Greed Vs. Temperance: The Dangers of For-Profit Colleges

Note: This blog post has been recently updated with new data.

If you have ever searched for colleges before, you know that there are many different types of them to choose from, right? From urban research universities to private suburban colleges and even Ivy League schools, colleges make up a big part of the education system in the United States—according to BestColleges, 18.4 million students were enrolled in U.S. colleges in spring 2025 alone. However, not all schools are the same. While some of them are owned and operated by state governments, others are owned by private corporations. These types of schools—called for-profit colleges—often do not have the same similarities as those owned by state governments; for example, they receive funds from student tuition to pay greedy investors and stakeholders or invest in non-educational purposes. In doing this, for-profit colleges are sending a message to their students that their interests are more valuable than education and thus are a waste of the students’ money. One such example of a for-profit college is the University of Phoenix*, which was founded in 1976 and was “one of the first online universities designed for working adults”. However, the school and its parent company have come into recent controversy when they used deceptive practices and multimedia, such as advertisements, to falsely claim that their relationships with top companies (such as AT&T and Microsoft) created job opportunities for their students. This resulted in “’mounds of debt and useless degrees”’ for the students and the U.S. Department of Education forgiving nearly $37 million in federal loans for more than 1,200 students. False and deceptive advertising are not the only things students should be worried about when thinking about for-profit colleges, however. They should also watch out for high debt, high costs of tuition, and low rates of credit transfer. 

While for-profit colleges have high acceptance rates and more flexibility, they can be a magnet for accumulating debt. According to a 2019 report cited by U.S. News and World Report, graduates from these types of institutions left with, on average, $39,900 in student debt. What’s more, students who attend a for-profit college are six times more likely to default on their federal student loans within 12 years of entering college compared to those who started at a nonprofit college. Defaulting on their loans can prevent students and graduates from getting a job or finding a home. Because these colleges produce higher debt loads, more than 779,785 borrowers have applied for discharge of their federal student loans from the Department of Education as of January 2023—most of these applications came from those who attended for-profit colleges, according to Illinois Senator Dick Durbin. 

Applying to a for-profit college can be a risky move for some students, partly because they pay a lot of money for admission but realize later on how poor their education is. According to the Conversation, the average net cost of attendance at for-profit colleges was $24,600 as of the 2020-2021 academic year; however, some graduates say that the degrees they earned at these colleges were not worth that much money, with 37% of them saying so, according to new polling shared with USA TODAY. To make matters worse, some for-profit colleges (such as Saint Regis University) do not have any accreditation of any kind, which means students attending these schools do not qualify for financial aid from the government; this makes it harder for these students to pay the cost of tuition.  

A major drawback for for-profit colleges is that credits earned at these schools may not transfer to other colleges. According to BestColleges, 94% of credits earned at for-profit colleges did not transfer. This is concerning, as about 100,000 students out of 1 million transfer from one of the many for-profit colleges in the United States. These students ultimately suffer because by not transferring the credits earned at these schools, they are limiting the number of students’ educational and career opportunities available to them and they might have to take the class again at the new college, which will take up more of the students’ time and money. 

While there are many positive things about for-profit colleges, it is important to also consider the negative things too, including the possibility of high debt accumulation, high tuition rates, and relatively low credit transfers. When selecting colleges, incoming college students might also want to think about other college options, including non-profit colleges, to avoid being scammed out of a good college education. 

Additional Resources

Here is a video from the Federal Reserve Bank of St. Louis explaining more about the differences between for-profit and non-profit colleges. Hope this helps!

*-denotes a source that was not part of the original MLA sources I used for this blog post