Move over tuition: 5 surprising ways universities make money

The conversation over the cancellation of student debt is shining a light on how much colleges charge for tuition. The cost to attend college has risen 169% from 1980 to 2019, while pay for young workers is up just 19% over the same time period, according to a Georgetown University report. But tuition, grants and state aid aren’t the only ways universities rake it in. Here’s how higher education institutions are becoming multi-billion dollar entities in this week’s Five for Friday. 

#5: Philanthropy

It’s no surprise that the ultra-wealthy like to put their stamp on universities. Just think about all the buildings with names on them across campuses. In 2018, billionaire Michael Bloomberg donated $1.8 billion to Johns Hopkins University, a record-setting number. And there aren’t many alumni closer to their old stomping grounds than Nike founder Phil Knight, who gave multiple $500 million gifts to the University of Oregon, the latest for a new science complex. Oregon is even dubbed “Nike University” over its close connection with the billionaire. 

#4: Research

Research can be a huge funding source for universities. Northwestern, for example, developed the nerve pain and seizure medication known as Lyrica. The university licensed the drug to pharmaceutical giant Pfizer, which has kept the money rolling in. Northwestern invested nearly every penny it earned into the school’s endowment, and by 2016, it accounted for as much as 18% of its fund. 

#3: Real estate holdings

Real estate is generally viewed as a solid investment. That’s probably why George Washington University has been gobbling up property throughout Washington D.C. over the years. In fact, GW owns so much commercial real estate that it was the city’s 10th highest property tax payer in 2018 and is one of D.C.’s largest landlords. If you include the campus, its property holdings are worth well over $1 billion. It should be noted that GW doesn’t pay taxes on buildings used for education. More than half of GWU’s endowment is invested in real estate and can bring in nine figures per year. 

#2: Stocks

The stock market isn’t just for Wall Street brokers. Former Coca-Cola President Robert Woodruff may have dropped out of Emory University in his college days, but he was still so fond of the Atlanta-based liberal arts school that he donated millions of shares in the company in 1979. The gift is now worth around $5 billion today. Emory is often ranked in the top 25 academic universities in the nation and has one of the biggest endowments in the south. But you might be accused of lacking school spirit if you drink Pepsi on campus. 

#1: Oil Money 

Big oil might not fit the college funding bill until you realize it’s in Texas. The University of Texas leases more than 2 million acres of land to oil companies in the Permian Basin. With oil prices high, the university makes $6 million per day off the land. UT even recently surpassed Yale to become second-richest American university in terms of endowment size ($42.9 billion as of 2021). As long as the oil-rich land remains in demand, UT will likely catch up to No. 1 Harvard in the coming years.