For-Profit Colleges vs. Nonprofit Colleges

Genevieve Carlton, Ph.D.
Updated November 15, 2023
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What’s the difference between for-profit and nonprofit colleges? Discover 5 key differences to make an informed decision about your degree.

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There are nearly 6,000 colleges in the U.S. Some are public, while some are private. Some are two-year institutions, while some are four-year institutions. And some are nonprofit colleges, while others are for-profit colleges. But what exactly do for-profit and nonprofit mean when it comes to colleges?

Put simply, for-profit colleges are colleges that operate for a profit — which can negatively impact students. In contrast, nonprofit colleges prioritize educational quality rather than profits. The choice of college can impact campus life and the student experience. It can also shape your career opportunities after graduation.

For many students, a nonprofit school is a better choice, especially if you’re looking for a more traditional college experience. But that’s not always the case. Our guide walks through the difference between for-profit and nonprofit colleges and how to choose the best college to reach your goals.

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What Is a For-Profit College?

A for-profit college is a college owned and operated by a private company or business. They are often managed by investors and stakeholders and they generate revenue that is used for non-educational purposes.

For-profit institutions usually don’t receive state or federal aid. Money made by for-profit colleges mostly comes from tuition and fees. They usually offer career-based and occupational training programs, often through online formats for nontraditional learners.

Because profits from for-profit colleges are used for non-educational purposes, some nonprofit institutions and employers regard them as less reputable. However, some for-profit colleges have accreditation, and these schools are valid educational options.

What Is a Nonprofit College?

Nonprofit colleges are schools that channel funds from tuition and fees into educational programs. They also receive support from state and federal governments, endowments, and donations.

Public and private institutions can both be nonprofit entities. Nonprofit schools spend more money on instruction, curriculum development, and recruitment than their for-profit counterparts.

Nonprofit institutions offer certificate programs and degrees that lead to careers and continuing education opportunities. Many employers regard degrees from nonprofit schools as more reputable due to the funding that these institutions invest in high-quality educational programs.

For-Profit Colleges vs. Nonprofit Colleges: 5 Key Differences

For-profit colleges and nonprofit institutions can differ in affordability, admissions, quality of education, and accreditation. You should research the programs and schools that align with your personal and professional goals.

1. Purpose and Quality of Education

For-profit and nonprofit colleges differ in purpose and deliver different learner outcomes. For-profit schools typically offer career-oriented programs. They’re often more focused on earning revenue over student learning outcomes.

Nonprofit colleges and universities, on the other hand, typically put a large percentage of their federal funding directly into education and student resources. Nonprofit institutions tend to have higher retention and graduation rates than for-profit institutions for these reasons.

2. Cost and Affordability

For-profit schools rely on tuition, fees, and donations for funding, which can lead to higher costs. At the same time, for-profit schools do offer scholarships and tuition discounts. You might be able to apply for federal financial aid so long as the for-profit school is accredited.

Generally, for-profit colleges provide programs with comparable or higher price tags than programs at nonprofit institutions. Private nonprofit institutions are, on average, the most expensive schools to attend. This becomes especially clear when comparing the average cost of tuition between private and public schools. However, private schools are also able to provide more comprehensive financial aid packages that factor in your family’s income.

Average Cost of College, By School Type
Type of SchoolAverage Tuition and FeesAverage Total Cost of Attendance
Public nonprofit$9,700$26,000
Private nonprofit$38,800$55,800
Private for-profit$17,800$32,900
Source: NCES

3. How They’re Funded

Public, nonprofit institutions receive significant financial support from state and federal government bodies, while private nonprofit schools are often funded through private endowments or grants. Tuition payments and fees also contribute to school revenue.

For-profit colleges are owned by private companies and businesses. And unlike their nonprofit counterparts, for-profit institutions focus entirely on earning revenue through student tuition and fees, along with money from investors and corporate entities. For-profit colleges may also channel earned revenue into non-education expenses or directly to investors.

