How do universities make money

So it's understandable that college-goers are surly. But we're not saying your mom is totally wrong. State schools can still be a safe bet for the cost-conscious student, but several factors like in-state tuition, federal grants, and loan awards can play a large role.

That's a lot of taquitos. So how big's your endowment? Private institutions play by slightly different rules. Private colleges and universities are on a whole 'nother level. Prestigious universities with strong name recognition and vast alumni network often have diverse revenue streams that lead to massive funds like Harvard University 's 36 billion-dollar endowment source.

Again, think of the taquitos you could buy. Or tacos, if you prefer the classics. Large endowments provide a safety net for schools that might otherwise feel the sting of a changing landscape in higher education. Colleges and universities have increasingly offered discounts on the price of full tuition and fees in order to make enrollment more attractive. As state appropriations for higher education diminish, public universities increasingly rely on other sources to advance their mission and maintain the quality of education and training they provide: tuition, philanthropy, auxiliary services, grants and contracts, and endowment and investment income.

The extent to which individual public research universities rely on diverse sources of funding varies greatly by location, demographics of students served, state aid programs, and relationships with regional business and industry. Some institutions fare better than others due to generous state funding, robust philanthropic enterprises, or lucrative partnerships with local corporations.

Connecticut and Louisiana represent opposite ends of the spectrum, with public research universities distributed across the range of total educational expenses and proportions of state and student contributions. Data from Budgeting at public research universities has changed dramatically in the last thirty years.

In the early s, most universities operated with a central budgeting model , in which the provost or vice president for academic affairs and the CFO or vice president for business and administration split control of the budget, according to function. The RCM approach moves the responsibility for a balanced budget to the unit or school level : the central administration taxes units to advance the common mission of the university, but schools and units manage their own resources.

In fact, recent data reveal that revenues from tuition and fees now average more than one-half and often far more of the core education expenditures at public research universities. Even with the rise in tuition prices, tuition often only covers one-third to one-half of the total cost of education. While net tuition revenue total revenue from tuition and fees minus grant and loan aid has risen at all public research universities, only 17 percent of first-year students in AY— paid full tuition without receiving any form of financial aid.

At public research universities, philanthropy supports an average of 7. Colleges and universities can make money from a number of sources, including endowments, gifts, tuition and fees, athletics, and grants.

Schools can also make money by charging fees for international enrollment. Nonprofit colleges and universities must reinvest their revenues in funding school programs, including scholarships, student aid, and athletics.

For-profit colleges are not required to reinvest all of their revenues in school operations. Some of them can depending on what they charge for tuition, how much they receive from federal or non-federal funding, and how profitable their athletic program proves to be. Generally, the larger and more well known a school is—or the more exclusive it is—the more money it stands to make through tuition and athletics. Georgetown University.

National Student Clearinghouse Research Center. USASpending Datalab. Education Data. Center on Budget and Policy Priorities. American Council on Education. Accessed September 8, Harvard University. Full Sail University. Inside HIgher Ed. Saving For College. Student Loans. Actively scan device characteristics for identification. Use precise geolocation data.

Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. For those and other reasons, and at a time when they would seem to be searching for new sources of revenue, U. The basic research performed in university laboratories underpins discoveries that may take years to end up in the market, if they ever do.

Trying to prod more commercialization of discoveries from federally sponsored research is also why, 40 years ago this year, Congress passed the Bayh-Dole Act , which gave universities the rights to the licensing revenue resulting from their research. Universities and colleges spun off 11, startups between and — an average of per year — according to the Association of University Technology Managers, or AUTM, whose members oversee what is known as technology transfer. Related: Panicked universities in search of students are adding thousands of new majors.

Now some institutions are redoubling their efforts to smooth the way for their discoveries to be shared and sold. The federal portion of funding for university research has also been steadily declining , forcing institutions to look for other sources of support. And money that comes from licensing typically goes back into the research budget.

We want to see results. Related: Some colleges seek radical solutions to survive. But moving research from a lab to the market is complex. First, researchers have to be willing to invest time in translating abstract concepts into tangible products. One called it the unbaked cake phenomenon: Academic researchers show up in her office with a metaphorical bag of flour and a cup of sugar, she said, when what investors and potential partners want is a fully baked cake.

But you have to find somebody willing to pay money for it, license it, develop it. Mochly-Rosen said she has seen this among her colleagues and counterparts. After all, faculty are awarded tenure and promotion based on measures such as how much research money they bring in and how many papers they publish, not their numbers of patents or startups or the licensing revenue they earn.

Even the profits from commercialization, which most universities share with them, prove little motivation. Getting a patent can take five to seven years, said Allen, and testing a drug or developing a product even longer than that. Some universities are trying. And that annual number of patents, while still low, has begun to rise. After her rocky experience with the compound she developed that aids heart-attack recovery, Mochly-Rosen founded an organization called SPARK to speed up the transformation of academic discoveries into FDA-approved drugs and treatments.