Choosing a College: Nonprofit vs. For-Profit

One aspect of college you may have yet to consider is the difference between attending a for-profit or a nonprofit school. The college you choose to pursue a degree or certificate can profoundly impact the rest of your life. You could end up with a valuable degree that helps you get well-paying jobs, a fulfilling career, and a stable income. Or you could enroll in the wrong program for your needs and end up with college loans to pay back but no degree to help you get better jobs. Your odds of ending up with a valuable degree or certificate may depend on what type of college you attend: for-profit or nonprofit.

There are benefits to both types of schools, but you need to consider some points of concern when you take that last step and sign up for a program. Because this decision impacts your financial future, we want to give you more information to help you choose between the schools that offer the degree or program you seek. For-profit online colleges surged during the pandemic, meaning you have probably heard about more of these programs. Take a moment before you make your final decision to compare your options and make a sound decision for your education and future well-being.

The easiest way to tell is to look up the school on College Scorecard, a website run by the US Department of Education to give students all kinds of school information. Look at the building icon near the top of the page; underneath, it will tell you whether the college is nonprofit, for-profit, or public. All public universities and colleges are nonprofits. 

The easiest way to tell is to look up the school on College Scorecard, a website run by the US Department of Education to give students all kinds of information about schools. Look at the building icon near the top of the page and under it, it will  tell you whether the college is nonprofit, for-profit, or public. All public universities and colleges are nonprofits. 

Here are some general differences between for-profit and nonprofit schools. Remember that each school has various characteristics. Some nonprofits act more like for-profits and vice versa. These are typical features to help you understand how the two types of schools may differ.

Nonprofit Schools (Public & Private)	For-profit Schools
More of the tuition money is spent on education, and the rest is reinvested in the school.	Less of the tuition money is used for education, and profits are distributed to owners, investors, or shareholders.
More programs are on campus and geared towards traditional students, though this is changing quickly as more schools offer online and flexible programs.	Class scheduling is often more flexible, with fewer on-campus programs or requirements.
Acceptance rates are varied: some schools are very selective, while others are open enrollment or accept a very high percentage of students who apply.	A higher percentage of students are accepted, giving some students who have had trouble getting into other schools a chance to succeed.
During admissions and enrollment, you usually talk to a counselor who has experience in higher education and will follow you through as you begin your classes.	Recruiters are often from a sales background and may use more emotional appeals to convince students to register.
Public nonprofit 4-year schools have an average net price of attendance of $14,700 per year, while private nonprofits average $28,400, according to the National Center for Education Statistics.	For-profit 4-year colleges have an average net price of attendance of $24,600 per year, which is lower than private nonprofit colleges but higher than public institutions.
Graduate tuition and fees are lowest at public universities, averaging $12,394. Graduate costs are highest at private nonprofits, with an average of $28,445.	Graduate costs are only slightly higher than for in-state students at public institutions, with an average of $14,301.
Transferring credits to other schools can be easier if you want to change to a different school because more institutions will recognize your work. This is only sometimes true for community colleges, so check on the transferability of your credits.	If you want to switch to another school, your credits may not be recognized. Not all colleges and universities will grant you transfer credits for your work at a for-profit school.
If you transfer in to a nonprofit school, they may limit the number of credits accepted toward your degree from other institutions. This may mean you spend more time and money completing your degree.and money completing your degree.	For-profit schools routinely have more liberal transfer credit policies, with more credits transferred for prior study, military or work experience, and credit by examination. This can shorten your time to a degree.
Usually hold institutional accreditation by one of the accreditors formerly called “regional” accreditors, with a reputation for having more rigorous standards for schools.	Usually have institutional accreditation by one of the agencies formerly called “national” accreditors, with a reputation for lower standards that are easier to pass. You can check here to see the accreditation status of a school.
Lower student debt: Accumulated student loan debt for those who complete a bachelor’s degree is an average of $29,100 as of 2020-21.	Higher student debt: As of 2018, 47% of those with bachelor’s degrees from a for-profit school accumulated over $40,000 of debt, with 32% of students taking out over $50,000.
For students getting an associate degree, over 50% graduated with no student debt at all.	58% of associate degree graduates left school with over $20,000 in student loan debt.
68% of students at nonprofit private institutions and 63% at public institutions completed their bachelor’s degree within six years of starting.	29% of students enrolled in for-profit 4-year institutions graduated with their bachelor’s degree within six years.
Student loan default rates are going down, with 7% of public and 5.2% of private nonprofit institution students defaulting for the last year statistics are available.	A higher percentage of students at for-profit colleges default on their student loans, at 11.2% for the latest year available.
More robust student services including access to libraries, tutoring, counseling, career services, faculty advising, mentoring, and alumni networks. They also have more activities like athletics and clubs.	Student services can be less available, especially for online-only students, so check to see if the school has the support you may need if you run into difficulties during your studies. You will find fewer traditional college activities like sports, clubs,  and events.

