Many for-profit colleges offer online education options; what is the actual cost of a for-profit college?

What is a for-profit college?

1. There are three main types of institutions of higher education: public universities, which are mostly funded by state governments and overseen by state-appointed boards of directors and trustees; nonprofit colleges, which do not receive state funding but rely on tuition and private donations; and private, investor-funded for-profit colleges, which can be subsidiaries of large corporations. Many for-profit universities offer online education options, and interest in these options has increased due to the coronavirus outbreak. For-profit universities, whether they are online, on-campus, or hybrid, often offer niche programs or programs geared toward specific jobs. These universities often attract non-traditional students who are drawn to their flexibility and convenience.

2. Theoretically, for-profit universities address an important niche in education by focusing on efficiency and practical knowledge rather than education itself. "They should lack the hallmarks of American education - nice gymnasiums, new libraries, menus that cater to a wide range of dietary preferences - and focus primarily on teaching skills to low-income and often adult students that will allow them to be able to earn money and work well."

What are the real costs of for-profit colleges?

1. Students and families rarely pay the advertised college tuition and fees, also known as the price tag. Instead, families can rely on the net price, or the price a student pays after receiving grants and scholarships, to get a better estimate of a given school's actual costs. From 2003-2004 to 2015-2016, the average net price for low-income students in the private nonprofit sector declined by 2 percent, while the net price for dependent students from low-income families at for-profit institutions rose by 36 percent in 2003. During that same period, according to the College Board's 2019 Trends Report, which contains the most recent available data.

2. Prospective students should consider the types of grants and scholarships available rather than comparing price tags, said Robin Howarth, a senior fellow at the Center for Responsible Lending, a nonprofit organization. "The net price includes grants. Often, even if you start out as a for-profit and nonprofit organization with the same price tag, more or less, for-profits hardly ever offer institutional aid to students, and nonprofits usually don't," Howarth said. In addition to offering federal financial aid, some for-profits offer unique course formats that can reduce costs, such as FlexPath, a subscription-based course offered by for-profit Capella University.Elaine Kincel, a spokeswoman for Capella University, wrote in an email, "Depending on the course, the learner bring in transfer credits, and how quickly they complete the program, the cost can vary greatly."" For example, learners taking the FlexPath model may choose to learn faster and save money..."

Graduation rates at for-profit colleges

Enrolling at a for-profit college can also take time away from students. Only 26 percent of students who complete a degree at a for-profit institution do so in six years or less. By comparison, 68 percent of students at private nonprofit universities and 62 percent of students at public universities completed their degrees in that time, according to 2019 data from the National Center for Education Statistics.

Student Debt and For-Profit Colleges

1. Students who graduate from for-profit colleges are more likely to take out student loans, which on average are higher than the amount of debt owed by students who attended other types of schools. More than 80 percent of 2016 graduates from for-profit colleges had student loans, compared with 68 percent of private nonprofit colleges and 66 percent of public colleges. Graduates of for-profit colleges carry an average of $39,900 in student debt, according to a 2019 report from the nonprofit organization TICAS.The most recent data from TICAS shows that people who attend for-profit colleges are six times more likely to default on their federal student loans than everyone else within 12 years of entering college.

2Ben Kaufman, director of investigations and senior policy adviser at the Center for Student Borrower Protection, another nonprofit organization, said defaulting on a loan could prevent graduates from getting a job or returning home. He added: "Borrowers face the cost of tuition and room and board, along with interest, and all the domino effects of their lifetime." "Research shows that studying at a for-profit college often leaves people worse off than if they had never attended one."