How does the US fund universities?

Columbia University, USA, is suspended due to funding cuts.

This puts America's top universities, known for their huge financial resources, facing a serious test of their autonomy and financial sustainability.

Since the Great Depression and especially after World War II, the US federal government has invested heavily in higher education, viewing it as a driving force for economic , technological, and defense development.

As of 2023, US colleges and universities spent nearly $109 billion on research and development, of which about $60 billion (or 55%) came from federal government funding.

Unlike countries with national university systems, the US does not regulate public universities at the federal level. Instead, the institutions operate independently, relying largely on a diverse financial network that includes tuition, philanthropy, auxiliary activities, and especially endowments.

Among them, Harvard's endowment stands out with a size of up to 53.2 billion USD by 2024, larger than the GDP of many small countries such as Jordan or Iceland. Other schools such as Yale, Stanford, Princeton and MIT also own funds ranging from 23.5 billion to more than 40 billion USD.

However, these funds, which include federal grants and investment funds, are not flexible sources of money. About 90% of their value is tied to donor terms, and can only be used for specific purposes such as scholarships or scientific research. According to Harvard data, the school's endowment includes more than 14.6 thousand individual grants, each with its own terms of use.

In addition to federal and endowment funding, elite universities also rely on philanthropic donations and tuition. Large-scale fundraising campaigns can raise billions of dollars, but most of that goes toward long-term goals like investing in facilities, expanding programs, or paying for new positions.

The endowment model of elite American universities is far larger than that of the rest of the world. For example, the total endowment of the University of Oxford, when including its 43 colleges, is only about $11 billion, one-fifth the size of Harvard’s endowment alone.

Or Cambridge University, one of Europe's oldest educational institutions, with a net worth of around £2.62bn, which is about the same as that of a mid-level public university in the US.

In contrast, universities in Europe and China rely heavily on state funding and tuition caps. Endowments are often limited and philanthropic campaigns play a much less prominent role than at Ivy League schools in the United States.

Meanwhile, tuition fees only account for a portion of the budget and are a sensitive factor. Universities cannot increase tuition fees arbitrarily due to social and government pressure and the need to ensure access to higher education for students from many backgrounds.

Ancillary revenues such as housing, food and extended educational services are only enough to cover operating costs, rarely creating surpluses to cope with major fluctuations such as budget cuts.

The Trump administration’s cuts or freezes to research funding are having a serious ripple effect. Harvard Medical School plans to lay off staff, close some research facilities, and suspend grants for scientific projects.

Columbia University has imposed a spending freeze. The National Institutes of Health (NIH) is at risk of losing up to 40% of its budget, directly threatening vaccine development, cancer research and public health programs.

Not only elite universities, but also smaller academic institutions, specialized science programs, and local innovation ecosystems could be affected.

The loss of research funding could disrupt international collaboration networks, weaken national innovation platforms and create a lasting gap in high-quality human resource training.

Cam Giang (According to giaoducthoidai)

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