To date there have been many studies of water system optimization which were focused on the water use performance of industrial, regional, and urban areas from a macro-perspective. However, water system optimization colleges and universities are rare, though the amount of water consumption is huge in higher education institutions. We applied a water extended input–output model to investigate and analyze the water system of Northeastern University. Results showed that the water consumption at Northeastern University is 106.72 m3/year per capita; 74.44% of the total water consumption at Northeastern University takes place in dormitories and other school buildings. In contrast with industrial and agricultural sewage, the pollutants in campus sewage are simple and are easy to render harmless or eliminate. Analyzed results showed that the rate of water recycling is low. In this paper, we present an optimization project for improving water efficiency at Northeastern University. Through measures such as dormitory toilets that reuse washroom sewage, our proposed plan will reduce water consumption per capita by 2.13 m3/year. If our proposed plan is adopted at other higher education institutions whose size is the same as Northeastern University all over the country, 7,842.77 × 105 m3/year of water will be saved, which is equivalent to 3.45 × 106 yuan.