Where Do Colleges Get Their Money?
The late economist Howard Bowen coined “the revenue theory of costs” which states that institutions raise all the money they can and spend all the money they have. College revenue hails from many sources and typically the money comes from a combination of tuition and fees, state and local appropriations, endowment income, and federal funds. Over the last decade, public institutions have grown increasingly reliant on tuition revenue; whereas tuition as a percentage of revenues at private colleges has declined. Here’s an examination of public, private, not-for-profit, and for-profit institutions comparing and contrasting how their revenues stack up. Which of the three models do you think is the most sustainable?