What Does a College’s Budget Look Like?


There are many different costs associated with running a college. Colleges, like any other organization, need a budget to make sure their costs stay on the right path. All colleges have a specific amount of funding coming in and they have to spend it appropriately. However, chances are you don’t really know what your college spends your tuition on. After all, your tuition bill doesn’t exactly come with an itemized receipt. If you’ve ever wondered what your college tuition pays for, here are the things you might want to consider.

What Does Your College Tuition Actually Pay For?


Direct Costs of Education

There are some educative costs that have a much more direct impact on the education process itself. When you go to college, for example, you expect that your tuition will pay for the salaries of the people who are teaching you.

For every $100 of your tuition, $61.46 on average goes to these more direct costs of education. Those direct costs of education look like this on average:

  • $15.81 – Salaries
  • $11.47 – General Instruction Expenses
  • $9.61 – Auxiliary Student Enterprises
  • $8.26 – Academic Support
  • $8.15 – Institutional Support
  • $4.75 – Student Services
  • $3.41 – Grants and Financial Aid

As you can see, this includes everything from payment for the teaching process to academic support structures that help students grow and learn. These are the kinds of things that you probably think about when you think about a collegiate budget, and on average, colleges spend 61% of their money on it.

Indirect Costs of Education

So, if colleges are spending around $61.46 of every $100 tuition dollars on direct education costs, where does the rest go? There are also indirect costs of education that factor into the ways in which your educative process manifests.

The rest of the tuition money, which is $38.54 of every $100 on average, goes to indirect costs that are not outside of the traditional classroom experience. That includes all of these areas:

  • $15.58 – Hospitals and Healthcare
  • $11.66 – Research
  • $6.25 – Other, Including Taxes and Liabilities
  • $4.52 – Public Services
  • $0.53 – Independent Operations

Some of these areas do actually function as teaching areas; working in a hospital, for example, can be an integral element of a medical student’s education. However, these are all outside the traditional range of education and may contribute to your education in other ways. Even taxes and liabilities play an important role in this process by fulfilling an educative organization’s legal duties.

Tuition As a Percentage of Revenue

One thing that you may want to look at is the concept of tuition as a percentage of revenue. You may not have known this, but tuition actually isn’t the main source of a higher education body’s revenue stream. Public education organizations typically receive government grants, while private organizations may receive endowments.

However, over the last 20 years, tuition costs have risen dramatically and have made up more and more of the percentage of public organizations’ revenue. In 2000, tuition was only around 29.2% of a public organization’s revenue stream. However, fast-forward to 2018, and on average, it’s 46.6%. This also corresponds to around a 25% increase in tuition in the last decade.

Conclusion

This information isn’t always actionable; you might not be able to do much other than talk about this information when you discuss college tuition costs. However, it is interesting to see how tuition costs have changed over time. Remember that when you’re looking into college, especially if you’re talking to leadership about changing the tuition structure.