Research
We compiled the first longitudinal dataset with detailed state funding information to examine whether different funding strategies for public higher education affect college access and completion, with a focus on outcomes among racially minoritized students. We found no relationships between funding mechanisms and student outcomes at community colleges. However, at public universities, we found that funding strategies with a base-plus component that provide across-the-board increases or decreases to colleges may reinforce already-existing funding inequities. This leads to a system in which racially minoritized students, particularly Black students, face challenges to completing a degree.
State funding for public higher education institutions is crucial in supporting college access and completion, particularly among students from historically underrepresented groups, yet little is known about these mechanisms and how they are affected by financial challenges. This paper provides the first detailed longitudinal typology of state funding strategies, focusing particularly on formula volatility and equity. We find a gradual shift toward funding models that include a combination of base-adjusted and enrollment and performance metrics, along with a growing focus on equity. During recessions, states frequently revert to across-the-board funding cuts, further disadvantaging underresourced institutions.
We compiled the first longitudinal dataset with detailed state funding information to examine whether different funding strategies for public higher education correlate with college access and completion, with a focus on outcomes among racially minoritized students. We found no relationships between funding mechanisms and student outcomes at public universities. However, at community colleges, we found that funding strategies that combine base adjustments and enrollment or performance components may increase enrollment but not completions.
The majority of research on the role and influence of financial grant aid typically focuses on federal aid, even though a substantial portion comes from states. State policymakers typically determine how much of a state’s financial aid allocations will be distributed based on students’ financial need, academic merit, or a combination of need and merit. We examined how need-, merit-, and combo-based state-level financial aid policies relate to students’ enrollment and completion using detailed data on states’ financial aid programs available for first-time entering college students for fiscal years 2004-2020. We found little consistent evidence of a relationship between student outcomes and the amount of aid per recipient, though, we did find practically significant correlations with aid eligibility criteria. Among institutions located in states with combo-based aid, requiring a college entrance exam for eligibility was associated with smaller enrollments and lower graduation rates compared to institutions that did not require the exams (though, this finding was not replicated when investigating requiring exams for merit-based aid).
Administrative burden, or the frictions individuals experience in accessing public programs, has implications for whether and which eligible individuals receive aid. While prior research documents barriers to accessing federal financial aid, less is known about the extent to which state aid programs impose administrative burden, nor how administrative burden varies across aid programs or how it relates to target populations. This study examines administrative burden in 19 state aid programs in Tennessee. We find programs targeting less-advantaged students (technical and community college students) have lower burdens than those targeting more-advantaged students (merit-aid programs, programs available across sectors). The state’s only program explicitly targeting racially minoritized students had the highest burden. We discuss implications for designing more equitable and effective state aid programs.
In this paper, we explore the relationship between community colleges’ reliance on local funding and their total institutional revenue. We find that community colleges’ level of reliance on local funding is negatively related to their total institutional revenue for rural community colleges and community colleges serving an above-average share of low-income students.
This study examines the impact of various types of performance-based funding (PBF) policies on institutional resources across postsecondary institution types. Although 41 states have implemented PBF over time, the design and dosage of PBF policies look very different across PBF-adopting states. We leverage multiple quasi-experimental approaches and find that high-dosage PBF policies had a negative impact on state funding for four-year historically Black colleges and universities (HBCUs) and four-year institutions serving an above-average share of racially minoritized students. We also show that sporadic positive effects of PBF policies on state funding are concentrated primarily among non-minority serving institutions (non-MSIs) and institutions serving below-average shares of racially minoritized or low-income students. Taken together, our findings reveal the unequal impacts of PBF policies and suggest that PBF policy design is an important consideration with critical implications for under-resourced institutions and the underserved students they serve.
