Samer Hamadeh, Former Vault.com CEO. NYC Volunteer, Stanford Alumni Interview Program.
A school's operating budget pays for professor salaries, buildings and equipment, scholarships, and many other parts of what it takes to run a college or university. It's rare that the tuition money received from students covers this entire operating budget. Most schools actively solicit donations (which builds up the school's endowment) and use those donations (or at least the interest) as well as investment income, revenue from other sources, and tuition in order to pay all of the bills. Ultimately, your tuition is helping to pay professor salaries but it's also helping the college or university to pay its other bills, too.