What Is the Difference? Public Funding of For-Profit, Not-For-Profit, and Public Institutions

Abstract

Postsecondary education in the United States is provided by for-profit, not-for-profit, and public institutions. A majority of students at the baccalaureate and above levels are enrolled at not-for-profit and public institutions, but a growing percentage are enrolled at for-profit institutions. This changing balance raises questions about the differences among the types of institutions and the public funding available to each. This paper outlines the legal and financial distinctions including the differences related to the requirement to serve the public good, access to revenue sources, and the applicability of the nondistribution constraint. The influence of these differences on students, particularly students who are eligible to receive Pell Grants and other public funding is discussed. The mixed-form market literature is used to inform a discussion of possible future developments. Implications of the public funding of for-profit postsecondary education are discussed.