4. Admission Process

For-profit colleges usually have less rigorous admission standards than nonprofit schools. Both nonprofit and for-profit schools require a high school diploma or equivalent and a completed application. However, many for-profit schools have no GPA or test score requirements.

For-profit institutions typically offer rolling or open enrollment as well. Unlike nonprofit schools, which generally have 2-3 admission cycles a year, for-profit institutions may allow you to enroll all year long.

While high acceptance rates and flexible admission options can make for-profit schools a more accessible option, transfer opportunities are limited at these schools. For-profit schools tend to accept fewer transfer credits than nonprofit schools, and most nonprofit schools do not accept transfer credits from for-profit schools.

5. Programs and Accreditation

Academic programs and degrees vary by institution, but for-profit and nonprofit schools share some similarities. Many for-profit schools offer professional and career-focused programs, as do their nonprofit counterparts. For example, nursing, business, and psychology degrees all appear at both for-profit and nonprofit schools.

For-profit schools generally hold national accreditation, though some receive regional accreditation. Accreditation status affects transfer options, financial aid opportunities, and overall reputability. Even if a program at a for-profit college offers the same coursework as nonprofit schools, you should always check the program’s accreditation status.

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Which Type of Schools Are For-Profit and Nonprofit?

You should familiarize yourself with common for-profit and nonprofit designations. Here are a few types of schools in each category.

For-Profit and Nonprofit Colleges
Type of SchoolFor-profit or Nonprofit?
Ivy League SchoolsNonprofit only
State UniversitiesNonprofit only
Community CollegesNonprofit only
Vocational-Technical and Career CollegesMostly nonprofit
Private CollegesEither nonprofit or for-profit
Arts CollegesEither nonprofit or for-profit
International CollegesMostly for-profit
Online CollegesEither nonprofit or for-profit
Specialized-Mission CollegesEither nonprofit or for-profit
Religious-Affiliated CollegesEither nonprofit or for-profit
Liberal Arts CollegesMostly nonprofit

Nonprofit vs. For-Profit Colleges: Which Is Better for You?

A nonprofit college or university is typically the best option for most students. For-profit institutions can provide programs that meet the needs of your specific career path, but often without fulfilling other elements of the traditional college experience.

Remember that for-profit colleges often value their bottom line over instruction, curricula, and learning outcomes. However, for-profit schools can offer positives, such as open admission, flexible schedules, and general convenience.

Among for-profit colleges, you should be especially careful about “diploma mills.” These are for-profit schools that offer programs with no clear academic standards. Often, you don’t even need to take classes — you simply pay a fee and receive a degree.

To avoid falling victim to a diploma mill, you should confirm accreditation status, explore admission and curriculum standards, and make sure the school has a physical address.

Frequently Asked Questions About For-Profit and Nonprofit Colleges

Are universities nonprofit?

While many universities are nonprofits, including all public universities, some are for-profit institutions. You’ll need to check the institution’s status before applying. Reputable institutions list whether they’re nonprofit or for-profit on their websites.

Are public schools nonprofit?

Yes, public colleges and universities are nonprofit institutions. These schools receive funding from state and federal sources, and they operate as nonprofits. The same is true of public K-12 schools, which are nonprofit organizations.

Are for-profit schools bad?

For-profit colleges are not necessarily bad. They typically have a higher acceptance rate, offer flexible schedules, and emphasize career-focused educational programs. However, for-profit colleges also typically report lower graduation rates, higher costs, and fewer student services.

Because they prioritize profits, these institutions may not invest as heavily in student learning outcomes. As a result, some for-profit schools have a poor reputation. Before applying to for-profit schools, research their reputation and alternative options.

What are some popular for-profit colleges?

There are many large for-profit colleges that operate in the U.S. Some of the most popular include University of Phoenix, DeVry University, and Grand Canyon University. For-profit colleges typically focus on technical and vocational education. Before attending a for-profit college, research the school’s total cost, graduation rate, and reputation.

Page last reviewed November 5, 2023.