As you begin to research schools and build your college list, you will notice that there’s many schools out there to choose from that offer different types of education and degrees. In your research, you may notice that some schools are for-profit, while others are nonprofit. But what do these terms mean and how do they work? Here are some important things you should know about for-profit colleges and why you should consider avoiding them.

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What is a for-profit college?

For-profit colleges are typically exactly what they sound like– they’re profit-driven schools that prioritize making money from students. These types of schools are run like businesses and are primarily funded by private investors. The money made at for-profit colleges through student tuition and fees is largely given back to investors as profits and used on marketing and advertising to draw more students in. Examples of for-profit colleges include schools like DeVry University, University of Phoenix, and Grand Canyon University.

How are for-profit colleges different from nonprofit colleges?

In contrast to for-profit colleges, nonprofit colleges are typically what students think of when they think about college. In the U.S., public universities, private universities, and community colleges are most commonly nonprofit schools, meaning they’re funded by both the federal and state governments, endowments, donations, and student tuition fees. Nonprofit colleges typically prioritize the quality of education and its students over profits.

Other differences between for-profit and nonprofit colleges:

Accreditation

Accreditation is a review colleges and universities go through by accreditors to ensure their academic programs and offerings are high-quality and up to standard. There are two main types of accreditation in the U.S.– regional and national. The most common type of accreditation is regional– most nonprofit colleges and universities in the U.S. are accredited by one of seven regional accreditation organizations. Regional accreditors typically have much more rigorous standards than national accreditors, and must be recognized by the Council for Higher Education Accreditation (CHEA) and/or the U.S. Department of Education.

While some for-profit colleges are regionally accredited, many are nationally accredited. This means that they have typically gone through a less rigorous, less holistic review process. Additionally, this likely signifies a difference in the quality of education you might receive at a for-profit college compared to a nonprofit college.

If you want to know whether a school you’re interested in is regionally or nationally accredited, we recommend looking it up using the U.S. Department of Education’s Database of Accredited Postsecondary Institutions and Programs. Just type in the name of a school to begin your search.

Types of degrees, specializations, and certifications

While some for-profit colleges (like Grand Canyon University) offer bachelor's and master's degrees, many focus primarily on technical, trade, and vocational certification and training programs. Many nonprofit trade/vocational schools and community colleges will also offer these types of certifications as well, but a large majority of nonprofit schools offer associate and bachelor's degrees to students.

Acceptance rates

Because for-profit colleges need student tuition fees to make money, they typically have very high acceptance rates and low barriers for entry. Nonprofit colleges have varying acceptance rates, but typically have more rigorous requirements for acceptance than those at a for-profit college.

Graduation rates

Despite acceptance rates being higher at for-profit colleges, nonprofit colleges have higher graduation rates.

Services offered to students

Because for-profit schools need to make a return on their investment, a majority of student tuition fees go directly back to investors rather than to students. This means that for-profit schools are much less likely to offer student support services, academic resources, clubs, sports, etc. On the other hand, nonprofit colleges make a student’s overall college experience a priority, investing time, money, and resources into student life and student support services.

Reasons to avoid for-profit colleges

As you research your college options and start to think about what schools you’ll apply to, it’s important to keep in mind that there are many reasons to avoid for-profit colleges altogether. Here are just a few:

For-profit colleges can close with little notice and have a track record of being predatory

According to Best Colleges, for-profit colleges are far more likely to close abruptly than nonprofit colleges. In fact, nearly 80% of the colleges that closed between 2004 and 2020 in the U.S. were for-profit schools.

Additionally, in 2021, the U.S. Department of Education announced that it would grant $1.5 billion in loan forgiveness to 115,000 students who previously attended ITT Tech, a for-profit college. Before closing in 2016, ITT Tech “misled students into taking out unaffordable private loans that were allegedly portrayed as grant aid” in order to continue operating.

Notable differences in price and financial aid offerings

There are three notable financial differences between for-profit and nonprofit colleges:

Cost of tuition. For-profit colleges are typically much more expensive than many types of nonprofit colleges, including public, in-state four-year and two-year colleges. During the 2021-2022 school year, average tuition costs at for-profit colleges was $15,710. In comparison, public, in-state four-year colleges cost an average of $10,750 and public, two-year colleges cost around $3,800.

Source: College Board

Financial aid offerings. Depending on the type of accreditation a for-profit school has, a student’s financial aid options may be limited. For example, schools that have no accreditation whatsoever are not eligible for federal financial aid. This means students attending that school are unable to receive any kind of financial aid from the federal government, including grants and loans. Inability to complete the FAFSA and receive federal aid also restricts a student's scholarship options, as most organizations that award scholarships require applicants to first complete the FAFSA. Additionally, since nonprofit schools have more support systems in place for students, they are much more likely to offer institutional aid like scholarships to their students, which can significantly cut down tuition costs.

Debt levels after graduating. According to College Board, “Students who earn their bachelor’s degrees at for-profit institutions … are more likely to borrow and accumulate higher average levels of debt than those who graduate from public and private nonprofit four-year colleges.”

Difficulty transferring from a for-profit college to a nonprofit college

Transferring from a for-profit college to a nonprofit college may present some difficulties to students. This is largely due to a school’s accreditation. For example, if a student attends a for-profit college that isn’t accredited, it’s highly unlikely that any of their credits will transfer to a nonprofit college. Similarly, if a student transfers from a for-profit college that has national accreditation rather than regional, it’s also unlikely that a majority of their credits will transfer. In both cases, this means that a student would have ultimately wasted time and money on credits that can’t be contributed toward their degree.

Reasons to consider a nonprofit school

With all of this in mind, here are some reasons we highly recommend that students consider attending nonprofit colleges rather than for-profit:

• Higher-quality education. Because nonprofit colleges typically have regional accreditation, the quality of education is likely to be much higher than at a for-profit school.
• A student’s overall college experience is prioritized. Because nonprofit colleges typically have more funding to use on clubs, sports, academic supports, and more, they are more likely to provide a better overall college experience to their students.
• Price. Nonprofit colleges are, in many cases, significantly less expensive than for-profit colleges. This is especially true at two-year colleges. A large majority of for-profit colleges offer specialized trade, technical, and vocational training– but with a high price tag. Compare this to two-year colleges and trade schools, which offer the same exact types of training, for significantly less money. A student is typically much better off attending a two-year college rather than a for-profit college.

Making a decision about where to attend college can be intimidating, but we're here to support! If you have any questions about for-profit colleges or making your college decision, text #College to 33-55-77 to chat with one of our advisors. If you're using a mobile device, click here to have the text message set up for you!