Full text can be accessed at the following link http://link.springer.com/chapter/10.1057/9781137345783_9This chapter discusses (current) modalities for funding public higher education in Tanzania, as well as related challenges and prospects using as a reference point the University of Dar es Salaam — Tanzania’s oldest and largest public university — in the absence of data from other public universities. The major thesis of this chapter is that the current modalities of funding public higher education are unsustainable and unrealistic in the wake of the surging demand for higher education. Alternative sustainable models and strategies of financing public higher education — including establishing a higher education development/investment bank — are urgently needed to achieve financial sustainability. This chapter further argues that while the government has the responsibility of funding public higher education, since it is also a beneficiary, its financial ability to fund both public and private higher education, as is the practice (or malpractice) now, is limited because there are too many competing demands for government funds or because higher education is not a priority, or both. The situation calls for new and eclectic funding models.