Performance-based funding (PBF) policies are an increasingly common way for states to tie funding for public colleges and universities to student outcomes. Yet amid growing concerns about student debt, the potential exists for PBF to affect student debt and ability to repay loans in both intended and unintended ways. In this paper, we use the first comprehensive dataset of PBF policies to examine the effects of PBF on debt and repayment outcomes. We find evidence that PBF policies increased the debt burdens of students who left college without a degree while not affecting the debt of completers.
This study draws upon the first detailed longitudinal dataset on performance-based funding (PBF) to document the evolution and current landscape of PBF in American higher education. We show that while PBF has become increasingly common, states have experimented with adopting, abandoning, and re-adopting PBF over time. We also find a new wave of PBF adoption occurring in the 2010s following the Great Recession. However, PBF remains a relatively weak policy lever with a small share of funds at stake in most states and some states not funding PBF even when it exists in legislation. Equity considerations vary in the student groups they include and less than half of two-year and three-quarters of four-year PBF systems include race when allocating performance funds. Our findings complicate some common characterizations of PBF and offer new insight for researchers examining how PBF policy design shapes student and institutional outcomes.
Thirty-three states have enacted performance-based funding (PBF) that ties public four-year college funding to student outcomes. Research indicates PBF has led to restricted access and increased selectivity. However, we know less about how variations in PBF (e.g., the share of funds at stake and the subpopulations targeted in equity metrics) shape outcomes, particularly at minority-serving institutions (MSIs). This study draws on the most comprehensive PBF dataset and incorporates recent econometric advances to examine how features of PBF shape college access and selectivity. We find some evidence of decreased enrollment among racially minoritized and low-income students at highly selective colleges and MSIs with low-dosage PBF. We find equity metrics are not enough to boost enrollment among targeted subpopulations.
A growing number of states use performance-based funding (PBF) systems to tie appropriations to student outcomes. Yet while many studies have examined the effects of PBF on enrollment and completion outcomes, no research has considered whether PBF affects post-college outcomes. This is of particular importance as more states directly incentivize colleges to improve student earnings and have students major in high-demand fields in PBF systems. We used the first detailed longitudinal dataset of state PBF policies to examine the effects of PBF on student earnings and found modest positive effects for four-year universities and generally null effects for community colleges.
Performance-based funding (PBF) is an increasingly popular higher education policy designed to hold colleges accountable for their students’ academic outcomes. The majority of states in the U.S. have adopted a PBF policy, but we know very little about how PBF adoption affects completion outcomes among underserved subgroups or whether specific design elements of PBF policies exacerbate inequities facing traditionally disadvantaged students. In this study, we examine the effects of various PBF policies on the completion outcomes of historically underserved students.
Performance-based funding (PBF) policies with research incentives have grown in popularity over the years despite little understanding regarding whether they actually work. This study leverages a novel national dataset to examine the impact of PBF research incentives on the research expenditures and total state appropriations among public four-year institutions, with a particular focus on minority-serving institutions (MSIs). We find that PBF research incentives had no impact on research expenditures or the total amount of state appropriations allocated to treated institutions, regardless of MSI status. PBF policies that allowed institutions to self-select or opt into including research incentives as part of their PBF formula had a positive impact on the relative share of expenditures allocated to research and total state appropriations.
This systematic synthesis examines the intended and unintended consequences of performance-based funding (PBF) policies in higher education. Within this synthesis, we focus particularly on evidence from research studies with strong causal inference designs in an effort to understand the impacts of these policies.
As state governments seek to improve the performance of institutions of K–12 and higher education, they often adopt educational policies that have similar names but different characteristics across states and with variations over time within states. Yet quantitative analyses generally examine the absence or presence of an educational policy instead of diving into details such as the dosage or percentage of funding tied to a policy or the specific groups being targeted by the implementation of the policy. The aim of this article is to provide guidance for education policy researchers in constructing and analyzing detailed data that can inform the design of state-level policies, using state performance-based funding policies in public higher education as an example. We also show how to conduct difference-in-differences analyses with continuous treatment variables in order to take advantage of more-nuanced data and better understand the context in which policies are effective (or ineffective).