Approximately 10 percent of the higher-education student population attends for-profit universities according to the Brookings Institution.[1] As the for-profit education sector has grown over the decades, it has become a major player in the education field.

But what exactly are for-profit schools and how do they differ from nonprofit institutions?

Let’s explore this question further.

First, the difference between nonprofit and for-profit colleges and universities.

Simply put, for-profit universities are operated by privately owned, profit-seeking, tax-paying organizations; any profits may be returned to their investors, owners and shareholders. Nonprofit schools are private or state-funded, tax-exempt schools; any surplus funds must be filtered back into the organization.

Are For-Profit Universities Accredited?

Like their nonprofit counterparts, for-profit online colleges and campus-based for-profit universities may seek accreditation by a national or regional accrediting agency. The U.S. Department of Education maintains a searchable database to help you determine if a school is accredited and by which accrediting body.

It is important to determine your prospective school’s accreditation status and type if you plan to transfer between colleges or attend another school in the future; sometimes credits do not transfer easily between schools with national accreditations while transferring credits between regionally accredited is typically no problem. This means the money you paid for a particular class through a nationally accredited school may have gone to waste.

Are For-Profit College Students Eligible for Financial Aid?

Yes, students who attend accredited for-profit colleges are eligible to apply for financial aid. However, the 90/10 rule prohibits for-profit schools from earning over 90% of revenue from federal financial aid.

The “gainful employment” rule requires that colleges disclose information regarding the percentage of graduated students that have secured gainful employment. This rule is slated to take effect in 2023.[2]

Do For-profit Online Schools Offer the Same Programs as Nonprofit Colleges?

Generally, for-profit online universities and campus-based for-profit universities follow a business-model approach, so they tend to base their program offerings on consumer demand. Therefore, degree programs may be more specialized or more focused on specific trades or vocations than nonprofit colleges. However, many for-profit schools also offer the same traditional degrees offered at nonprofit liberal arts schools.

Are For-profit Universities Credible?

Whether you’re considering a nonprofit or for-profit college, do your research to ensure that your choice is credible. Consider factors such as accreditation status, graduation rates and faculty expertise.

Though the new gainful employment rules don’t go into effect until 2023, many schools are already posting this information on their websites. You can also research current faculty to determine if they are considered leaders in their fields and investigate the types of publications and research they have under their belt.

Use School Match Pro for the best information that pertains to your situation.

School Match Pro can help connect you directly with the school or program that best fits your lifestyle, goals, timeframe and, perhaps most importantly… your budget

We’re here to help you answer all the critical questions you have about how, where, when and why a particular school may be the best match for you; or why it may not be a good fit.

Regardless of the type of school you decide to attend, do your research before making your final decision to ensure that the college is credible, meets your educational expectations, and will help you reach your career and personal goals.


[2] Education Department delays gainful employment proposal until 2023 | Higher Ed Dive