Dive Brief:
- While the data is limited and further study is necessary, a new paper by Seton Hall University assistant professors of education Robert Kelchen and Luke J. Stedrak describes how public colleges may be enrolling fewer low-income students to game state funding formulas.
- Inside Higher Ed reports that across the 1,649-school sample, per-student Pell Grant revenue dropped by up to 2% between 2003 and 2013 in states with performance-based funding, and there was an increase in institutional aid, which indicates schools may be spending more in non-need-based aid to attract students from wealthier families.
- The study only analyzes data through 2013, when most colleges in the sample received just 1-5% of their state allocation based on performance metrics, meaning, while there is more work to be done to figure out the reasons for such financial changes, if colleges are trying to game the system, the results will be more marked now that more states are tying more money to such formulas.
Dive Insight:
The question of whether performance-based funding would create an unintended consequence of motivating colleges to seek out more homogenous cohorts has been a concern all along. Some states specifically write into their formulas that one metric of good performance is the enrollment of a growing portion of underrepresented minorities, first generation, or low-income students. Measuring access is one way to gauge performance without opening the door to unwanted enrollment tactics.
The idea that schools are gaming the system is still in question, of course. The research to date highlights the financial changes at colleges subject to performance-based funding but is not conclusive about why.