The Rise of Performance-Based Funding

Performance-based funding in higher education may leave a lot to be desired, but it’s here to stay. The reasons? Growing economic pressures, lawmakers’ demands for accountability, and the belief that a college credential is needed to land a good job. A majority of states now use some form of these models, which allocate a portion of higher-education funding based on how well public colleges meet desired performance goals. The success of performance-based funding, however, is far less certain: Experts are divided over how these models should measure success, and whether they improve student performance. A poorly designed formula can actually hurt students by encouraging colleges to “game” the system, shutting out students who need more academic support. This issue brief, The Rise of Performance-Based Funding, offers college leaders and policymakers practical advice, historical context, case studies, data, and other resources to help navigate the intricacies of this increasingly popular