Negative Findings on Performance-Based Funding

Two newly released academic research papers identify negative consequences linked to states' performance-based funding formulas.

So far 35 states tie some funding for public colleges to metrics like graduation rates or degree production. And the Higher Education Act rewrite the GOP is advancing in the U.S. House of Representatives also includes aspects of performance funding by requiring that 25 percent of students at minority-serving institutions must complete in order for those colleges to be eligible for some federal funding streams.

Research findings about the effectiveness of state-based performance funding so far have been mixed. But the two new studies add to a growing amount of research that indicates the policies may not work or have unintended consequences, with some of those problems being linked to design flaws.

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