Lab fees attached to tuition bill. Anything over the designated amount is out of pocket or sponsored by a third party. So the cost is split over 3-4 students. At least that is how it works where I work.
. This caps the cost. We keep the funded parts when done if possible.
State law here caps the fees to around 60$ per student per class unless your at a private school. This is done to contain tuition costs. No one wants a school to hide their tuition costs in lab fees.
Shop access would be free, as we already have a machine shop for research and teaching purposes. So the student watches a series of videos on shop practice before gaining access. 3d printing is free or at materials cost depending on the type of printing. An excessive materials project would be curbed by budget rules on the shop costs.
Large grants to an individual professor or group may come with incentives for community outreach or to somehow involve undergraduate students in their work.
Team contest based activities go to a different funding source. So the events like the mini race cars are not for grade, but are used for teaching purposes. Local corporations tend to enjoy funding such things as a means to meet motivated potential employees or as an alumni gift.
Never underestimate the parents/students/ staff ability to scrounge parts if they are in a technical /manufacturing town.
One person's dead lawn tractor may provide an 18 horsepower engine for a race car. By the time the students get done with it, it is ultra reliable, producing 22-25 Horsepower, has an ECU and Telemetry. It will be optimized for low fuel consumption for a limited fuel contest if not racing
The team will have presentation on it for potential sponsors and will probably snag a marketing student from the business school to tune up their presentation. They will find a way to get supporters and the marketing team to events on their own dime.
The team will have established a training group to help each other keep their grades up and to train incoming members.
Do this over ten or twenty years and it becomes quite an activity with a nice shop and knowledge base.
The one thing I would love to do but can't is join the large scale rocketry team. NASA comes up with a very interesting but tough problem each year. For example: Achieve an apogee of precisely 5000 feet using a solid rocket motor when carrying X kilograms of payload. They are given budget for one flight engine and one test engine. That's it.
We do have externally reviewed, audited, internal budgeting practices. I'm not going be allowed to buy a team a bar of solid platinum just because I want to.
Teams also score higher if they do outreach to local schools.
Steve