A National Analysis of the Impact of Performance-Based Funding on Completion Outcomes Among Underserved Students

Abstract

The majority of states in the U.S. have adopted a performance-based funding (PBF) policy, but we know very little about how PBF adoption affects completion outcomes among underserved subgroups of students or whether specific design elements of PBF policies exacerbate inequities facing traditionally disadvantaged students. In this study, we show that high-dosage PBF policies had a negative impact on bachelor’s degree production among racially minoritized students but a positive impact on bachelor’s degree production among white students. We also report a positive impact on bachelor’s degree production among adult students when the PBF policy included a targeted incentive for graduating adult students, suggesting that PBF policy design represents a critical but understudied area of study with implications for underserved students.