For-profit colleges are held to a different—and often harsher—standard than their nonprofit peers. Federal agencies routinely single them out for investigations, audits, and public rebukes. Programs that train electricians, medical assistants, and business professionals are scrutinized and regulated under rules that nonprofit and public universities never face. This unequal treatment not only stigmatizes career-oriented education but also deprives many working adults of affordable, practical pathways to advancement.
Federal Trade Commission (FTC) actions against for-profit colleges are common, even though they make up only a small portion of institutions. Enforcement against genuine misconduct is necessary, but regulators have also been overzealous, targeting for-profit institutions on flimsy motives. This shift can turn oversight from a tool for accountability into a political weapon. In 2014 the Department of Education joined a lawsuit that lasted until 2025 claiming Stevens-Henager College, owned and operated by the Center for Excellence in Higher Education, was providing recruiters incentives that are not allowed for schools receiving federal funding. Despite a jury ultimately siding with the college after 11 years, the costs of the legal battles on top of the Department of Education preemptively cutting their funding put the school out of business.
The FTC and Department of Education (DOE) also unfairly targeted Grand Canyon University (GCU)—first by denying its nonprofit status, despite recognition by the Internal Revenue Service (IRS), the state of Arizona, and others. The FTC compounded the mistake by accusing GCU of falsely branding itself as a nonprofit. The DOE continued refusing to recognize GCU’s nonprofit status until a federal appeals court forced it to in 2024. Ultimately, the FTC dismissed its case entirely in 2025.
The biggest regulatory divide between for-profit and non-profit schools lies in their eligibility for Title IV federal aid, which subsidizes student loans, grants, and most federal funding in higher education. For-profit institutions must comply with the Gainful Employment rule, which requires them to demonstrate that graduates earn enough to keep student-loan payments below eight percent of their annual income.
Meanwhile, bachelors’ programs at non-profit and public universities are exempt. Graduates with bachelor’s degrees spend 14 percent of their earnings on loans in their first year after college—a figure that falls to 6.5 percent by the tenth year. Many of these programs would fail to meet the same Gainful Employment standard imposed on for-profit schools, which requires no more than 8 percent of a graduate’s income is required to pay any student debt. , which requires no more than 8 percent of a graduate’s income is required to pay any student debt.
In some majors, the gap is even wider: graduates of drama and theater spend roughly 24 percent of their income on student loans the first year after college and still 10 percent a decade later—never meeting the standard. These benchmarks should be applied to non-profit and public bachelor’s programs as well, or at the very least be disclosed to prospective enrolling students.
Even after meeting higher performance thresholds for Gainful Employment, for-profit schools face additional restrictions. The DOE’s 90/10 rule limit them to receiving no more than 90 percent of their revenue from federal student aid—including Veterans Administration and Department of Defense benefits. Non-profit and public colleges face no such limitation.
The differences don’t end there. In reporting requirements, nonprofit and public schools are given a pass. For-profit colleges must publish program-level data on outcomes, tuition, debt, completion rates, and job-placement rates. Non-profit and public universities are not required to report that data.
Transparency benefits students by helping them make informed, financially sound decisions about their education. When colleges clearly disclose program costs, typical debt loads, graduation rates, and post-graduation earnings, students can weigh whether a degree is likely to deliver a return that justifies its expense—or whether it should be pursued purely for personal or intellectual fulfillment. Transparency also promotes accountability among institutions and encourages competition based on real outcomes rather than marketing forcing schools to prioritize their students’ future over getting students in seats. Clear, comparable data empowers students and ensures that higher education delivers genuine opportunity instead of debt without value.
Regulations should protect students, not punish institutions based on tax status. For-profit colleges that follow the rules deserve the same fair treatment as any public or nonprofit university. Holding every school—public, non-profit, and for-profit alike—to the same transparent and consistent standards of transparency for incoming students is the only way to ensure accountability without bias, and to keep opportunity open to all.
Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.