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

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. Personal Finance

    Is An Ivy League Degree Worth It?

    In 600 B.C. Aesop determined that a bird in the hand was worth two in the bush. Warren Buffett claims that this axiom can be used to determine the most valuable uses of capital. In this article ...
  2. Professionals

    The Best Financial Modeling Courses for Investment Bankers

    Obtain information, both general and comparative, about the best available financial modeling courses for individuals pursuing a career in investment banking.
  3. Savings

    Should You Look at 529 Plans Outside Your State?

    529 savings plans are not restricted by geography. So if your in-state offering has high fees or poor investment choices, look elsewhere.
  4. FA

    Paying for College: Utilize These Top Hacks

    Saving money for college is difficult for many families, but it doesn't have to be. Here are some overlooked hacks to save money on college costs.
  5. Investing

    4 Billionaires Who Dropped Out of Harvard

    People who became successful despite dropping out of Harvard University.
  6. Credit & Loans

    Student Financial Aid Changes: FAFSA 2015-2016

    Here is a look at some of the major changes to FAFSA in 2015 - 2016 and how they will affect student financial aid.
  7. Credit & Loans

    What to Do When You Can't Repay Your Student Loans

    Student loans should be kept in good standing no matter what. Here are some tips on managing your loans.
  8. Credit & Loans

    Student Loan Deferment: Live to Pay Another Day

    Extending your principal repayment date can increase your chances of fighting off default.
  9. Credit & Loans

    Fund Your Schooling with PLUS Loans

    Find out what they and are whether you're eligible to apply for these no-maximum loans.
  10. Savings

    Fund College for a Grandchild: 529 vs. HEET

    For some grandparents, a HEET is a desirable option for funding their grandchildren's college education. Here's what you need to know about this trust.
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. What are the best MBA programs for corporate finance?

    Opinions vary based on which publications you consult, but the best MBA programs for a career in corporate finance are at ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center