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For-Profit Schools vs. Non-Profit Schools

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For-profit schools are an increasingly common part of the educational landscape. In 1992, Congress changed Title IV funding requirements and labeled for-profit schools as educational institutions, making them eligible for federal funding -- including student loans and federal grants. For-profit schools have been on the rise since then. While these schools offer some advantages, they've also received criticism from a variety of educational experts, financial advisors, newspapers and educators.


Non-profit organizations include public schools, churches, charities, public clinics and hospitals, political organizations, labor unions, research institutes, museums, legal aid societies, professional associations, and government agencies. Non-profits are defined to be a corporations that are organized to meet special tax-exempt purposes.

The Basics

For-profit schools are most commonly post-secondary institutions such as colleges and universities, but there are also for-profit elementary and high schools. Historically, schools have been either public schools supported by government funding or private schools registered as non-profit organizations. Schools registered as non-profits are required to put funds directly into the school, but for-profits return a profit to their shareholders. The primary responsibility of a corporation -- including a school -- is to make a profit for its shareholders. Consequently, for-profit schools may use different educational approaches and billing styles than non-profit schools so that they can maximize profits and minimize costs.


Because for-profit schools' primary aim is to make money, they tend to offer fewer need- and merit-based scholarships. Instead, they rely on student loans and grants, in addition to self-funding by students. For students who have struggled in school, for-profit schools may be more accessible, because these schools tend to accept a much higher percentage of applicants than non-profit schools. Conversely, students with an excellent academic track record but little money may struggle to pay for the tuition of for-profit schools and may be able to get more funding from public and non-profit private schools. Students enrolled at for-profit schools often end up saddled with student debt.

Educational Quality

For-profit schools must meet state and local accreditation requirements. However, these schools frequently have a lower overall quality of education than non-profit schools. The "Wall Street Journal" reports that the graduation rate at for-profit schools is often shockingly low, with "The Boston Globe" putting the graduation rate at 28 percent. Consequently, students saddled with high debt may have little opportunity for jobs that will enable them to pay back their debt. Because the primary goal is profit, these schools may prioritize getting tuition payments above providing an education, and may not put as much effort into recruiting and retaining exemplary educators as non-profit schools do.


For-profit schools commonly offer their students promises to find them a job within six months of graduation. For students who complete their education, this can be beneficial. For-profit schools often contract with local businesses and serve as feeder institutions for the business. But students have no way of enforcing these promises aside from lawsuits, and schools don't publish statistics on whether and how much they've worked with students to find jobs. Non-profit schools also have career placement departments, and often work to help their students find jobs. The primary difference between the two in this area is that non-profit private schools and government-funded public schools don't typically offer their students guarantees.

Making the Decision

If you're debating between a for-profit and non-profit school, ask for the graduation rates and job placement statistics of each school. Schools with higher admissions standards are generally better-quality schools with a more challenging curriculum. If you can't meet these admissions standards, consider starting at one school and transferring later. If you're taking out loans -- whether you're at a private, public or for-profit school -- avoid taking out more than you need to pay for your education, and apply for scholarships and grants.


Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.

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