There is a lot going on in the news about for-profit colleges. Campuses are closing with little to no advance notice, leaving students with unfinished degrees. Without a diploma, students may not be able to start jobs in their field, yet they are still burdened with loans to pay back. And non-transferable college credits can prohibit furthering their education, causing them to give up or start at a costly, time-consuming square one.
But are all for-profits the same? Which ones are the money-starved scavengers? A post-secondary education is a dream for many people, and making dreams happen is a profitable business model.
And really, are nonprofit colleges any different? How can you tell if the school you’ve been accepted to is legit—and lasting?
Let’s explore the difference between for-profit and nonprofit colleges, along with other little factoids you’ll need to make an informed college decision.
Read about Trade School vs. Traditional College.
What Is A For-Profit School?
For-profit schools are businesses. The product they sell is education. Some for-profits are public, and they are traded in the stock exchange. Others are owned by a private equity firm. Generally, a for-profit school comes with a higher price tag than nonprofits do, because the goal is to operate on a surplus so shareholders make money.
A for-profit school will typically focus on a career path, offering only classes geared toward that curriculum—a great way to quickly get your education and join the workforce.
But, more than a few “prey” on low-income students who wouldn’t otherwise consider college, and veterans. At those, many of their admissions counselors are nothing more than salespeople trying to reach a commission quota.
As a whole, for-profits follow the 90/10 rule, allowing them to earn 90 percent of their funding through federal financial aid. If they exceed 90 percent two years in a row—excluding veteran packages—then they are cut off from any type of government funding the following year. The majority of for-profits are operating due to being almost fully federally funded. If it financially benefits the college, then they take the money any way they can.
However, it’s not the funding of the schools that is the primary source of concern; it’s the outcome of the education you really need to look at. Some for-profits don’t adequately prepare their students for the careers they’re training for. Under-qualified instructors, lack of necessary accreditation, low graduation rates, low job earnings for graduates, and students left dealing with unsustainable financial aid debt are just a few of the problems giving the profit schools a bad rep. Put it this way, if the school has low entry requirements that basically allow anyone to get in, then chances are they have an interest in money.
We must stress that not all for-profits are bad. Some nonprofit schools have the exact same issues. But, from the looks of it, the schools that are the worst are beginning to get what they deserve. The trouble is, their students are the collateral damage.
What Is A Nonprofit School?
Nonprofit schools also have a purpose of giving students an education and the training needed to successfully enter the job market upon graduation. But as opposed to being privately owned, such as the for-profits, nonprofits are publicly owned and managed under an elected board of trustees—unpaid volunteers with no financial gain from the school they are appointed to help manage.
Nonprofits definitely make a profit, but they keep it in-house—by way of higher salaries and campus improvements—rather than turn it over to shareholders. They are also still far from perfect, with many colleges having low graduation rates and high tuition, but the rules are different for nonprofits than they are for their counterparts. Whether or not that changes remains to be seen.
Nonprofit colleges are usually more affordable and have better financial aid packages. The admissions counselors are, in most instances, people who went to college for this type of career. They earn a salary, so there’s no hard sell trying to get bodies through doors.
What Are Private And Public Schools?
Private schools get their funding from private sources such as endowments, tuition, and donations. They can operate either as a nonprofit or for-profit entity because of being independent, and therefore can make their own policies. The schools are usually on the smaller side, with the average student body for a private college in the 1,900 range and 30K for a private university.
Public colleges are funded by the state they’re in. They, too, may also receive donations and endowments. These schools are strictly nonprofit, and they offer lower tuition for students who are state residents. The student body is generally much larger than a private school, but the tuition can run lower.
What Are The Benefits Of For-Profits?
A for-profit college/program makes going to school convenient. There are evening, weekend, and online classes, making scheduling practical and doable for students.
Admission into for-profits are easy. Really, anyone with a high school diploma or GED can get in. Bad grades, bad credit, bad breath—it doesn’t matter. You’ve been accepted before you even apply.
Some for-profits have short programs, allowing you to go from school to the workforce more quickly than the traditional route. However, look at online reviews of the school you’re thinking of attending, because some are known to lure their students in with this fact, and then reality strikes, and you’re still trying to get your degree two years later.
What Does Gainful Employment Mean
In order to protect you from predatory schools, the Obama administration came up with the Gainful Employment Act. By actual definition, gainful employment means an employee is receiving consistent work and payment from an employer. Most recently, it’s become associated with colleges and their graduates.
