Guide to For-Profit Colleges: What You Need to Know

by TBS Staff
• 4 min read
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For-profit schools benefit from name recognition and big promises. But for most students, a for-profit school represents a bad investment.

Not-for-profit schools, including public colleges and private nonprofit colleges, make educating students their primary mission. For-profit schools exist to make money.

First, consider how much schools spend on student instruction. For-profit colleges spend an average of just 29 cents on student instruction for every dollar in tuition. Private colleges spend 84 cents, and public colleges spend $1.42.

Second, consider advertising. For-profit schools spend $400 per student on ads, while public institutions spend $14 per student.

There is good news for students considering a for-profit school. They can almost always find the same program offered at a lower cost through a community college. This page introduces for-profit colleges so students know how to avoid predatory schools.

What Is a For-Profit College?

A for-profit college confers certificates, diplomas, and degrees at the postsecondary level. However, unlike nonprofit colleges, for-profit schools primarily aim to make a profit. Investors and shareholders expect to earn money from the school. As a result, for-profit colleges generally cost more.

What Are Examples of For-Profit Colleges?

Many for-profit colleges advertise heavily. They also often choose names that sound like legitimate, not-for-profit colleges. As a result, students might face confusion when researching colleges. Below are some well-known for-profit colleges.

What Is the Difference Between For-Profit and Nonprofit Colleges?

What is the difference between nonprofit and for-profit colleges? Nonprofit colleges treat educating students as their primary mission. For-profit colleges operate to earn a profit for their shareholders. This fundamental difference shapes education at nonprofit and for-profit institutions.

When it comes to academic quality, nonprofit schools consistently rank higher. A 2021 report classified four out of five for-profit colleges as high-price, low-quality institutions. Less than 16% of for-profit colleges ranked as high-quality institutions.

For-profit colleges tend to focus on vocational and trade-focused training. However, many two-year colleges offer similar programs at a lower price and with higher quality.

Reputations of For-Profit Colleges

For-profit colleges have earned a negative reputation for providing low-quality education and leaving students saddled with debt.

According to a 2021 study, for-profit colleges are much more likely to close, leaving students and graduates with no institutional support. They also report much lower graduation rates. Over 40% of Black students at public and private nonprofit universities graduated within six years. Only 14% of those at for-profit colleges ever earned a degree.

Pros of For-Profit Colleges

While most students should avoid for-profit colleges, they have a few benefits. For example, for-profit colleges tend to focus on vocational education and often prioritize flexibility.

Students may find it easier to gain admission at for-profit colleges because they generally report higher acceptance rates than nonprofit or public institutions. This benefits applicants with a lower GPA or low test scores. However, community colleges typically do not require test scores and admit applicants with a low GPA.

Many for-profit colleges focus on vocational training. These trade schools train students in areas like automotive technology, engineering technology, and allied healthcare. For some students, a vocational degree offers career advancement and a higher earning potential. Keep in mind, however, that many nonprofit and public colleges also offer vocational degrees.

For-profit colleges often offer flexible schedules, including night and weekend classes. In addition, most offer part-time enrollment options. Students can also enroll in an online program to earn their degree. The lifestyle flexibility appeals to working adults, student parents, and others with busy schedules. However, this flexibility can be found at many community colleges and private and public nonprofit universities as well.

Cons of For-Profit Colleges

For-profit colleges come with several major downsides. Graduates take on more debt, cannot transfer their credits, and may struggle to find jobs. For most students, the cons of for profit-colleges outweigh the pros.

Graduates of for-profit colleges tend to walk away with more debt. In 2018, 66% of public college graduates and 75% of private nonprofit graduates had student loan debt that averaged $25,550 and $32,300, respectively. However, 88% of for-profit college graduates had loans with an average debt of nearly $40,000.

For-profit colleges generally hold a negative reputation. Some essentially operate like a diploma mill, granting degrees with low standards or without even requiring coursework. Graduates may struggle to find jobs as a result of the negative reputation of for-profit colleges.

A for-profit college can harm a graduate's job prospects. Many employers avoid hiring candidates with a degree from a for-profit college. The degree may not meet the requirements for professional licensure or certification. Graduates might find themselves shut out of the job market after earning a degree or certificate.

Public and nonprofit colleges prioritize the best interests of students. Many of these institutions incorporate student learning outcomes into their academic missions. For-profit colleges, in contrast, often do not put students first. They operate to make money rather than treating education as their primary mission.

Many college students transfer at some point in their postsecondary education. However, for-profit colleges typically do not meet the requirements for transferring credits to other institutions. In particular, students struggle to transfer credits into regionally accredited colleges and universities. Transfer students must redo their prior coursework — and pay for it twice.

Common Questions About For-Profit Colleges

true How Do You Know if Your School Is For-Profit?

The College Scorecard lists whether a college operates on a for-profit or a nonprofit or public basis. The site, run by the Department of Education, also provides information on graduation rates, cost, and average salaries of graduates.

true Are For-Profit Schools Accredited?

A for-profit college can hold accreditation from national and programmatic accrediting agencies. However, they typically do not hold regional accreditation, which is considered the highest standard for academic programs.

true Is a Degree From a For-Profit School Worth It?

No. A for-profit degree does not pay off in most cases. With low graduation rates and high student debt, for-profit schools often represent a poor investment.

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