States are increasingly using workforce-oriented performance-based funding (PBF) to fund higher education and incentivize colleges and universities to improve students’ post-graduation outcomes. In this study, we use detailed, up-to-date data on workforce-oriented PBF policies in the United States combined with publicly available College Scorecard data to estimate the effect of PBF on students’ debt-to-earnings ratios and loan default rates. We find workforce-oriented PBF has minimal effects on students’ ROI and loan default except at HBCUs, where we find that workforce-oriented PBF had a statistically significant, negative impact on student debt.
