For-Profit Schools – Are they all bad?

From the onset, the goal of the Military Online Colleges blog has been to provide readers with the information needed to make their decision on where to attend college and earn their degree. To that end, it is only natural that our discussion on what is truly “military friendly” turns to a discussion on for-profit colleges and universities.

Just a quick note. It is not the intent of this blog to cast any dispersion on any one institution, but rather to simply provide the reader with information from which to draw their own conclusions.

What is a for-profit college, and how are they different than other colleges?

All colleges and universities in the United States have a common framework, and have to follow and comply with federal guidelines and the standards established by their accrediting bodies. However, it is in how they are managed where the difference comes into play.

For-profit institutions are private schools that are owned and operated by companies or private equity firms, whose product is a post-secondary education and their customers are individuals seeking to improve their lives by earning a college degree or post-secondary certificate. As with all businesses, they generate revenue by selling their products to customers. Generating revenue is their bottom-line. Their sole source of revenue comes in the form of the tuition and fees paid by their students.  For-profit institutions tend to follow a governance structure in which the leadership is accountable to a board of directors or trustees, of which the ownership of the institution are members.

Public colleges and universities also receive their funding from tuition and fee payments made by students, but also have endowments.  Larger public institutions also receive funding in the form of state and local tax revenues. Public institutions tend to follow a state governance structure in which a state board of regents establishes and approves policies, procedures, and academic programs.

Private, non-profit institutions also receive their funding primarily from student tuition and fees, but since they are non-profit, they also receive their funding from various endowments. They also tend to follow a governance structure, in which the leadership of the institution answers to a board of trustees. In private, non-profit institutions, faculty members tend to play a large role in governance and are responsible for all academic programs and standards. This may not be the case in a for-profit institution.

Regardless of the institution they attend, students can fund their education on their own, use the federal financial aid systems, or through scholarships they receive. However, students who attend for-profit institutions may not receive institutional scholarships as many of them do not offer scholarships for their students.

So why are for-profit colleges and universities under so much scrutiny and getting a bad rap these days?

There are many reasons. The three main reasons are; where their revenue comes from, low graduation rates, and low employment rates of their students into careers related to the degree earned.  However, it seems the main reason stems from how or where they receive their revenue and the tactics employed by for-profit institutions to enroll students.

According to an article recently published in Fortune magazine, for-profit colleges and universities, though they only account for about 10 percent of total college enrollment, their students account for nearly half of all student loan defaults (Bair, 2014).  Also, of the schools approved to receive military tuition assistance, ten of the top twenty-five schools are for-profit. Finally, for-profit institutions receive up to ninety-percent of their revenues from taxpayer funding programs (federal financial aid, military tuition assistance, and GI Bill benefits). These factors have placed for-profit institutions under great scrutiny from our federal legislators.

Recently, a few for-profit institutions have had legal suits filed against them for various issues ranging from high pressure enrollment tactics, misinformation regarding the repayment of federal student loans, advising students to take out loans when need is not present, and incentivizing enrollment counselors based on the number of enrollments they obtain.

As we discussed previously, not all institutions are the same. Therefore, not all for-profit institutions are the same and participate in unscrupulous practices. The bottom-line is to do your research and ask questions.


Bair, S. (2014). For-profit schools are a bad deal for both investors and taxpayers. Fortune.  Retrieved from:

National Association for College Admission Counseling

Military Times

Posted in : Degree Directory, Education Benefits, Military Friendly
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