before for-profit schools were ‘businesses’ that were only after profit, some of them didn’t have a real school environment. Instead, leasing a space is their best option. And since their spaces are limited, extracurricular activities and recreation centers are not part of their offer because, after all, these are ‘added costs’. However, for-profit schools are sometimes more flexible than non-profit institutions in terms of program schedules and times.
Non-profit schools have a better environment since they practically revolve around the lives and welfare of their students. The campuses are designed for students to connect with their peers, learn, and have the best college experience. On-campus colleges usually have study halls, cafes, plazas, and outdoor spaces—things you seldom find at a for-profit school. Non-profit schools also receive government funding for tuition fees, and at times, help with tuition through the help of alumni and generous donors. This makes non-profit colleges even more affordable compared to their for-profit counterparts.
For-profit institutions usually have predestined programs decided by the school’s academic committee. These schools focus more on job-specific curricula like web design, medical billing, and business administration. Their admission process is also very easy—usually, you just submit your application and secure the payments.
The Accreditation and Graduation Rites
For-profit institutions are accredited by national groups. However, academics is not important for these types of schools. Their accreditation is solely based on graduation rates, job placement, and student attendance. For non-profit universities, they are accredited by regional groups. The accreditation is based on the quality of education and of the faculty.
Accreditation is very crucial, especially for students planning to transfer credits to other schools, for those who want to obtain financial aid, and for employers to acknowledge the degree
Non-profit schools are more diverse. Professors are allowed to create their own curriculum and courses. They also have better support in job hunting like career advisors or job fairs. Of course, non-profit colleges have better name recognition, knowing that most employers are likely to consider hiring non-profit school graduates because of educational design and overall media coverage. Because of this, non-profit institutions have a tougher admission process that requires entrance exams, essays, applications, and even fees, although each institution is different from one another.
Is it safe to enroll in a for-profit institution?
For-profit colleges and universities have a negative standing for offering low-quality education and leaving enrollees burdened with college debt. In a 2021 study, for-profit colleges are more likely to shut down, leaving graduates and students with no institutional support. The report also noted a lower graduation rate for these types of schools. Although for-profit colleges have a negative impression on many students, they have some benefits as well. For instance, these colleges prioritize flexibility and are more focused on vocational education.
What are the benefits of enrolling in a for-profit college?
Easy Admission. Because for-profit colleges report higher acceptance rates, enrollees find this an easy ticket to getting admission. This is particularly helpful for applicants with low test scores or lower GPA. Their application process is very simple and easy. According to the National Conference of State Legislatures, enrollment in for-profit schools has significantly increased 225% over the past twenty years.
Trade-Focused. Most for-profit institutions focus more on vocational training. These schools teach students in trade programs like engineering technology, automotive technology, and allied healthcare. There are students who prefer vocational degrees as this offers career advancement plus better earning potential.
Flexibility. For-profit colleges have flexible schedules. Some even have weekend and night classes. Plus, they also offer part-time enrollment options. There are also those that offer online programs. Because of this flexibility, working adults and student parents are drawn to the convenience of going to a for-profit college.
Do for-profit colleges have financial aid?
Most, if not all, of these for-profit institutions, focus on recruiting low-income students—whether it’s a recruiting directive or part of their marketing plan. Why? Because these are the students that qualify for financial aid. The for-profit school usually charge exorbitant tuition, so naturally, financial aid kicks in to help pay for it. Since these schools are after of profit, it’s no surprise to hear that some schools get up to 90% of their profits from federal financial-aid programs. And when the student decides to drop out? The school can still keep the money; it does not go back to the taxpayers.
This is one reason why some people resent for-profit schools. After all, who likes to see their tax money into these schools, and fail to see qualified degree holders graduating?
Did you know? There was a notable rise in for-profit college enrollment during COVID 19
During the COVID-19 pandemic, academic experts said that US colleges and universities might be devastated. In fact, they even predicted a 20% decline in enrollment at that time. But those initial forecasts were worse than what actually happened. During the fall semester of the academic year 2020-2021, the total enrollment was 3% lower than that same time a year earlier. But surprisingly, one school stood out among the rest: for-profit colleges.
Public and private non-profit four-year universities had an enrollment drop of about 1.4% and 2%, respectively. Community colleges also noted that they had 9.4% fewer students this academic year. This was a surprise among experts believing that community colleges would be more feasible in the pandemic era since their cost is lower and their transfer policies are more flexible.
So why are there more students enrolling in for-profit colleges during the pandemic?
For-profit colleges and universities are very experienced with remote learning. And thanks to the Trump administration that rescinded the Obama-era rule holding these schools accountable for their graduates to be gainfully employed, they can easily deploy financial resources as needed.
By the fall of 2020, a quarter of the more than a thousand US colleges and universities started in-person instruction. But because of the pandemic, the face-to-face learning environment was transformed considerably: mask-wearing, social distancing, virus testing requirements, restrictions on extracurricular activities, hybrid attendance options, and many more. The ‘traditional’ college experience—where each student lives, socializes, and learns in close physical proximity, is not happening soon.
Thus, instead of paying for the full tuition and housing expenses, some students opt to skip attending traditional colleges momentarily. For-profit colleges somehow attracted students seeking a reliable and safe learning option during the pandemic.
Should you choose a for-profit or non-profit college?
If you are looking for a less pricey cost of attendance, go to non-profit colleges. When you enroll in these schools, you can complete your college with fewer loans, and graduate with minimal student debt. Although this sounds enticing, this should not be your only benchmark for choosing your college. Consider also other factors that go into guaranteeing that you will get the best educational experience—from the program choices to the facilities offered, down to the campus environment.
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