How Much Do Private Colleges Rely on Auxiliary Revenue Sources?

In my last post, I broke down four key revenue sources that colleges typically rely on to balance their budgets. Each of the sources (tuition dollars, auxiliary revenue, state funding, and endowment/donations) is likely to take a hit during the next academic year. But auxiliary revenue from sources such as housing, dining, and other on-campus events is most at risk. Even if many classes return to campus in the fall, it will be with fewer students on campus at any given point.

These auxiliary revenues are especially important for small, residential private nonprofit colleges. These are the types of colleges that I worry will close if they cannot return as normal in the fall, and colleges that house a larger share of their students on campus are at greater risk than colleges with fewer students living on campus. Some colleges will likely try to get closer to normal housing density by allowing multiple students in a dorm room and treating them as a family unit for health purposes, but this also requires additional testing, tracing, and cleaning expenses.

To get a sense of which private nonprofit colleges rely heavily on auxiliary revenue sources, I pulled data on gross (not net) revenue from the Integrated Postsecondary Education Data System (IPEDS) from Fiscal Year 2018. I created a spreadsheet with total revenue, tuition revenue, auxiliary revenue, and the share of revenue from tuition and auxiliary sources. Please note that there is some ambiguity in the definition of auxiliary revenue, so some of the differences across colleges could be driven by differences in how colleges classify revenue. The figure below shows the distribution of auxiliary revenue reliance among colleges that reported any auxiliary revenue in FY18.

To provide an example, the now-closed Green Mountain College in Vermont earned $15.41 million in total revenue in FY18, with $8.78 million (57%) coming from tuition and $4.69 million (30.5%) coming from auxiliary sources such as housing and dining. Only 40 colleges received more than 30% of their revenue from auxiliary sources, and these tend to be small liberal arts colleges or religious seminaries. Most colleges with on-campus housing received between 10% and 25% of their revenue from auxiliary sources, which is still an important part of the budget but not quite as crucial as smaller colleges.

You can download the spreadsheet here.

Author: Robert

I am an a professor at the University of Tennessee, Knoxville who studies higher education finance, accountability policies and practices, and student financial aid. All opinions expressed here are my own.

9 thoughts on “How Much Do Private Colleges Rely on Auxiliary Revenue Sources?”

  1. But isn’t most of the money spent on the enterprise itself, dorms, etc. can we tell how much is used in operating budget for say, instructional costs? At my CC none is.

    1. Generally, yes. But some costs exist regardless of whether residence halls are full, so losing that revenue means that there is a sudden loss that needs to be covered.

      1. But it can’t be covered out of the operating budget. College could employ some of staff in another role but at this point does not have the money. My CC came to foundation for money, but we said no. For fall it looks like they can make payments on loans (bonds). We converted all rooms to singles and it appears we will fill them. We will see. Other aux enterprises like book store are not in college budget either. Not sure you can point to aux ent. as revenue source for public colleges.

  2. I’m a little confused — this data set is missing many, many colleges and universities.
    Where are the rest of them?

  3. Okay, I get it — PRIVATE colleges. Why not include PUBLIC schools are well? Thanks!

    1. I stuck with private colleges because these are the institutions at risk of closure. Publics will have a difficult time getting through, but they can’t close without legislative approval in many cases.

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