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For-Profit or Non-Profit: Which Schools Are Right for You?

Everyone knows what makes public colleges and universities different from private ones: public schools receive a large portion of their operating budgets from government appropriations, while private schools rely on donations, tuition, student fees, and endowments. Fewer people, however, are familiar with the distinctions between non-profit and for-profit institutions. And with enrollment at for-profit schools on the rise, it’s important to understand these differences, and how they can affect you.

According to Stanford business instructor Samuel C. Wood, for-profit institutions are growing considerably faster than all other institutions of higher learning. Boston-based research firm Eduventures reports that 9% of all higher education students in the United States are enrolled at for-profit institutions. Students who once faced the choice between public and private schools now have another element to weigh: for-profit or non-profit.

Campuses and Costs
Non-profit colleges and universities are what everyone pictures when they hear the word “college.” Many have leafy campuses, big quads, imposing libraries, well-known professors, gymnasiums, student health centers, and large scholarly research budgets. These abundant resources often come at a price. Most for-profit institutions, on the other hand, do not direct their money toward these areas. Many rent classroom space in office buildings and give students access to online scholarly journals and textbooks in lieu of brick-and-mortar libraries. Some for-profit schools offer their courses online, which can further reduce costs. Though some of this savings is passed on to the students, most goes toward the schools’ profit.

Yet according to research done by the National Center for Postsecondary Improvement, for-profits still have a lower average tuition cost than private non-profit institutions. For-profit schools lead the pack in financial aid for students, too. Average aid packages for two-year degree programs hover around $1200 per year, with those for four-year programs reaching an estimated $750. Public non-profit schools offer slightly higher aid for four-year programs ($790), but their aid for two-year programs averages just $330.

A Business Model for Education
Advocates of for-profit colleges and universities cite the colleges’ business model as a strength. For-profit colleges are run as businesses, and as such, they seek to maximize their profits. The best way for them to boost their profit margin is to keep their enrolled students happy and to recruit more students. Therefore, they have a compelling economic reason to maintain student satisfaction and to give students the services they want and need.

This economically-driven thinking also factors into the types of degree programs for-profit colleges offer. The focus at the majority of for-profit schools is on professional and vocational degree programs rather than the liberal arts. If you are looking to earn your degree in history, English, or the classics, a non-profit institution is most likely a better choice. If you’re more interested in becoming a dental assistant or a human resources manager, both for-profit and non-profit institutions can fit your needs.

A disadvantage to for-profit schools’ business model is that money might not always go toward providing students with the highest quality education available. In fact, according to Samuel C. Wood’s research, the average for-profit school spends approximately 23% of its operating budget on recruitment and advertising, and just 19% on student services and support. Non-profit schools spend just 1 to 2% of their budgets on advertising while 40 to 43% of their money goes toward student services. Before you commit to a for-profit school, be sure to find out what services they offer. The best schools tend to offer job placement services, career counseling, and free tutoring for their students.

Student Body Variety
The student bodies at for-profit schools differ from those at non-profit schools. Programs at for-profit schools are often geared toward working adults, which often produces older and more diverse student bodies. Also, admission standards at for-profit schools can be less competitive. This can give students who did poorly in high school a chance to prove they have what it takes to succeed in college. Many students also use for-profit schools as stepping-stones to other colleges. They might spend one to two years there establishing a strong academic record, and then transfer to a non-profit school. If this plan appeals to you, make sure the school you plan to transfer to accepts credits from a for-profit institution. This can prevent any unpleasant surprises down the road.

Picking a High-Quality For-Profit School
A recent article in the Chronicle of Higher Education cautions against putting all for-profit schools in a single category. Just as there are big differences between a small liberal arts school in an urban area and a large public university in a small town, many differences also exist among for-profit schools. You can find for-profit schools that have historical, attractive campuses and have been owned by the same families for years, as well as for-profit schools with locations all over the country or even the world. Some for-profit schools have no brick-and-mortar locations at all–they exist entirely online.

Picking a for-profit school that fits your needs is similar to choosing a non-profit school. You want to find a school that offers the academic program you need, that is affordable, that gives you a high-quality education, and that provides you with support as you embark on your new career post-graduation. Most importantly, you want to find a comfortable academic environment where you feel confident you can thrive. If you discover a school that meets all of these criteria, whether for-profit or non-profit, you should have a great higher education experience in store.

Publish date: June 17, 2008