Colleges get most of their money from tuition and fees, government funding, and private donations.
So let’s look deeper
Colleges get most of their money from tuition and fees, government funding, and private donations. According to the National Center for Education Statistics, tuition and fees accounted for $354.5 billion of revenue for postsecondary institutions in the United States in 2018. This was followed by $74.9 billion in government funding, including grants and loans, and $47.5 billion in private donations.
One interesting fact is that tuition and fees have been on the rise for many years. According to a report from CollegeBoard, between 2008 and 2018, in-state tuition and fees at public four-year institutions increased by an average of 3.1% per year beyond inflation, while out-of-state tuition and fees increased by an average of 3.2% per year beyond inflation. Another interesting fact is that government funding can vary widely between institutions. For example, research universities tend to receive more government funding than liberal arts colleges.
Here is a table summarizing the sources of revenue for postsecondary institutions in the United States:
Source of Revenue
Amount in 2018
Tuition and Fees
$354.5 billion
Government Funding
$74.9 billion
Private Donations
$47.5 billion
As Warren Buffet once said, “Investing in yourself is the best thing you can do. Anything that improves your own talents; nobody can tax it or take it away from you.” This quote highlights the importance of higher education and the investment that students and their families make in it.
The video explores the various revenue sources for colleges and universities, including federal and state funding, tuition and fees, endowments, grants, and Athletics. Non-profit schools must reinvest their revenues back into scholarships, student aid, and programs, while for-profit schools are not required to do so. However, declining enrollments due to the pandemic have put pressure on schools to adapt their finances and find new ways of generating revenue. This has led to financial challenges for many institutions, with some at risk of closure or being absorbed by stronger institutions. Effective financial management is crucial for colleges and universities to ensure their sustainability in the face of evolving market pressures.
State and local appropriations are used primarily to fund public colleges and universities, but some money goes to student aid, some benefits students in private colleges, and some is reserved for special purposes like research, agriculture, and medical education.
How are colleges funded in the US?
US colleges and universities receive their funds from many sources, including tuition, federal Title IV funds, state funds, and endowments.
Why does the government give colleges money?
The answer is: The federal government provides support for UC in three crucial areas: student ÿnancial aid, research, and health care delivery and training. These funds help UC educate our nation’s workforce, advance scientiÿc and technological breakthroughs, and provide world-class medical training and patient care.
Which public universities make the most money?
Response to this: Hawaii, Alaska, and Vermont public universities had the largest revenues from federal grant and contract investments per student enrolled in public colleges and universities, according to the Department of Education.
How do colleges make money?
The answer is: Aside from tuition and fees, schools can pursue other options for making money, including endowments, college sports, and fundraising. For students, the question of attending college is often linked to affordability, which can influence enrollment rates. Colleges and universities can receive funding in a diverse range of ways.
How much does a college cost?
Between 2008–09 and 2018–19, average published tuition and fee prices rose by $930 (in 2018 dollars) at public two-year colleges, by $2,670 at public four-year institutions, and by $7,390 at private, nonprofit, four-year colleges and universities according to College Board.
How much money does the government give to colleges & universities?
Response: For starters, colleges and universities, including both two- and four-year schools, receive significant funding from the federal government. In 2018, for example, the government paid out $149 billion to colleges and universities. 3 This money was provided to schools in three ways:
Which public universities make the most money?
Answer to this: Hawaii, Alaska, and Vermont public universities had the largest revenues from federal grant and contract investments per student enrolled in public colleges and universities, according to the Department of Education.
How much does a college cost?
As an answer to this: Between 2008–09 and 2018–19, average published tuition and fee prices rose by $930 (in 2018 dollars) at public two-year colleges, by $2,670 at public four-year institutions, and by $7,390 at private, nonprofit, four-year colleges and universities according to College Board.
How do colleges make money?
Aside from tuition and fees, schools can pursue other options for making money, including endowments, college sports, and fundraising. For students, the question of attending college is often linked to affordability, which can influence enrollment rates. Colleges and universities can receive funding in a diverse range of ways.
How much money does the government give to colleges & universities?
Response will be: For starters, colleges and universities, including both two- and four-year schools, receive significant funding from the federal government. In 2018, for example, the government paid out $149 billion to colleges and universities. 3 This money was provided to schools in three ways:
