For-Profit vs. Nonprofit Colleges: What’s the difference and why does it matter?

Find the right college for you.

In the ever-evolving landscape of higher education, it's crucial for high school students and their parents to understand the differences between postsecondary opportunities, including whether a college is for-profit or nonprofit. Choosing the right pathway is a major decision, and the type of institution you attend can have a significant impact on your education, finances, and future success. Let’s break down the key differences between these two types of colleges and help you make an informed choice.

What’s a For-Profit College?

For-profit colleges, as the name suggests, are businesses that deliver educational opportunities. While many strive to deliver outcomes for students, their primary goal is to generate profit for their owners and shareholders. These colleges offer a wide range of degree programs, both at the undergraduate and graduate levels, and they may provide online or campus-based education. Examples of for-profit colleges include the University of Phoenix, DeVry University, and Strayer University. 

Historical Challenges of For-Profit Colleges

When considering for-profit colleges, note that some for-profit colleges have faced challenges and controversy in the past, and some have engaged in behavior that disadvantaged students. Major policy changes have helped address these issues, and more are coming. This means you should thoroughly research for-profit schools you might be considering. 

What’s a Nonprofit College?

Nonprofit colleges, on the other hand, are educational institutions not driven by profit. These colleges are run by a board of trustees or a governing body, and any extra revenue generated is reinvested into the institution to improve educational quality, facilities, and student services. Nonprofit colleges can be public (state-funded), such as Rutgers University or the University of Texas, or private institutions like Drexel University and Howard University.

What Are the Key Differences Between For-Profit and Nonprofit Colleges? 

Now that we've defined both types of colleges, let's take a closer look at the key differences between them:

  • Ownership and Purpose: The most significant difference is their primary goal. For-profit colleges aim to provide education that makes them money, while nonprofit colleges provide education that helps students succeed.
  • Funding: For-profit colleges primarily rely on tuition fees and may also receive funding from investors or loans. Nonprofit colleges receive funding from a variety of sources, including government funding, endowments, and donations.
  • Affordability: College costs can vary significantly. For-profit colleges can often be more expensive than nonprofit colleges, and they may have higher tuition rates and additional fees.
  • Programs and Coursework: For-profit colleges frequently offer more career-focused programs, while nonprofit colleges offer a broader range of academic disciplines that can lead to satisfactory careers. Nonprofit colleges often emphasize research, which may provide a more comprehensive and rigorous academic experience.
  • Admissions Process: The admissions process for both types of colleges is similar, involving applications, standardized test scores, letters of recommendation, and transcripts. However, nonprofit colleges may have more competitive admissions requirements.

What Should I Know About For-Profit Colleges?

For-profit colleges can offer: 

  • Flexibility: For-profit colleges often offer more flexible class schedules, making it easier for  many students, such as working adults, to pursue their education.
  • Practical Programs: For-profit colleges may provide programs that are closely aligned with specific career paths and local employers and that offer practical skills and training.
  • Online Options: Many for-profit colleges offer online programs, which allows students to study from anywhere.
  • Speedy Completion: Some for-profit colleges offer accelerated programs that can help you complete your degree more quickly.

What Should I Watch Out For? 

  • Higher Student Debt: Tuition at for-profit colleges can be significantly higher than that at nonprofit colleges, and for-profit colleges might not offer as much financial aid or scholarships. Because of higher tuition and limited financial aid, students often pay more to attend a for-profit institution and may need to take out additional loans. Carefully review tuition bills and loan options to be sure any loans you’re considering don’t include unfair or deceptive terms. 
  • Quality Concerns: Some for-profit colleges have faced scrutiny for the quality of their programs because their focus on profit can come at the expense of educational quality. One indicator of quality is whether an institution has accreditation. 
  • Inconsistent Career Success: Many for-profit colleges offer training for new careers paths, but it might not actually help you make more money. Understand and research up front if the investment in your education will lead to the lifestyle you expect. 
  • Credit Transfer Issues: Credits earned at for-profit colleges may not transfer to other institutions, which may limit your educational and career opportunities.
  • Limited Financial Aid: For-profit colleges might not offer as much financial aid or scholarships as nonprofit colleges.

What Should I Know About Nonprofit Colleges?

Nonprofit institutions are often known for: 

  • Academic Excellence: Nonprofit colleges often prioritize academic quality, and they have dedicated faculty and research opportunities.
  • Generous Financial Aid: These institutions may offer more financial aid and scholarships to students in need. Often, the actual cost of attendance is lower than the sticker price. Lower tuition and more financial aid can often lead to less student debt. 
  • Transferable Credits: Credits earned at nonprofit colleges are more likely to be accepted by other institutions, which gives you greater flexibility in your education.

What Should I Watch Out For?

  • Longer Time to Graduation: A bachelor’s degree can take 4 or more years to complete. Many for-profit programs take less time to complete because they may be skills based. 
  • Selectivity: Admission to some for-profit colleges, like Harvard or Yale, can be highly competitive due to their focus on academic excellence. Schools like this have many more applicants than they have seats for and only admit a small group. There are different levels of selectivity in nonprofit colleges. Many offer admission to most applicants. 

What to Consider When Exploring For-Profit and Nonprofit Colleges

When making your college choice, consider the following factors:

  • When You Want to Start Your Career: If you have a clear career path and a for-profit college offers a program closely aligned with that path, it may be a good choice and get you into the workforce sooner. Keep in mind that some career paths might require more education or training later. Nonprofit colleges can prepare you for a broader set of career opportunities, and there’s more time invested up front. Researching a variety of institutions on BigFuture will help you find the right fit. 
  • Financial Situation: Evaluate your financial situation. Consider the long-term impact of student loans. Nonprofit colleges are more affordable and offer more financial aid options.
  • Transferability: Think about the possibility of transferring to another college or pursuing further education. Nonprofit colleges often provide more transfer-friendly options.
  • Accreditation: Be certain that the college you choose is accredited by a recognized accrediting body to ensure the quality of your education.

Your decision should be based on your personal goals, financial situation, and the education experience you want. Research your options thoroughly, and don't hesitate to consult with high school counselors, parents, and trusted mentors to make an informed choice that sets you on the path to a successful future.