There has been so much change in higher education over the past decade that both types of schools have adopted some of the characteristics of the other. While for-profits were known for online degrees, now many nonprofit universities have expanded their online degrees to meet the growing demand for flexible education for non-traditional students. While nonprofits have become more like businesses, for-profits have started to invest more energy into the student experience and outcomes. Both have adopted some of the practices of the other type of school so that the differences may be more subtle than in the past.

It is important to remember that each school is unique and may vary from the overall trends. We’ll highlight some areas for you to think about as you choose the most appropriate school for your degree.

Financial Structure

The financial structure is the main difference between the two types of schools that can impact many other aspects of your education. However, there are also some reasons why a for-profit school could still be a good choice for your education.

Nonprofit schools reinvest incoming money into improving educational programs, campus facilities, student services, and faculty and staff that serve the institution. For-profit schools spend only part of their money on academic programs and return profits to investors, shareholders, or owners. 

Nonprofit colleges, including public universities, receive money through government grants, private donations, and student tuition. For-profit colleges bring in money primarily through tuition that students pay. 

Note: Using this calculator, you can find out how each school you are considering spends its tuition dollars. 

Student Recruiting

All colleges and trade schools seek new students and will encourage you to apply if you show interest in their programs. In the past, some for-profit colleges used high-pressure sales techniques to find a student’s “pain points” or emotional vulnerabilities to convince the student to enroll. While many of these tactics are no longer overtly used, the legacy of aggressive sales tactics still influences college recruiters. 

Some nonprofit schools have incorporated more aggressive recruiting practices similar to the for-profit model. However, public and private nonprofit universities typically use admissions counselors trained to help students through enrollment and even further into their school careers. For-profit schools may use admissions “advisors” who are there to get the student to sign up and then hand the student off to another team.  

While schools will want to show you how great their programs are and make an emotional connection with you, be wary if you feel too much pressure to sign up. That’s a sign that you should use your logical brain to think through the financial and other consequences of signing on the dotted line.

Completion Rates

According to the National Center for Education Statistics, 68% of students enrolled in a nonprofit private institution completed their bachelor’s degree within six years, 63% at public colleges, and 29% at for-profit schools had completed their degree. While looking at how many students complete their degrees is essential, several factors can partially explain these numbers.

In general, a higher percentage of students who enrolled in online schools–more often for-profits in the past–were adults with other responsibilities, not traditional-aged college students (18-24). In addition, acceptance rates are higher at for-profit schools, meaning more students get a chance, but not as many will put in the effort and have the support to complete their degrees. But look carefully at a school with a lower graduation rate to see if there may be reasons related to the educational programs offered.

Student Debt and Affordability

Approach any student loans cautiously, and ensure you are not signing up for debts you cannot easily pay back later. For-profit schools often encourage students to take out debt, even if they can’t really afford it–they make a profit on each student who enrolls. Nonprofit schools also encourage student loans, and it is easy to sign the papers without thinking about how you will pay them back later. It seems like free money. But loans are often hard to repay, especially if you don’t complete a degree or certificate program. Look at the average graduate salaries and student loan debt for the schools you are considering enrolling in: all of this information is on the College Scorecard.

If you are unsure whether you will thrive in college, consider a lower-cost community college for at least the first part of your degree. You will likely incur very little or no student debt, and many community colleges offer similar career programs to for-profit schools. It may save you money, let you try your major, and give you time to see if you like college.

If you want to enter a profession like cosmetology, automotive repair, allied health, or many other jobs, a trade school may be the correct type of higher education for your goals. Trade schools can be either nonprofit or for-profit, and the same cautions can apply to trade schools as to colleges and universities. Carefully look at the school to see how much their graduates earn, what career and student services are available, and the average loan debt that students incur. 

For many students, the journey through higher education is not a straight path–you may not finish your degree at the first school you enroll in and later finish at another university. All these little choices will make a difference in how financially successful or burdened by student debt you might be in the future. Wherever you are on your journey to a degree or certificate, the more you know, the better you can plan for your future in college and after you graduate.