College Finance & Operations


College Finance & Operations

America spends nearly $700 billion a year on higher education, including paying instructors, funding research, keeping the facilities running and much more. At public universities, the biggest chunk of this comes from taxpayers, who deserve accountability for their money. So do students and their families, who fork over tuition and fees, and a fast-growing additional amount for room and board. At private, nonprofit institutions, the proportions are reversed, with more money coming from students than from taxpayers.

America spends nearly $700 billion a year on higher education, including paying instructors, funding research, keeping the facilities running and much more. At public universities, the biggest chunk of this comes from taxpayers, who deserve accountability for their money. So do students and their families, who fork over tuition and fees, and a fast-growing additional amount for room and board. At private, nonprofit institutions, the proportions are reversed, with more money coming from students than from taxpayers. Endowment investment returns are another important funding source for higher education institutions. 

For context, government spending on higher education exceeds federal subsidies to any other industry, including fossil fuel and farming. On top of that, higher education institutions collectively owe a quarter of a trillion dollars’ worth of debt and have been borrowing more than $40 billion a year more. 

These are big, big numbers. To show their impact, keep in mind that American families are increasingly struggling to afford tuition and fees that rose 25 percent faster than inflation in the last decade.

This makes investigating how colleges and universities spend this money one of the most important watchdog tasks for any education reporter. Readers, viewers and listeners want to know: Why do these costs keep rising so much faster than median family incomes? Are particular universities and colleges  spending responsibly and safeguarding their assets for the future? Is one school or another in financial trouble and in danger of closing?

Telling these crucial stories doesn’t necessarily require special expertise in finance or high-level math skills —  just the same thorough research techniques and healthy journalistic skepticism as covering anything else.

After all, colleges and universities are just like any other human institutions, run by people whose motivations range from idealism to self-interest. Many try to hide embarrassing financial information or even corruption; large, public universities, for example, often hide high salaries paid to endowment managers by spinning off private foundations not subject to public-records laws.

This Topics page will walk you through tools and techniques that can help you scale those walls to help your readers understand the $700 billion question of how colleges and universities manage — or mismanage — themselves. 

Updated May 2021


History and Background: College Finance & Operations

Little has changed regarding the financial underpinnings of American higher education in the nearly 400 years since Rev. John Harvard gave his library to what would become known — in commemoration of his generosity — as Harvard College. That private contribution supplemented funding from the Massachusetts Bay Colony, and while Harvard would eventually become independent of the government, most universities and colleges are still supported by a combination of tuition and private and public funding.


Glossary: College Finance & Operations

Auxiliary Services: Dining plans, dorms, convenience stores and other amenities that are increasingly important sources of revenue for universities and colleges. 

Bond Rating: A measure indicating a college’s ability to pay back the money it has borrowed from those to whom it has sold bonds, typically tracked by Moody’s and Standard & Poor’s. Ratings range from the top ranking of AAA to the lowest, CCC-.


The Role of Endowments

Those vaunted multibillion-dollar university and college endowments that get so much attention ($630 billion in total at the 774 institutions that report their endowment performance to the annual NACUBO-TIAA Study of Endowments) are worth a closer look. For one thing, only 13 institutions are in the $10 billion-or-more club; the median endowment is about $144 million. Nearly four in 10 have $101 million or less.


Decoding Financial Aid’s Impact on College Price

Hidden deep inside College Navigator is a particularly helpful clue to a university or college’s financial health: the proportion of its entering students who get institutional financial aid. At about 300 colleges and universities nationwide, all first-year students get institutional financial aid, evidence at wealthy institutions of admirable generosity, and at less-well-resourced ones, of potential desperation.


How to Investigate a College’s Spending Trends

By definition, university finance and operations data is scattered among myriad sources, including everything from financial audits to enrollment reports and financial aid disbursements. There are also important and reliable sources of aggregate national data that can help put an institution’s individual performance into context.

Combine these numbers and they will often lead you to universities and colleges that, despite enrollment declines, have kept hiring, building and spending.


The Other Kind of College Debt

While much of the attention about higher education borrowing is focused on student loans, universities and colleges have taken out extensive amounts of debt and collectively owe about a quarter of a trillion dollars, according to the Moody’s bond-rating agency. 

Debt at individual private institutions is also listed on their Form 990s (Part X, Line 20: “Tax-exempt bond liabilities”); most higher education debt is in municipal bonds.


