Page 143 - Crisis in Higher Education

114 • Crisis in Higher Education

Sources of funds Uses of funds

Tuition
• 70% students,
parents, Spending
40% family, and • Instruction
friends • Research and
• 30% grants and innovation
scholarships • Service to the
academy
State and local • Outreach and
engagement
government
21% tuition Public university (academic budget) Embedded spending on administration
subsidies
Federal Research
12% research spending

Spending
Endowment determined by
27% and other endowment and
income gift
stipulations

FIGURE 5.4
Sources and uses of fund for public universities academic budgets.

5.4.1 Sources of Funds
The largest source of funds in academic budgets is tuition at about 40%,
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and a critical point is who pays tuition. To begin, Figure 1.2 from Chapter
1 sheds light on how the typical family pays university expenses. Students
pay 27% of their tuition, including student borrowing. Parents contribute
the most at 38%, including parent borrowing. Other relatives and friends
pay about 5%. The total paid by students and their support group is 70%
(27% + 38% + 5%). See Figure 5.4. Students and their support group also
pay for room, board, and books, but these items are ancillary services
that are not part of the academic budget. Grants from federal and state
governments and scholarships account for the remaining 30% of tuition
revenue. Grants from federal and state governments are given directly to
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students. Some tuition scholarships are provided by other entities, but the
majority is provided by the universities either as cash awards from endow-
ments or as tuition discounts. In the final analysis, more than 70% of the