For-Profit vs. Nonprofit Schools: What’s the Difference?

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non profit school

When you’re looking for a job, you may hear a term like “non-profit sector,” or maybe a place of employment describes itself as a “corporate for-profit entity”. Well, what does that really mean? Doesn’t everyone want to make some profit? Even charities have to make money to do their work; why else would they be asking for donations all the time? On that same notion, you hear “non-profit” and you may think of organizations and institutions like Habitat for Humanities, the Red Cross or public schools, churches and hospitals (well, at least some), and if you know people who work in those kinds of areas, they’re not exactly known for raking it in.

However, when we’re talking about colleges it’s useful to know exactly what these terms mean. Both non-profit and for-profit schools grant degrees, but their focus and framework are quite different.

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What’s Their Motivation?

Non-profits offer a learning environment designed with the student in mind. Nobody owns a non-profit; they are operated by a board of directors who do not get payment, and there are no stocks and shareholders to create income for. So, they are free to keep the focus and motivation on providing a quality education to their students.

For-profits are solely there as a business to make money for owners and shareholders by offering their product: education. They must provide financial returns (profit) to their investors. Supporters claim that for-profit schools operate more efficiently, since they can cut costs more easily in the name of creating returns. Plus, they usually don’t have the recreation facilities or extra-curricular expenses that traditional colleges have, they can spend more of the tuition towards students’ learning.

Why Do Students Distrust For-Profit Colleges?

For-profit colleges have been in the spotlight for many years due to their questionable practices and high tuition fees. People are becoming increasingly skeptical of these institutions, as they often don’t provide quality education and put students in debt.

In addition to this, there is a lack of transparency when it comes to how much money for-profit colleges make from students. They often use deceptive marketing tactics to lure unsuspecting students into enrolling in their programs, which can lead to a lot of financial hardship down the line.

Furthermore, many for-profit colleges don’t offer job placement services after graduation or have poor job placement rates. This means that graduates may struggle to find employment after graduating from these institutions, leaving them with large amounts of debt but no job prospects. All these factors contribute to people’s distrust of for-profit colleges.

Are NonProfit Colleges Charities?

Nonprofit colleges have long been the backbone of higher education in the United States, providing students with quality education at an affordable price. However, with rising tuition costs and increasing competition from for-profit schools, many wonder if nonprofit colleges still make money. But there are many ways these institutions generate revenue and strategies they use to remain financially viable in today’s economy.

Nonprofit colleges are educational institutions that operate without the intention of making a profit. They are not charities, but they rely on donations and other forms of philanthropy to fund their operations. Nonprofit colleges provide an opportunity for students to pursue higher education without the burden of excessive tuition costs. As such, they serve an important role in helping many students access quality education regardless of their financial background.

Nonprofit colleges are a great way for students to get the education they need without having to worry about expensive tuition fees. However, these colleges still need to make money in order to stay afloat and provide quality education. So how do nonprofit colleges make money?

Nonprofit colleges generate income from various sources, such as grants, donations, investments, and endowments. They also generate revenue from student tuition fees and other services such as housing or meal plans. Additionally, some nonprofit colleges partner with corporate sponsorships or enter into agreements with local businesses that provide additional funding for their institutions.

Most nonprofit colleges receive donations and endowments, which are typically made in the form of bequests to the college by people or institutions who provide funding for a specific purpose. For example, an individual might make a donation for scholarships in honor of his or her parents or name after them. The individual might also donate assets such as real estate to support scholarship funding.

Private nonprofit schools may actually be more money-driven than public non profit schools, especially when it comes to building their endowment. Nonprofit private colleges are technically not interested in profits, but like other nonprofit organizations, private schools often pay their executives high wages. Private universities also benefit from the impression of success and wealth, which attracts students. Private institutions, like for profit institutions, have more money motivation than public universities.

What’s the Bottom Line?

Non-profits are usually more affordable; they try to keep competitive with state tuition costs (of course this is not always the case, especially with elite private non-profits). On average, for-profits charge $31,000 average tuition vs. $26,000 for non-profit colleges.

What’s the Outcome?

28% of for-profit college students graduated with a four-year degree vs. 65% at private non-profit colleges. Further, a study by the National Bureau of Economic Research, in Cambridge, Massachusetts, stated that students who attend for-profit education institutions are more likely to be unemployed, earn less, have higher debt levels, and are more likely to default on their student loans than similar students at non-profit educational institutions

While non-traditional students may think for-profit schools are an attractive choice because of open enrollment policies and flexibility of program (online, short semesters, night and weekend options) they may soon realize they are paying a much greater cost for a mediocre school.

Regardless if you choose to attend a no-profit or for-profit school, you want to ensure the institution is accredited by one of the 6 regional accrediting boards here in the United States. Accreditation makes sure the time, energy, and money you are investing meet a certain academic standard that will be valued by potential employers. The buck stops with them – a diploma from an unaccredited school isn’t going to impress anyone you want to work for.


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Aya Andrews


Aya Andrews is a passionate educator and mother of two, with a diverse background that has shaped her approach to teaching and learning. Born in Metro Manila, she now calls San Diego home and is proud to be a Filipino-American. Aya earned her Masters degree in Education from San Diego State University, where she focused on developing innovative teaching methods to engage and inspire students.

Prior to her work in education, Aya spent several years as a continuing education consultant for KPMG, where she honed her skills in project management and client relations. She brings this same level of professionalism and expertise to her work as an educator, where she is committed to helping each of her students achieve their full potential.

In addition to her work as an educator, Aya is a devoted mother who is passionate about creating a nurturing and supportive home environment for her children. She is an active member of her community, volunteering her time and resources to support local schools and organizations. Aya is also an avid traveler, and loves to explore new cultures and cuisines with her family.

With a deep commitment to education and a passion for helping others succeed, Aya is a true inspiration to those around her. Her dedication to her craft, her community, and her family is a testament to her unwavering commitment to excellence in all aspects of her life.

Find your perfect value college is an advertising-supported site. Featured or trusted partner programs and all school search, finder, or match results are for schools that compensate us. This compensation does not influence our school rankings, resource guides, or other editorially-independent information published on this site.

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