What’s the Difference Between For-Profit and Non-Profit Colleges?

By Thomas Broderick

When I hear the phrase ‘non-profit organization,’ I immediately think of those ASPCA commercials that play Sarah McLachlan’s “Angel” while displaying pictures of neglected puppies and kittens.

Disclaimer: If you’ve never seen the commercial I’m talking about, don’t look it up. It’ll wreck your day.

The ASPCA is one of many non-profit organizations in the United States. In the smallest of nutshells, a non-profit is an organization that puts back any surplus income into its mission. There are no shareholders to please or pay off. As a result, non-profits do not pay taxes on the money they take in. That way, people who give to the ASPCA know that 100% of their donation is going to the organization’s mission.

Everything else is a for-profit enterprise. When you buy the latest iPhone, a little bit of that money goes to people who own Apple’s stock and the board of directors. Another way to put it is that a for-profit organization’s mission is to make lots (and lots) of money. Unlike non-profits, these organizations pay taxes on the money they bring in.

Now that we’ve learned a bit about the difference between for- and non-profit organizations, let’s see how this distinction applies to the college you attend. What’s the difference in the educational experience and academic rigor? We’ll explore answers to this question and much more.

Public colleges are always non-profit schools…

Public colleges and universities are as much a part of their states’ educational systems as public elementary, middle, and high schools. They receive funding from the state and put students’ tuition dollars back into their programs. Also, as institutions designed to benefit in-state residents, they often charge higher tuition to out-of-state students and set quotas on how many out-of-state students they accept each year. That’s why, for example, a student from New York who attends the University of California – Berkeley pays more than double the in-state tuition rate.

…but private colleges aren’t always for-profit schools.

When I went to Vanderbilt University, I could almost see the money bleeding from the walls. In my junior and senior years, the university was spending truckloads of cash constructing new dorms and science centers. You would imagine that just by looking around, Vanderbilt was a for-profit institution. But that’s not the case.

Vanderbilt, along with many other private colleges and universities, is a non-profit school, as well. They invest their tuition dollars into endowments, research, and new construction. In other words, the amount of money a school has doesn’t make the difference between for-profit and non-profit.

So what does?

There’s a lot of tax law and legalities involved, but like the example at the beginning of the article, a for-profit school is managed by a corporation. Here’s an easy-to-remember scenario that explains the difference between the two.

Non-profit college: “We need to provide a broad range of majors and minors to our students. We do not consider how profitable a major is when making funding decisions.”

For-profit college: “Enrollment in East Asian studies major dropped 20% since last year. We’re eliminating it.”

At for-profit colleges, majors and academic departments are like products. If one’s not selling well enough, they cut it to save money.

Now that we know a little bit about how for-profit and non-profit schools operate, let’s examine the question you really came here to answer.

What’s the Difference for Students?

In terms of the student experience, the most significant difference concerns each type of school’s academic offerings. Like in the example in the previous section, for-profit schools tend to offer a more limited selection of majors, those that are in line with what the economy needs. At for-profit colleges, you’re likely to find more STEM majors and fewer humanities majors.

Another thing you may have heard concerns for-profit schools and scandals. Yes, for-profit colleges have gotten in hot water in recent years for breaking the law and other dubious practices. Thankfully, many of these schools have gone out of business, and remaining for-profit schools are under the microscope. What this means is that if you’re considering for-profit colleges, you need to do your due diligence. When researching a for-profit college, ask yourself the following questions:

• Does this school possess regional accreditation?
  • If the answer is ‘no,’ move on.
• Does the program I’m interested in possess national or subject-specific accreditation?
  • If the answer is ‘no,’ it’s not a deal breaker, but keep looking just in case.
• Are there any news reports that portray this school in a negative light?
  • If the answer is ‘yes,’ move on.
• What are alumni saying about their educational experience?
  • Like restaurant reviews, people with negative experiences are more likely to share their stories online than people who had a good or neutral experience. Even so, take all claims seriously and continue researching.

In fact, it’s a good idea to ask yourself these same questions about non-profit colleges, too.

Final Thoughts

Non-profit and for-profit colleges have the same basic mission: educate students. And as many for-profit schools have cleaned up their acts in recent years, you can feel safer about them as an option for your college degree. However, no matter what kind of college you want to attend, pick a reputable school that aligns with your interests and goals.

So, set aside time to research schools, call admissions offices, and ask yourself – sometimes difficult – questions about what you really want out of your education. This way, you can pick the best school for you.

Good luck. ☺️