<p>The enormous endowments (financial funds built up over time) at HYP and MIT cover most of the cost of educating undergraduates. They pay for professors’ salaries, huge library staffs, etc. HYP/MIT have huge endowments per student which enable them to spend a lot more per student than places like Northwestern, Texas, UPenn or Michigan can. </p>
<p>The other source of money is research funding. The Ivies + other elites get hundreds of millions of dollars of federal dollars for research. However, most of that money goes towards research, not for undergraduate education. But research per student does matter in the sense that students have access to research opportunities. Caltech, Yale and MIT lead in terms of the amount of research funding per undergraduate.</p>