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

When you’re making the important choice of where to advance your education, you’ll be faced with several options. Here, we explore an important distinction in higher education: nonprofit versus for-profit universities.

Nonprofit online universities are either part of a larger state system (just as CSU Global is a part of the larger Colorado State University system) or they stand as private nonprofit institutions, unaffiliated with a state school.

For-profit online universities are operated by private, profit-seeking businesses.

As you sift through your options, it’s important to understand just where your money goes — either to your own education or to shareholders.

Nonprofit Means a Focus on Student Success

Whether an online university is part of a state system or is a private nonprofit university, one thing remains consistent: The focus is on student success and education, not on profit.

State-school-affiliated programs receive money from the state, private donors, or tuition. Since public online universities are state-run, they typically are able to offer much lower tuition rates.

Often, state-school-affiliated online universities also boast a wider array of resources and a larger alumni base, and they tend to carry more name recognition.

Nonprofit private online universities carry the same focus on student success and, like public universities, they use funds to develop curriculum and enrich the student experience. The most important distinction between public and private online universities is that the majority of funding for nonprofit private online universities comes from donations, endowments, and tuition — instead of from the state itself.

For-Profit Universities

For-profit online universities are owned and operated by independent businesses, and their chief concern is keeping themselves in business. Typical benchmarks that nonprofit universities use to evaluate their success — such as graduation rate, retention rate, and student satisfaction — are still important to for-profit universities. However, the focus is through the lens of improving their bottom lines. That is, if students are happier and stay enrolled, the university will stand to make more money off their tuition.

Most heavy debt burdens in the United States are carried by nontraditional students (a group that for-profit colleges aggressively target). Degrees and certificates earned at for-profit colleges are generally more expensive than state-affiliated schools or community colleges, and yet economists like the Treasury Department’s Nicholas Turner and George Washington University’s Stephanie Riegg Cellini have found that the return on investment for students at for-profit universities is scarcely worth the higher cost of the degree.

What explains this phenomenon? It’s simple: Churning through students with less emphasis on graduation rate, job placement, or retention rate is a lucrative business. For-profit universities stay afloat and in the money by enrolling new cohorts by any means necessary (with sometimes disastrous effects, as the large for-profit, now-defunct, Corinthian Colleges discovered).

At the end of the day, the distinction is simple: For-profit online colleges and universities tend to offer a wide range of programs, but often at a higher cost than nonprofit or public online universities, with tuition and funding being used to run the business. Nonprofit universities offer a vast array of programs, and these universities are either state-school-affiliated or funded by donors and endowments. This means that nonprofit online universities are able to focus completely on student success.

Making an Informed Decision of Where You Get Your Education

As you search for the higher education solution that’s right for you, make sure you consider the following:

• Is the college or university accredited?
• Do they have the degree program I’m looking for?
• Does the cost associated with the degree seem high compared to the same degree at other universities?
• How does the university measure student success?
• Will the university in question work with me to transfer credits?
• Does the application process heavily emphasize fee payment rather than test scores or work experience?

Before applying or enrolling, make sure to speak to an advisor or reach out to students at universities you’re considering attending. You’ll get a better idea of the culture of the university, its offerings, and the ways it can help you achieve your goal of earning a degree.