One of the most important questions that you need to answer before you embark on your journey of starting your private university is whether it will be a non-profit university or a for-profit university. You first need to understand the terms and what they mean so here is a simplified definition for you: a non-profit university is not owned by you or anyone else, it is (more or less) owned by the community.
A for-profit university is run like a business so you own the university, own the assets, and can sell its shares and take its profit and buy your own assets using this profit. With the non-profit model, you cannot take the profit, you have to reinvest it in the university.
While this might look like a no-brainer to any investor assuming that the right way to go is "without a doubt" as a for-profit university, this decision will have major consequences for the university in the long run. First, for-profit universities take a place at the bottom of the list when it comes to state funding and donations (for obvious reasons).
Second, regulators and accreditors both have a skeptical outlook on for-profit universities and this skepticism is justified in some sense because of the numerous bad examples of private for-profit universities that set terrible standards in terms of academic integrity and student outcomes. Last, but not least, students and parents both adopt the same skeptical view of for-profit universities.
Your decision might end up delaying your license approval, accreditation, and student enrollment if you choose to be a for-profit university. Add to this the fact that the costs of starting a university are humongous and profits don't start coming in before 3-5 years (literally), so unless you are a billionaire, you will not be able to sustain the university's costs for more than 1-2 years and that's why you desperately need the state funding.
During my career in higher education, I have seen many entrepreneurs who started a privately owned for-profit university and failed to sustain its growth and ended up closing it down. It always makes me so sad to see a university go down, especially since I know very well the amount of work and dedication that goes into it.
Another successful model which I have seen is combining the best of both worlds, having the university as a not-for-profit university established under the umbrella of a for-profit foundation. This allows the foundation to sell services to the university and get a profit.
For example, instead of buying a campus in the name of the university and not being able to use it as an asset for yourself and the rest of the investors, you can buy the building in the name of the foundation and rent it to the university.
This applies to many other services and activities, you can also sell shares of the foundation without affecting the non-profit status of the university and while getting the needed funding to support the growth of the university.
The most important thing is to spend enough time thinking about this decision before setting up the university. Consult your lender, investors, future board members, and everyone who might be affected by this decision. Make sure you have a plan and an alternative plan as you can change your status in the future too but this will be a very costly change.
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