National Association of College and University Business Officers

NACUBO publishes an annual survey of that year’s estimated “discount” on sticker price by private colleges that allows you to estimate net prices that families actually pay out of pocket. In conjunction with the Common Fund, NACUBO also publishes an annual estimate of the gain and level of every college’s endowment.


Trends in Pricing

The yearly report from the College Board, usually issued each October, is considered one of the most up-to-date summaries of average college net and sticker prices. Be aware, however, that there seems to be a disconnect between the net price numbers and trends published by the federal government and the numbers and trends published by the College Board. So be sure to check both because they sometimes diverge and will lead to opposite conclusions.

Key Coverage

For Poor, Leap to College Often Ends in a Hard Fall

The growing role of class in academic success has taken experts by surprise since it follows decades of equal opportunity efforts and counters racial trends, where differences have narrowed. It adds to fears over recent evidence suggesting that low-income Americans have lower chances of upward mobility than counterparts in Canada and Western Europe.

Key Coverage

13th Grade: Older, Returning Students Strain Florida’s Community and State Colleges

There are a lot of people in Florida going through what Pepper Harth is going through. Remedial classes in math, reading and writing are seeing a surge of students at Florida’s 28 community and state colleges — schools where all students are welcome as long as they have a high school diploma or G.E.D. From 2004 to 2011, Florida’s remedial education costs for both students and schools ballooned from $118 million to $168 million. 

Key Coverage

Student-Loan Delinquencies Now Surpass Credit Cards

Of the $956 billion in student-loan debt outstanding as of September, 11 percent was delinquent — up from less than 9 percent in the second quarter, and higher than the 10.5 percent of credit-card debt, which was delinquent in the third quarter. By comparison, delinquency rates on mortgages, home-equity lines of credit and auto loans stood at 5.9 percent, 4.9 percent, and 4.3 percent respectively as of September. 


Student Debt and the Class of 2011

We estimate that two-thirds (66%) of college seniors who graduated in 2011 had student loan debt, with an average of $26,600 for those with loans. The five percent increase in average debt at the national level is similar to the average annual increase over the past few years. Also similar to previous years, about one-fifth of graduates’ debt is comprised of private loans. 

Key Coverage

No Income? No Problem! How the Gov’t Is Saddling Parents with College Loans They Can’t Afford

A joint examination by ProPublica and The Chronicle of Higher Education has found that Plus loans can sometimes hurt the very families they are intended to help: The loans are both remarkably easy to get and nearly impossible to get out from under for families who’ve overreached. When a parent applies for a Plus loan, the government checks credit history, but it doesn’t assess whether the borrower has the ability to repay the loan. It doesn’t check income. It doesn’t check employment status.


Debt, Jobs, Diversity and Who Gets In: A Survey of Admissions Directors

At a time of increasing national concern about debt levels of college students, a plurality of college admissions directors in a new survey by Inside Higher Ed indicated that current average loan volume for undergraduates is reasonable — and 22 percent of all admissions directors and 28 percent of those at private colleges would be comfortable with the average student debt being even higher than it is now. 

Key Coverage

A Disruption Grows Up?

Competency-based education could be a game-changer for adult students, probably more so than MOOCs. Yet despite the backing of powerful supporters, colleges have been reluctant to go all-in because they are unsure whether accreditors and the federal government will give the nod to degree programs that look nothing like the traditional college model.

Key Coverage

Too High a Price?

Grinnell’s discussions follow closely on the heels of an announcement this summer by Wesleyan University that it was moving away from need-blind admissions, saying that if the college could not generate enough money to cover financial aid, it would consider students’ financial need in some of its decisions (possibly 10 percent of the class). The move has generated backlash among students, alumni and others at the university. Grinnell administrators said a policy like Wesleyan’s is on the table.

Key Coverage

Obama, GOP duel over rising college expenses

WASHINGTON – President Obama would make tax credits for college expenses permanent and expand Pell grants for students from lower-earning families. The Republican team of Mitt Romney and Paul Ryan would emphasize the need to curb rising tuitions and federal education spending that are burdening families and the government.

Key Coverage

Parking Pros: UT Far Exceeds City in Tickets Issued, Revenue Returned

Each year, UT’s parking department issues twice as many tickets as the city where it is, and it compels nine out of 10 violators to pay the fine. That adds up to about $1.2 million in revenue each year.

