Top tier institution get a significant amount of their funding from alumni donations. Their motivation is to identify top tier students, provide them with a ne

Top tier institution get a significant amount of their funding from alumni donations. Their motivation is to identify top tier students, provide them with a network of other top tier students, who when they graduate will become leaders in their respective fields. Many of these top tier universities have endowments large enough that they don't need to collect tuition from the students. In fact, many of these universities allow free or reduced tuitions for low income students. (http://www.admissionsconsultants.com/college/ivy_league_finaid.asp http://www.admissionsconsultants.com/college/ivy_league_fina...) Here is the list of endowment per student: http://www.statisticbrain.com/college-endowment-rankings/ http://www.statisticbrain.com/college-endowment-rankings/ Here's the top 5 (per student) University Endowment / Student Endowment Total Enrollment 1 Princeton University $1,857,040 $14.05 billion 7,567 2 Yale University $1,436,384 $16.65 billion 11,593 3 Harvard University $1,304,492 $27.56 billion 21,125 4 Franklin W. Olin College of Engineering $1,096,595 $335.6 million 306 5 Pomona College $942,490 $1.46 billion 1,548 The motivation for alumni to contribute to the endowment after graduation is that the value of their degree is correlated to the ranking/reputation of the university. By contributing to the university, you not only help the university by help yourself. So the economics for top tier universities are not similar to the rest of the colleges.