Know the Difference Between For-Profit and Nonprofit Schools

The vast majority of private schools are nonprofits, or organizations that put all money earned back into the school.  By contrast, a school that is operated for profit sends money to its owners or investors at the end of the year, and may or may not spend money to improve the school.

These true for-profit or proprietary schools are schools operating as businesses to make money from fees and tuition.  While some proprietary schools are legitimate, many of them aren’t always upstanding.  According to a 2012 class-action lawsuit, such is the case with for-profit college, ICDC.  The complaint states that, “[t]his for-profit college has mislead students into enrolling into its educational programs by adopting misleading/deceptive names for its educational programs, adopting a practice of misrepresenting its post-graduation employment statistics, and by making other misleading and false representations.”  The complaint goes on to say that, “[a]t the end of the day, ICDC is more concerned with raking in millions of dollars in tuition and fees than educating and training it students.”

Top Scams by For-Profit Schools

1. Accreditation Status

Some for-profit schools fib about their accreditation status, either by telling you they’re A certification process and quality assurance method that’s designed to distinguish schools that comply with a set of educational standards.  But not all accreditation agencies are created equal.  Many are recognized by the U.S. Secretary of Education as being reliable authorities as to the quality of education or training provided by the institutions they accredit.  Those are the ones you want to see when you’re evaluating a school.  Others are unrecognized and some are completely made up, and scam artists will claim their school is accredited by such organizations to make it seem like their institution is legitimate and well-respected when, in reality, it’s a sham. when they’re not, or by making up “fake accreditation” programs that then accredit them.

Result?  You’re not getting the high-quality education you thought you were getting and, if you try to transfer to an accredited school, you’ll learn that your credits are not transferable.

How to avoid the scam? Go to the U.S. Department of Education’s website to see if the school is really accredited.

2. Similar Names

Many for-profit schools will give themselves names that are very similar to well-known nonprofit private schools in the hopes that you’ll be confused and think the for-profit school is the same thing as the nonprofit school. For example, California Southern University, a for-profit online university, sounds very similar to University of Southern California, a nonprofit private school.  Also, National American University, another for-profit university, could be confused with American University, a nonprofit private school.

3. Tuition Costs

Many for-profit schools use misleading pricing tactics when listing tuition costs.  For example, some schools will tell you that you will attend classes for 12 months a year, but will state the annual cost of attendance for 9 months of classes.

For-profit schools also tend to be more expensive than comparable degrees and certificates at nearby public colleges.

4. Graduation Rates and Post-Graduation Job Promises

Some for-profit schools misstate graduation rates to make its programs more appealing, as well as lie about post-graduation job rates and salary levels.

To make sure you get accurate information, ask the schools for supporting documentation to back up its claims.  If they’re the real deal, they shouldn’t hesitate to give you the information you need.

The takeaway?

Don’t immediately write off proprietary schools just because they make a profit, but do look at them with a keen eye and watch out for the common pitfalls.