University parking data examined by the News Sentinel reveals those details and other glimpses into the habits of thousands of campus drivers and the sweeping organization keeping them in check.
What time of day are drivers most likely to get a ticket? Watch where you park between 10 and 11 in the morning.


Key Coverage

Teacher’s Wages Garnished as U.S. Goes After Loan Default

Lawyers drained Linda Brice’s bank account and seized a quarter of her take-home pay, or more than $900 a month. Brice, a first-grade teacher and Coast Guard veteran, begged for mercy, saying she couldn’t afford food, gas or utilities.

Brice’s transgression: she defaulted on $3,100 she had borrowed more than 30 years ago to pay for college. The chief federal judge in Los Angeles took her side, ruling that Brice should pay only $25 a month. The law firm of Goldsmith & Hull – representing the federal government — then withdrew $2,496 from her bank account. 

Key Coverage

Budget Disparity Growing Among NCAA Division 1 Schools

While most higher education reporters tend to steer clear of the sports side of universities, there can be compelling finance stories in this part of campus life. “Major-college athletics departments increased the amount of money they generate by nearly $190 million in 2011, but they increased their spending by more than $267 million,” this article reports. So, how do colleges cover that difference in costs? 

Key Coverage

Taxpayers Fund $454,000 Pay for Collector Chasing Student Loans

How’s this for a startling opening sentence: “Joshua Mandelman made $454,000 in a single year as a student-loan debt collector — more than twice the pay of the U.S. secretary of education.” The article offers a revealing look at “guaranty agencies,” a little-covered part of the higher education beat that can contribute significantly to costs. 

Key Coverage

Football Fails Profit Test as Students Pay $1,000

Rutgers adds $1,000 in fees to student bills to cover costs of football program. “Rutgers funneled $28.5 million from the university budget and student fees into sports, the most among 54 U.S. public universities in the biggest football conferences, based on data compiled by Bloomberg.” The site also posts the list for these schools. 

Key Coverage

Federal Regulations Are Not Making College More Expensive

Higher education expert Kevin Carey attempts to debunk a belief often touted by policymakers, administrators and critics. He concludes that “The worst thing about this whole conversation is that that there’s a much stronger argument to be made that rising college prices are a function of too little federal regulation, not too much.”  

Key Coverage

Executive Compensation at Private Colleges

Each year, The Chronicle of Higher Education publishes lists based on its analyses of how much the presidents of public and private colleges are paid. The list for public colleges also is accessible through this link. 

Key Coverage

180 Private Colleges Fail Education Dept.’s Latest Financial Responsibility Test

Every couple of years, the federal government issues an analysis of the financial strength of colleges. “Financial-responsibility scores, which are derived from the audited financial statements that colleges submit annually to the department, are supposed to offer a broad measure of colleges’ financial health. By placing restrictions on failing programs, the department seeks to protect students and taxpayers from colleges at risk of financial collapse.” 

Key Coverage

Maintenance Over Management: A Survey of Business Officers

This survey of important campus administrators including business officers and admissions officers reveals some interesting trends. “[A]bout 60 percent of all respondents to the survey disagreed or strongly disagreed that “my institution can make additional and significant budget cuts without hurting quality.” 

Key Coverage

Lost in Translation

EWA 2012 National Reporting Contest winner. Unscrupulous Chinese firms promise families and college- bound students from the mainland admission to prestigious American universities provided they pay large fees. What they get in return varies, with worst-case scenarios including living miles from the U.S. campus and thousands of dollars of unforeseen bills. Yet because of U.S. colleges’ appetite for the tuition foreign students pay, fixing the problem isn’t easy.

Key Coverage

The Business of Higher Education

EWA 2012 National Reporting Contest winner. The relationships between pharmaceutical companies and academe, the aggressive enrollment tactics at for-profit schools, and applied science competitions to beef up New York City’s tech prowess are just some of the topics covered in this multi-article series on the apparent and hidden costs of running a university.  

Key Coverage

The Best Class Money Can Buy

“Over the past twenty years, often under cover of the euphemisms with which the industry abounds, enrollment management has transformed admissions and financial aid, and in some cases the entire mission of a college or a university,” notes this classic analysis of a key part of the business of universities. “Borrowing the most sophisticated techniques of business strategy, enrollment managers have installed market-driven competition at the heart of the university.”