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After the victory of the People's revolution in 1921 the most promising students were sent to Russia or other foreign countries for further studies. In 1926, 40 Mongolian students went to Germany and France for higher education and they became the first Mongolian intelligentsia. The first Mongolian higher education institution, the Mongolian State University was founded on 5th May 1942. Its first academic year commenced on 5th October 1942 with 93 students in three faculties and 57 students on graduate course. Seven departments such as veterinary science, biological science, mathematics, physics, organic chemistry and non-organic chemistry functioned as the three founding faculties of the University at that time. The first 35 graduates from the University were awarded higher education diplomas in 1946. Later, in 1951, the teachers' training faculty was reorganized into the State Pedagogical Institute with 4 faculties, 8 teachers and 212 students. Now it is the State Pedagogical University.

The faculty of zoology in 1958 became an independent Agricultural Institute. The medical faculty became the Medical Institute in 1961. By 1966, the Mongolian State' University had a Technical Institute with 5 faculties and 13 departments, which later became a University in its own right. The Russian language faculty took its own place in 1979, among others. Today there are more than 10 State Universities and institutes financed by the Government. From 1991 the first private higher education institutions such as "Mongol business", "Mongol Knowledge", "Shikhikhutag", "Shonkhor", "Otgontenger", "Orkhon" and others opened. State subsidised scholarships totalling 650.9 million tugrig for 24,560 children from herder families, civil servants and socially vulnerable groups studying at universities, institutes and colleges.

As part of "Year for Students", work places were created to provide 371 students with part-time or full-time employment. The first medical clinic for students, financed by the Department of Health Insurances, opened its doors in March 2003. Students from both state-run and private universities and colleges benefit from the service and receive diagnostic and preventive treatments. In the new academic year of 2003-2004, 22,000 new students entered more than 70 state -run and nearly 120 private universities and colleges, as well as 30 vocational training schools. In the same academic year, Mongolia sent 229 undergraduate and post -graduate students to 14 countries by way of inter-governmental agreements. As of 2003, there were 584 foreign students studying in Mongolia, a 3 fold increase from 3 years ago.