Outcomes-based funding uses public money to encourage colleges and universities to increase the numbers and percentages of students who complete their degrees and certificates.
This model funds institutions based on how well they do at ensuring students make academic progress from year to year and on year-over-year increases in the numbers of graduates. By focusing on—and funding—student success, public institutions can contribute to national increases in educational attainment.
“Lumina believes colleges and universities need a better road map for responding to the increased financial emphasis state policymakers place on students actually finishing college.”
JAMIE MERISOTIS
President and CEO of Lumina Foundation
When funding is based on student outcomes, colleges focus more on helping students succeed in their programs of study. With this form of funding, state policymakers send clear messages to colleges and universities that more must be done to ensure students who enroll in college, especially students who are Black, Hispanic, and Native American, graduate—and graduate on time.
Research suggests public funding tied to student outcomes such as on-time degree completion can lead to changes in institutional climate and behavior that benefits students. Thoughtfully designed funding models can help states create environments in which institutions are given financial incentives to produce fairer outcomes for all students, particularly students from low-income families.