Highlighted Online Nonprofit Schools
What Is a Nonprofit College?
Nonprofit colleges are designed to not generate investment returns for investors. Instead, the institution uses its funding to cover current and future operating expenses, which include salaries and facilities.
A board of trustees governs each nonprofit school with the goal of making sound financial decisions for the institution while also meeting student needs.
Both private and public nonprofit colleges receive government funding through student financial aid awards, contracts for goods and services, and research grants. Additionally, nonprofit schools rely on private endowments, donations, and revenue from sports programs to fund academic programs and activities. A board of trustees governs each nonprofit school with the goal of making sound financial decisions for the institution while also meeting student needs.
Types of Nonprofit Colleges
Nonprofit schools can be either public or private. Two-year nonprofit colleges — including community colleges — typically offer associate degree and certificate programs. Many students transfer these credits to a nonprofit four-year college or university to complete a bachelor's and possibly continue for a graduate degree.
Most nonprofit institutions offer distance education and online learning, which may be more convenient for students who want to attend part time while juggling other responsibilities. Nonprofit public schools tend to offer a wider range of academic programs than nonprofit private colleges.
What Is a For-Profit College?
For-profit colleges are privately owned and funded by companies and investors. Most profits don't go back into the school but instead go to various stakeholders who have invested in the school.
For-profit schools aren't required to reinvest as much in operations as nonprofit schools. Instead, they invest a large portion of their money in marketing, advertising, and lobbying against funding restrictions.
Prospective students are often attracted to for-profit colleges because many offer both on-campus and online programs in popular fields such as business, information technology, and healthcare. In fact, they were initially at the forefront of online college education. Many also offer accelerated programs allowing students to finish their education in less than the average time.
What Is the Difference Between a Nonprofit and a For-Profit College?
There are several major differences between these types of colleges, namely how they receive and distribute money, their affordability, and their general reputation.
Funding for Nonprofit and For-Profit Colleges
The biggest difference between these two types is where they get their money and how they use it. Here is the percentage of funding that each type of college receives from tuition and fees versus government sources, according to the National Center for Education Statistics (NCES):
When it comes to spending money, nonprofit schools are statutorily barred from keeping profits beyond operating costs, whereas for-profit schools are businesses.
Nonprofit and For-Profit Affordability
In the academic year 2020-2021, tuition and fees cost an average of $9,400 at four-year public schools compared to $18,200 at private for-profit colleges. But it's worth noting that private nonprofit colleges are the most expensive options at $37,600 in 2020-2021. Additionally, the low costs of public schools only apply to students who qualify for in-state tuition rates.
Students are at greater risk of defaulting on student loans from costlier programs. According to the Brookings Institution, for-profit schools enroll only 10% of students, yet these students account for about 50% of loan defaults. In addition, 71% of students enrolled in for-profit degree programs take out federal loans compared to only 49% of nonprofit degree-seekers.
What's more, not all school types can offer the same financial aid options. Students can apply for financial aid to fund a for-profit education and may qualify for federal loans and Pell grants, but they're not eligible for federal work-study programs. In addition, applicants from for-profit institutions may not be considered for private scholarships.
Reputation Differences Among Nonprofit and For-Profit Colleges
Justified or not, employers may perceive the quality of nonprofit and for-profit colleges differently. Some for-profit colleges are considered "diploma mills" with a reputation for churning out degrees of dubious value.
Some for-profit colleges are considered "diploma mills" with a reputation for churning out degrees of dubious value.
Employers may be skeptical of a for-profit school's academic standards because these colleges aren't required to reinvest their money back into their programs. The Century Foundation reports that public universities spend $1.42 on student instruction for every tuition dollar collected, and private universities spend $0.84. But for-profit schools allocate just $0.24 from every tuition dollar on instruction.
Should You Choose a Nonprofit or For-Profit College?
Many criteria factor into a college decision, and some will matter more to you than others. Think through this as you decide between nonprofit and for-profit schools: You may appreciate nonprofit colleges more if you want a broad, theoretical education with opportunities to engage in student activities with your peers. You might prefer the for-profit route if you're looking to learn specific job skills to potentially enter the workforce more quickly.
You can also consider the factors we list below, which are closely related to the differences between college types that we described above.
Accreditation for Nonprofit Colleges
Most nonprofit schools are institutionally accredited (which used to be called regional or national accreditation). This means that the school passed an independent accreditor's review of its faculty, curriculum, administration, and services. Accreditation is necessary for a school to receive federal funding and for its students to use federal financial aid at the institution.
You can find accredited schools by searching the Department of Education's Database of Accredited Postsecondary Institutions and Programs.
Financial Aid for Nonprofit Colleges
You'll typically be eligible for federal financial aid if you attend an accredited nonprofit college online. Forms of aid might include grants, work-study programs, and loans just like your in-person peers. However, you usually still need to work on campus to receive work-study funds.
You can start the financial aid process by completing a Free Application for Federal Student Aid (FAFSA) to determine your financial need. Most states and colleges also gather relevant information from this form.
Beyond government funds, you might apply for scholarships from schools, nonprofit organizations, or individuals. Other forms of aid include fellowships for graduate students who work in their department, employer tuition reimbursement benefits, and the GI Bill for service members, veterans, and their families. Once you've exhausted all financial aid options, you can apply for loans through a private lender, but take care: Private loans tend to feature less favorable interest rates and conditions than federal loans.
You won't be able to fill out a FAFSA if you have undocumented immigration status, but many states provide similar forms so you can at least receive state aid.
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