In Indiana, for example, state funding incentives have prompted institutions to improve degree completion and the success of at-risk students. Recently, the state decided to start rewarding successful remediation strategies and programs that align with the needs of the state’s economic development.
The faster students get past remedial courses and complete their degrees, the more money they save. And if they are well equipped for the jobs available, the better they’ll be able to pay down student debt.
Performance-based funding dates back about 30 years, but it used to be tied largely to inputs such as student enrollment. Now it’s shifting to outcomes.
“[States] have built on the lessons learned.... [Performance-based funding shows] considerable promise in a handful of states doing it in a strategic way,” including Pennsylvania and Tennessee, says Daniel Hurley, director of state relations and policy analysis at the American Association of State Colleges and Universities.
