By Jay Greene, PhD | Heritage Foundation
The federal government provides enormous subsidies to the wealthiest universities in the country.
People may imagine that the bulk of these subsidies assist low-income students in covering the high and rising costs of attending these universities, but that is not what the federal government primarily funds. The largest type of subsidy that wealthy universities receive is in the form of payments for overhead costs on federal research grants.
During fiscal year (FY) 2022, Ivy League universities received $1.8 billion for overhead on government-funded research grants. That represents 84 percent of the total amount of government subsidy those universities received.
Research grants are not subsidies, because every dollar received has to be spent according to the terms of the grant. But for every dollar Ivy League universities receive for research, they charge the government an additional 64 cents, on average, for overhead.