For-Profit vs. Non-Profit Colleges: What's the Difference? Before choosing a college, prospective students should know how their school of choice works. Learn the difference between for-profit and non-profit colleges and universities.

by Priya Kumar

Today’s students have a menu of choices when it comes to planning their education: distance or classroom learning; full-time or part-time programs; for-profit or non-profit schools. As for-profit colleges and universities continue to saturate the higher education market, deciding on for-profit vs. non-profit colleges has become increasingly important.

Non-profit schools include state universities and community colleges, which receive a significant portion of their funding from the government. Many private universities are also non-profit institutions.

For-profit schools, however, are subsidiaries of a private company. In addition to educating students, the company’s owner or shareholders expect it to make money.

With more than 455,000 enrolled students and more than 200 locations, the University of Phoenix is the country’s largest private university. Other popular for-profit schools include DeVry University, Kaplan University, and American Public University. Overall, these schools account for about 8 percent of the college student population, which is expected to double by 2015, reports the Chronicle of Higher Education.

For-profit schools with accreditation are considered legitimate, although some have drawn criticism for what some call pushy recruiting practices and questionable degree programs. Students considering a for-profit school should research the program curriculum and its cost. Ask the school for statistics on job placement after graduation, and always make sure the program fits your needs.

The following chart compares for-profit vs. non-profit schools:

  For-Profit Schools Non-Profit Schools
Types of Education Tend to focus more on technical or vocational education Tend to be more academic or research-oriented
Types of Programs Range from associate’s to doctoral degrees; can more rapidly implement degree programs in critical areas such as information technology, health care, or security studies Range from associate’s to doctoral degrees
Length of Program Highly flexible schedules that sometimes allow students to finish faster; graduation rates are typically lower than non-profit schools In-classroom education can take years, but online components may accelerate program completion
Cost Usually more expensive than non-profit counterparts. Student loan defaults are higher Costs vary, with state schools typically costing less than private schools

 

Under a federal regulation known as the “90-10” rule, colleges may collect up to 90 percent of their revenue from the government; the remaining 10 percent must come from non-governmental sources such as student tuition or investor funds. Federal funds mostly take the form of Pell Grants and Stafford Loans, which the government offers to low-income individuals to help pay for education. The top five institutions receiving Pell Grant money last year were for-profit schools, which together received more than $1 billion, according to the Associated Press.

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