Nonprofit vs. For Profit

It's clear that in today’s landscape of higher education that not all institutions are created equal. Selecting a school to attend involves weighing multiple options, including whether the school is nonprofit or for profit. Here is a quick breakdown of the major differences between the two. 

 

 

Nonprofit

For Profit

The Mission

Driven to provide a full educational experience to each student.

The ultimate goal is to make a profit and provide shareholders with a return on investment.

Student Costs

Although costs may vary, tuition is typically affordable and competitive with public university system rates.

Often called “high tuition schools,” for-profit universities are more expensive in order to make a profit.

Accessibility

Although acceptance may be more selective, as charitable organizations, funds from donors help provide scholarships to qualified students.

This sector generally has loose standards for acceptance and offers fewer need- and merit-based scholarships.

Accreditation

Typically regionally accredited and use this as the industry gold standard. They generally do not accept credits from nationally accredited schools.

Although recent years have shifted for-profits from their traditional vocational focus to degree seeking, most of them maintain the historical status of being nationally accredited.

Community Connection

Many public and private nonprofit universities offer clubs and organizations students can participate in locally. Relationships among alumni and advisory board members help to provide networking opportunities and build community connections.

Liberal acceptance standards to drive large enrollment numbers for maximum revenue, many for-profits have locations across the country. Although this allows for nearly unlimited network connections, the intimacy and one-on-one relationships may get lost in the crowds

Flexibility

Although some schools are beginning to tailor to the nontraditional student sector, typically nonprofits are part of the larger public education systems that serve the traditional student with daytime classes and dormitories.

With their beginnings in providing alternative education solutions and trade training classes, for-profits tailor most toward nontraditional students, offering evening and online classes. Many have multiple locations available.

Educational Investment1

Nonprofit universities invest more capital per student on instructional costs, in 2009-10 the average for this sector was $15,321 per student.

For-profits spend significantly less on instructional costs. For the same period this sector spent an average of $3,017 per student.

Funding

There are various models for nonprofit funding, but generally sources come from private charitable donors. Most schools do accept federal financial aid, but not nearly to the degree of for-profits.

The majority of funding comes from taxpayer dollars in the form of federal grants and loans. In 2009-10 these institutions received $32 billion in government funds.2

Default Rates3

Default rates are much lower in the public and nonprofit sector, 57% take out loans in nonprofit, while 48% do so in public universities with median debt $8-10K lower than for-profits.

A staggering 96% of for-profit school students take out loans to pay for college and carry more debt than their peers in public and private nonprofit schools, leading to high default rates.

Success Rates4

Although published graduation rates vary based on calculation methods, private nonprofit schools have significantly higher rates with a category average of 64.5%.

Graduation rate for private for-profit universities is 27%. This is less than half of its private nonprofit counterparts.

 

1 http://www.franklin.edu/blog/non-profit-vs-for-profit-colleges-what-you-need-to-know/
2 http://www.ncsl.org/research/education/for-profit-colleges-and-universities.aspx
3 http://forprofitu.org/fact-sheet/
4 http://nces.ed.gov/datalab/tableslibrary/viewtable.aspx?tableid=7512