Gainful employment measures colleges and universities based on the amount of graduates who find jobs after graduation, ranking the colleges in order of the success of the students. This was put into action in 2014. Mainly career education, for-profit colleges are being studied, so potential students can easily find out how effective the education is.
How Is It Proven?
As of September 2017, over 1.1 million students have graduated since gainful employment has been put into effect.
The stats since GE has been in effect
- One in 10 graduates have failed the metrics.
- Ten states hold ¾ of the failing graduates.
- Nearly 25 percent of the failing students went to the same three institutions.
- Fifty-two percent with a certificate from a public undergrad program have relatively high-paying careers. Seventeen percent of students with a certificate from a for-profit have relatively high-paying careers.
What Is The College Scorecard?
The College Scorecard is an interactive tool created by the Obama administration as a means of transparency for potential students and their families. It’s meant to show the cost and value of a school, enabling students to determine whether an institution is worth spending the next two to four years attending.
Users are able to choose a school based on their needs—cost, location, size, program or degree, or name. Once the school is chosen, the Scorecard pulls up information such as the graduation rate, student body demographics, percentage of students on federal aid, and annual income upon graduation. What it doesn’t show is the student transfer rate.
The Trump administration, with Secretary DeVos leading education, is modifying the College Scorecard, which both makes it easier for schools to hide things, but also levels the playing field between for-profits and nonprofit schools.
What To Look For In A College Or University
In the end, you have to choose a school or program best suited to your needs. However, so you don’t fall victim to one of the shoddy operations, both in the for-profit and nonprofit sectors, there are some things you need to find out before signing your name on a single line.
Do your due diligence, which means, do as much research as humanly possible, because this relationship you’re about to enter is a huge commitment.
Questions to ask for-profit admissions personnel:
- What is the status of the school or program’s accreditation?
- Are the programs regionally, nationally, and program accredited?
- How knowledgeable are the instructors?
- What is the student to teacher ratio?
- Is there classroom support?
- Is there support post graduation?
- What is the graduation rate?
- What are the fees associated with attending the school or program?
- What type of financial aid is offered?
- Are the loans private or federal? It’s always best to take a federal loan out first because they have lower interest rates and better repayment options.
- Are employers recruiting students or graduates from the program?
- What is the school’s student body retention rate?
- What salary level are the graduates earning a few years past graduation?
- Can you go to a community college and get your certificate or degree at much less cost? That’s going to be your best option in most instances.
If the answers you receive seem shady, then trust your gut. Remember, if something seems too good to be true, then run away from it as fast as you can.
Questions to ask a nonprofit admissions counselor:
You’re going to want to know the same information as you’d ask a for-profit college, because those are all important factors to base your decision. But, you’re also going to need to know:
- How easy will it be to register for classes? Will they get full quickly?
- Is the campus safe?
- What is the student to teacher ratio?
- What type of merit-based financial aid is available?
- Are work/study jobs accessible?
- Are campus leadership positions available?
Whatever the type of school or program you’re thinking of enrolling in, it’s also a perfectly acceptable idea to talk to both the students and professors/instructors to get a better feel for the school. Find out what the students think of the program. That’s going to be a very good indicator as to whether or not you should even waste your time. And by chatting with the instructors, you’ll get a basic idea into the depth of their subject knowledge, whether they’re available to tutor or mentor students, and the expectations of the students.
It’ll be easier to make a good decision when you’re coming from a place armed with information about the school, its staff, and the study body.
Final Thoughts: Nonprofit Or For-Profit, Which Is Better?
For-profit schools serve a purpose, but very often that purpose is mostly beneficial to the stakeholders and not the student body. That doesn’t mean you won’t get the necessary training in your chosen career, it just means you need to be fully informed before taking out a high interest rate loan, and that goes for any college decision. The stakes may simply be a bit more precarious when choosing the for-profit route because of the rate some are shutting down, leaving students in debt and unable to transfer any of their earned credits.
Remember too, there are just as many shady nonprofits out there, taking the student or government money and offering a non-transferrable education or training in return. We have to stop kidding ourselves that predators only lurk in the for-profit sector, because it’s not the complete picture.
If you have to take out a loan of any kind to get your education, you’re going to have to pay it back—even if the training was terrible and finding a job is proving impossible. Doing your research, and being able to answer the questions above, will help you make the right decision.
You are your greatest advocate. It’s up to you arm yourself with the information you’ll need to stave off the predatory for-profit and nonprofit schools. Find a reputable one that will care about the you now and who you’re going to be in the future—don’t leave a single stone unturned. Your future self is banking on the moves you make today.
Find out what you need to know about trade schools here: The Different Types of Trade Schools.