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.
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.
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.