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For-Profit Universities: Good or Bad for Education?

Jul 9, 2010 Jennifer Williamson, Distance Columnist | 0 Comments

A for-profit university is a school run by a profit-seeking organization or corporation. Profits from tuition are paid to shareholders and owners rather than being funneled to endowments. Traditionally, for-profit universities are categorized as being more focused on vocational education than academic exploration.

For-profit universities promote themselves as the solution for low-income and nontraditional students who need a degree—and who ordinarily wouldn’t be able to complete a nontraditional program. For-profit universities say that they’re  more flexible and accommodating to working students, with degree programs geared toward making students ready to hit the ground running in their next job.

But there’s been some controversy lately over whether for-profit universities are good or bad for low-income students. According to the US Department of Education, graduates of for-profit universities are more likely to default on student loans (at 11%) than those who attended public and private colleges, who defaulted at rates of 6.2% and 4.1% respectively. This implies that
for-profit programs don’t necessarily make students more employable. 
These numbers have caught the attention of Congress, which is proposing new
regulations for the industry.  



The Problem with For-Profit Universities

One problem with the for-profit model is that these schools funnel most of their profits to shareholders, keeping overhead low. At some institutions, this may mean fewer highly qualified teachers and less investment in instructional quality. In addition, for-profit universities still deal with negative perceptions from employers and nonprofit schools—so students may have a hard time getting employment or transferring credits.

For-profit universities charge higher tuition than most community colleges, typically the other alternative for low-income and nontraditional students. According to the College Board, average yearly tuition at for-profit schools is about $14,174 per year—as opposed to the price of a two-year state school, at $2,544 per year. They help students get federal aid to subsidize their tuition—and most for-profit university students qualify for Pell grants. But those cover only a fraction of tuition—and students are often left with hefty bills upon graduation.  


 What it Means for Online Students

The for-profit university controversy can be particularly relevant to online students, as many online schools are also for-profit. But that doesn’t mean you shouldn’t consider a for-profit online school if it looks right for you. Still, it’s important to be informed. Here are a few things you should know about for-profit schools as an online student.

Not all online schools are for-profit schools 

Many traditional schools run online programs—and some offer entire degree programs online. If you’re concerned about the quality of a for-profit education or its acceptance in your industry, consider taking online classes at a nonprofit college such as Drexel University, Boston University or Cornell.

Some for-profit schools have regional accreditation

Many students have trouble switching credits from for-profit to nonprofit schools because it’s common for for-profit schools to have only national, not regional, accreditation. If your school is regionally accredited, its credits are more likely to transfer to traditional schools.

Do your homework before signing up

Before agreeing to a program, talk to several students who have graduated from the degree program you’re considering. If you can, find them on your own and not through the admissions office. Ask them about the quality of the education they received, whether they had trouble finding a job afterwards, and what kind of support the school gave them.

Compare tuition

In addition, ask about the flat tuition rate at the school you’re applying for. Yes, you may be able to get some grant aid for that—Pell grants will fund up to $5,550 in 2010. But when comparing tuition, assume that you will probably be paying for much of the tuition in loans. Look at tuition rates for nonprofit, for-profit, and community schools in your area—and try to make a realistic decision that takes price into account.

The latest news reports about for-profit schools don’t make them look good—and students should definitely take this information into account when choosing a school. That said, for-profit schools aren’t necessarily synonymous with online schools—and the ideal school for you may be a for-profit. Take news information into account, but do your own research and speak to students who have been to the school you’re considering—and you should be able to make a good decision about your school.

For Profit Colleges -



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