Study Guide: For-Profit Colleges

For-profit colleges are private postsecondary institutions that are organized as businesses. Unlike private nonprofit institutions, profits do not need to be reinvested into the institution, but rather accrue to owners or shareholders. For-profit colleges range in size from some of the largest publicly traded chain institutions to small sole proprietorships that take on only a few students each year. In total, these institutions serve about 1.2 million students, or about 6.4 percent of all college students. Many more for-profit education providers operate outside of the Pell Grant and student loan programs, though; for instance, hundreds, if not thousands, of cosmetology schools operate outside of the federal student aid system altogether.

For-profit colleges have seen their enrollment rise and fall in cycles corresponding with federal student aid generosity and the regulatory environment. They disproportionately recruit and enroll students of color, women, veterans, and students returning to school at older ages. As of 2020, just under half of for-profit college students were Black or Hispanic; 72 percent were female; and the average age at first enrollment was 22. Tuition at a two-year for-profit college is on average about four times higher than at a community college, at about $16,000 per year. As a result, students in for-profit colleges borrow more often and take on higher debt loads than students in other sectors of higher education. Additionally, students from for-profit institutions tend to have worse outcomes than similar students in similar programs from other sectors.

This study guide from the PEER Center provides a summary of the research on for-profit colleges: what they are, what drives the expansion and contraction of for-profit schools, who enrolls in them, what they cost, and how students fare after attending a for-profit college.