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Facts About For Profit College and Non-Profit College

Facts About For Profit College and Non-Profit College

A post-secondary education is a dream for many people, and making dreams happen is a profitable business model.

Let’s explore the difference between for-profit and nonprofit colleges, along with other little factoids you can use to make an informed college decision.

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—which is a good way to quickly get an education and join the workforce.

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.

What is a Nonprofit School?

Nonprofit schools 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.

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.

Are There Benefits of For-Profit Schools?

A for-profit college/program can make going to school more convenient. There are evening, weekend, and online classes, making scheduling practical and doable for students.

Admission into most for-profit colleges is easier. Basically, 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.

Find out what you need to know about trade schools here: The Different Types of Trade Schools.