Have you ever wondered if colleges like the University of Phoenix offer programs that compare favorably to the more traditional colleges?

If you're not up on your college lingo, there are two basic types of colleges and universities in the United States. The not-for-profit schools are what most of us know best. State sponsored schools like Florida State University or Ohio State University and most private schools like Georgetown University, Johns Hopkins University and the University of Notre Dame are some of the best-known examples of not-for-profit universities. These, and many others, are the schools that most high school students think of when they begin planning for college.

SEE: 6 Ways To Fund A College Education

In recent years, a new type of college or university has taken off. These are often referred to as "for-profit schools" because they're operated by companies that are expected to make a profit for their shareholders. The best-known for-profit college is the University of Phoenix but other such schools include DeVry University, Argosy University and Everest College.

There is a lot of debate among educators whether one type of school provides a better education than others, but for-profit institutions now educate 12% of college students and a recent study found that many students come from lower-income households.

The Institute for Higher Education Policy released a study that found low income students between the ages of 18 and 26 were overrepresented at for-profit colleges but underrepresented at not-for-profit institutions. Within this demographic, enrollment at for-profit schools has increased from 13% to 19% between 2000 to 2008, while enrollment at not-for-profits decreased from 20% to 15% in the same time frame.

The other group flocking to for-profit schools are military veterans and their families. Congressional legislation allowed veterans to receive 100% of their education costs from government-sponsored student loans. This, according to another study, resulted in government student aid payments to for-profit colleges increasing from $66 million to $521 million between 2006 and 2010.

Default Rates
According to a Boston University study, graduates of a for-profit college are less likely to a get a job than students that attend a not-for-profit school and if they do get a job, they're often paid less. According to another study, because these students are less likely to get a job, their student loan default rate is higher. Students at for-profit schools account for nearly half of all student loan defaults but only make up 12% of college students.

Recent data doesn't do much to help the for-profit education sector's image and as a result, the U.S. Department of Education has asked these schools to prove that they are helping their students find employment upon graduation.

SEE: 5 Financial Mistakes New Graduates Must Avoid

Advantages
With data hardly singing the praises of for-profit education, should all students avoid these schools? First, set your goal. Once you finish your college education, what kind of work do you hope to do? For degree programs, like trade, vocational or certifications added to an existing degree, for-profit colleges offering classes that don't interfere with a person's work schedule may be a good choice. For degrees where employers may take the school into consideration, for-profit colleges may not be the best choice.

The Bottom Line
As online classes become more mainstream, recruiters are looking less at the degree and more at the person. The best way to improve your chances of gaining a position in the field of your choice is to use the old-fashioned methods of networking, interning and gaining a reputation as a hard worker who produces quality results.

Data appears to show that the stereotype is true. Until for-profit colleges improve their results, it may still be best to attend a not-for-profit college or university.

Related Articles
  1. Professionals

    Is A Stockbroker Career For You?

    Becoming a stockbroker requires a broad skill set and the willingness to put in long hours. But the rewards can be enormous.
  2. Investing Basics

    How to Become A Self-Taught Financial Expert

    Becoming a self-taught financial expert may not be as daunting of a task as it seems.
  3. FA

    The Basics of The Series 79 Exam

    Passing the Series 79 exam is usually necessary for anyone who wants to work in investment banking.
  4. Personal Finance

    University Donations: Which Schools Got the Most

    A closer look at the staggering $40.3 billion donated to colleges and universities in 2015.
  5. Investing Basics

    The Top 5 Coding Schools in the U.S.

    Learn about some of the country's premier coding schools offering intensive courses in cutting-edge programming languages, such as JavaScript and Ruby.
  6. Professionals

    What it Takes to be a Financial Analyst

    A financial analyst researches companies and economic conditions to make business, sector and industry recommendations.
  7. Term

    What is the Series 66?

    The Series 66 exam is one of two tests required to register as both a securities agent and an investment advisor.
  8. Your Practice

    Tips for Helping a Junior Advisor Succeed

    Bringing on new partners means helping them get acclimatized and showing them the ropes. These tips help get you started on a successful arrangement.
  9. Investing

    Job or Internship?: A Guide for College Students

    College students, which is better for your future - an entry-level job or a unpaid internship? Find out now.
  10. Savings

    The Top 12 Weirdest Scholarships Available

    Cut your college expenses drastically by winning one of these off-the-wall scholarships.
RELATED FAQS
  1. What's the difference between microeconomics and macroeconomics?

    Microeconomics is generally the study of individuals and business decisions, macroeconomics looks at higher up country and ... Read Full Answer >>
  2. What’s the difference between the two federal student loan programs (FFEL and Direct)?

    The short answer is that one loan program still exists (Federal Direct Loans) and one was ended by the Health Care and Education ... Read Full Answer >>
  3. Student loans, federal and private: what's the difference?

    The cost of a college education now rivals many home prices, making student loans a huge debt that many young people face ... Read Full Answer >>
  4. Can I use my IRA to pay for my college loans?

    If you are older than 59.5 and have been contributing to your IRA for more than five years, you may withdraw funds to pay ... Read Full Answer >>
  5. Can my IRA be used for college tuition?

    You can use your IRA to pay for college tuition even before you reach retirement age. In fact, your retirement savings can ... Read Full Answer >>
  6. Can I use my 401(k) to pay for my college loans?

    If you are over 59.5, or separate from your plan-sponsoring employer after age 55, you are free to use your 401(k) to pay ... Read Full Answer >>
Hot Definitions
  1. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  6. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
Trading Center