Home / Education / Articles / What do universities do with the billions they receive from the government?

In 2018, federal money made up 14% of all college revenue. About 3.6% of total federal spending went towards higher education investments, according to the US government’s Datalab. Datalab operates under the Department of Treasury and is a public source for federal spending data.

Colleges and universities received $1.068 trillion in revenue from federal and non-federal funding sources in 2018.

The federal government directed 65% of its $149 billion investments to federal student aid which covers scholarships, work-study and loans given to students for their educational expenses.

Federal grants at universities received 27% of the total investment or $41 billion from the federal government in 2018. Grants are a form of financial assistance given to individuals or organizations to fund research and projects that contribute to the public good, according to Datalab.

The last 8% of federal investment in higher education was for contracts. Federal contracts are agreements where the government purchases a good or service from an organization such as a university or an individual for government use. Federal grants often fund university research and development labs.

Embed on your website

Public institutions typically report Pell grants as revenues from federal grants and as allowances that reduce tuition and fee revenue. Private institutions typically report Pell grants as revenues from tuition and fees rather than as federal grant revenue, according to the Department of Education.

Where was the money invested?

Outside of financial aid to help college students pay for educational expenses, government agencies fund research and development through university laboratories and special departments. Medicine, environment, agriculture, and general science and technology are a few examples of fields federal government agencies fund via contracts and grants.

The National Institute of Health (NIH) under The Department of Health and Human Services awarded $41 billion to colleges and universities in 2018. This was the largest higher education investment from any federal department that year. More than half of the funds from the NIH investment went towards federal grants.

The National Science Foundation awarded $11.2 billion to universities, the second largest federal investment in higher education institutions in the 2018-2019 school year. Most of the grant money went towards expanding science, engineering, and mathematics education and research, according to Datalab.

Embed on your website

What schools received the most money?

A little less than half of all federal grant money was for university medical research and development. Biomedical research and research training was the largest funded medical research and development category in 2018, followed by aging research. Harvard University received the largest federal grant: $179 million from the National Institute of Health. Columbia University received the second largest grant, $165 million, invested from the Centers for Disease Control and Prevention.

Embed on your website

Over 30% of federal contracts were dedicated to space research and development projects. California Institute of Technology received $2.4 billion in federal contract funding from NASA. This federal contract with California Institute of Technology was 24% of all federal investments in government contracts with universities.

Embed on your website

Hawaii, Alaska, and Vermont public universities had the largest revenues from federal grant and contract investments per student enrolled in public colleges and universities, according to the Department of Education.

California, Texas, and Michigan public universities were the top recipients of federal grant and contract money in 2018, receiving a quarter of federal grant and contract revenue across all public universities.

Learn more about higher education and which states are the most educated. Get the data directly in your inbox by signing up for our newsletter.

Embed on your website
Revenues of public degree-granting postsecondary institutions, by source of revenue and state or jurisdiction: 2018-19
Total fall enrollment in public degree-granting postsecondary institutions, by state or jurisdiction: Selected years, 1970 through 2019