Funding for Higher Education

Unlike other educational institutions in the United States, tertiary institutions – including universities and community colleges – are less likely to be funded and run by municipal, state, or federal governments. Most rely on student tuition payments to pay staff salaries and operational costs and the United States has one of the most expensive higher education systems in the world. In the 2012 fiscal year, average tuition for a public community college offering a two-year associate’s degree was $3,131 USD per year, while the average tuition for a private university offering a four-year bachelor’s degree was $29,056 USD per year. Columbia University in New York is currently the most expensive university in the country. Tuition is upwards of $50,000 USD. In many cases, financial aid in the form of grants, bursaries, or loans is used to help students offset these costs.

Public Institutions

While public universities have traditionally received support from state and federal government sources, support has waned in recent years, causing public universities to charge increasingly higher tuition. Since the 1990s, state support for public colleges and universities has dropped by 26%, forcing these institutions to rely on student tuition more and more. In 2011, for the first time ever, public tertiary institutions relied on student tuition more than funding from the state. Many believe that this shift represents a move towards complete privatization of higher education in the United States. Around 80% of all university and college students in the United States enroll in public institutions. Some of the most prestigious public institutions include the University of California at Los Angeles (UCLA), the University of Virginia, the University of Michigan, and the University of Texas at Austin.

Private Institutions

The more prestigious universities in the United States are private institutions. These include Ivy League universities such as Yale and Harvard. While tuition is substantial for these institutions, often it only accounts for a small percentage of the university’s total operational costs, which may include staff salaries and benefits, campus facilities, research facilities, and scholarships. For instance, in the 2010 fiscal year, Yale reported that student fees only accounted for 8.6% of the institution’s operating costs. Other sources of funding for private institutions include private and non-profit organizations, investment income, and private donors including alumni. Research drives a substantial percentage of a university’s revenue and profits.

Funding from Corporate Sources

Both public and private tertiary institutions rely on funding from private sources. These sources often have a stake in the area of education offered to students. For instance, the University of Maryland, a public university, receives funding for a cyber security specialization program from Northrop Grumman, a global security company. At Ohio State, IBM offers support for a data analytics program. At the State University of New York, The College of Nanoscale Science and Engineering receives millions of dollars from the private sector. Professional schools, including law, dentistry, and medical schools are also likely to receive funding from corresponding private organizations.