For Profit vs. Non Profit Online Colleges and Universities - What You Should Know

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More and more students are searching for non profit online colleges vs for profit colleges. So what is the difference and why should you care?  The reality is, no two universities are the same and, depending if your preferred college is a non profit online college or a for profit one, it could make a difference in your education, finances, and overall college experience.

Non Profit Online Colleges vs For Profit - What is A For Profit College?

The main difference between the two different types of colleges or universities is one exists to make a profit. These 'for profit' colleges operate like a business and are expected by investors to make money. So the question becomes, does this impact the quality of the potential education. The answer is not a simple one, as it does depend on the university itself. One important question to ask any of your potential non profit online colleges or for profit universities is how much money is devoted to creating and enhancing the curriculum.

According to the National Center for Education Statistics (NCES), it is true that for profit colleges tend to spend less than public and private non profit colleges[i]:

  • For Profit Colleges and Universities: $21 Billion
  • Public Colleges and Universities: $324 Billion
  • Non Profit Colleges and Universities: $173 Billion

Below is a breakdown of how those funds are spent by percentage for the 2013/2014 academic year. also important to note, the data includes only degree-granting institutions grant associate's or higher degrees and participate in Title IV federal financial aid programs.

Non Profit Online Colleges vs For Profit Colleges

Taking the data one step further, though the percentage of total dollars spend across all three types of institutions is similar, there per student cost is not. According to the NCES, for profit colleges spend $5,266 per student on instruction. Non profit colleges come in at $17,003 and public colleges at $8,070.  Per student, for profit colleges spend $6,055 on student services, academic support and institutional support. Non profit colleges spend $15,778 and public universities average $6,050[i]. What this data can't tell you though is exactly how is this money being spent - and that is the important question to ask any institution you are pursuing.

A last word on dollars spent. It is also generally true that for profit colleges spend a lot more money on marketing and recruiting than other institution types. It was determined in a Senate Report, that during the 2008/2009 academic year more than $4.2 billion was spent on these activities[ii]. Is that a bad thing? It really goes back to each individual school. Ask yourself, dollar for dollar, is the institution spending that money wisely. 

Government Funding

In order to receive government funding (also known as Title IV federal financial aid programs), both non profit online colleges and for profit online colleges must follow the same guidelines[iv]:  

  • Eligible students must be enrolled in an eligible program
  • The college or university must be legally authorized by the state it is in to provide a postsecondary educational program
  • All eligible programs are included under the notice of accreditation from a recognized accrediting agency
  • Every eligible program must define an academic year with a minimum of 30 weeks of instructional time, 24 semester or trimester hours, 36 quarter hours, or 900 clock hours
  • The college or university must meet the 85/15 rule. Where 15% of the schools revenue must come from non Title IV funding

Certification to receive funding includes completion of a Title IV pre certification program. For a for profit school, the person responsible for this is the school’s owner or an administrative official designated by the owner. For a non profit school, this is the school’s chief administrator or an administrative official designated by the chief administrator.  

Accreditation and Reputation 

Both non profit online colleges and universities and for profit online colleges and universities may be accredited by a national or regional accrediting body. Once again, it is important to understand on an individual level if the school you are interested in has a solid reputation with regards to accreditation. Accreditation requires every part of a school or program to be examined and judged by experts. If the school makes the grade, then it “passes.” If a college is accredited, it is important to know the reputation of the accrediting agency. You can check the Council of Higher Education Accreditation (CHEA) for more information regarding which colleges and universities are accredited.  

Another important factor to reputation is graduation rate. It is extremely important that regardless of the for profit vs non profit designation that you ask your online college about their graduation rates. As an average, NCES reports wide differences between first-time, full-time undergraduate students who began their pursuit of a bachelor' degree at a for profit 4-year degree-granting institution in fall 2008 vs a non profit[iii]:

  • 65% at non profit colleges and universities 
  • 27% at for profit colleges and universities. 

Wow huge difference right? This may or may not be important to you. As many non traditional students attend for profit online colleges, it is possible these individuals are not able to attend college full time and as such are not included in this data set. 

Flexibility

One of the selling points of any online college is flexibility. An advantage for profit online colleges typically have over non for profit online colleges are the multiple and frequent 'start dates'. A start date is the first day a school offers new classes. Non profit online colleges often stick to the more traditional fall and winter start dates.  While some for profit online colleges have new start dates every week, or every month. You may find that if you work full-time, you might prefer a school schedule which is more easily adapted around your schedule.

Other FAQs About Not For Profit Colleges

What is the difference between the terms not for profit vs nonprofit?
Nothing. they are the same exact term simply phrased in a different way. Both terms reference a college or university that does not pass profit on to investors or owners. 

Are public universities non profit?
Yes, public universities are non profit institutions. The difference between a public university and a private non profit college is ownership. The state a public university is located in owns the institution, ans as such, provides a very large abount of the institution funding to the school. Private non profit colleges and universities are privately owned - this however does not exclude them from taking advantage of many tax exemptions that ultimately could be viewed as public funding.  

What is a non profit university?
A non profit university is an instutution of learning that does not exist to simply make a profit. The school may be publicly or privately owned (thing state school vs Duke), and are often run by a board of directors or trustees. 

What degree programs are offered at a non profit online college vs a for profit online college?
This will depend on the individual school. In general, most non profit online colleges offer a wide variety of degree programs including general liberal arts degrees. For profit universities differ widely in what they offer. Some may offer only a few specialized programs, while others offer a larger selection of typical degree programs such as business and psychology. Few however will offer a general degree in liberal arts, this is the largest distinction.  

 

[i] nces.ed.gov/fastfacts/display.asp?id=75 |  [ii] help.senate.gov/imo/media/for_profit_report/ExecutiveSummary.pdf? [iii] nces.ed.gov/fastfacts/display.asp?id=40 | [iv] ifap.ed.gov/sfadepot/attachments/ses3.pdf

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