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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 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 (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 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 , 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.

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 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.

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 .

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 (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 ^® 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.