For Immediate Release: April 16, 2023

Contact:
Tony Pals, tpals@aera.net
(202) 238-3235, (202) 288-9333 (cell)

Marla Koenigsknecht, mkoenigsknecht@aera.net
(202) 238-3233, (517) 803-1591 (cell)

AERA23 Study Snapshot: Evaluating the Impacts of Performance Funding and Promise Programs on the Enrollment of Low-Income Students

Study: “Evaluating the Impacts of Performance Funding and Promise Programs on the Enrollment of Low-Income Students”
Authors: Amy Li (Florida International University), Yimeng Liu (Florida International University)
Embargoed until: 12:01 a.m. CT Sunday, April 16

This paper will be presented at the place-based component of the AERA 2023 Annual Meeting. 
Session: Equity, Effectiveness, and Expenditures, Oh My! The Landscape and Outcomes of Performance-Based Funding Models
Date/Time: Sunday, April 16, 4:40 p.m. – 6:10 p.m. CT

Main Findings:

• Low-income student bonuses in 26 states that operated performance funding policies had no effect on the number of first-time, full-time Pell Grant recipients or on the percentage of first-time students receiving Pell Grants at public, four-year universities. However, these bonuses did increase the average amount of Pell Grant aid to first-time, full-time students by 0.7 percent.
   
• Among institutions affected by one of three statewide promise program that required students to demonstrate financial need, there was a 9 percent increase in first-time, full-time Pell-eligible students two to 12 years after implementation of the program. The percentage of students receiving Pell Grants increased by 3.9 percentage points, although there were no changes to the amount of the average Pell Grant award.

Details:

• Found in the majority of states, performance-based funding polices shift the funding formula for public institutions of higher education from enrollment-based to outcomes-based, commonly including retention rates, credits completed, graduation rates, and degree completions. Using data from 2007–08 to 2019–20, the authors studied 26 states that provided extra funding to institutions for performance outcomes related to low-income students. 
   
• Increasingly popular in the past decade, promise program scholarships reduce out-of-pocket costs a student must pay to attend college, emphasizing place of residence as an important criterion for eligibility—students must attend high school in a certain school district or attend a specific college or one in a set of colleges to quality for the scholarship. Several programs require demonstrated financial need.
   
• The authors examined whether the enrollment of low-income students in public four-year colleges changed in response to the implementation of a state performance funding policy that incentivized low-income enrollment or a state promise program that had a need-based requirement.
   
• The findings suggest that low-income student bonuses in institutional performance funding policies have no effect on the number of first-time, full-time Pell Grant recipients or on the percentage of first-time students receiving Pell Grants. However, the bonuses studied did increase the average amount of Pell Grant aid to first-time, full-time students by 0.7 percent.
   
• Among four-year institutions affected by a statewide promise program that required students to demonstrate financial need, there was a 9 percent increase in first-time, full-time Pell-eligible students two to 12 years after implementation of the program. The percentage of students receiving Pell Grants increased by 3.9 percentage points, although there were no changes to the amount of the average Pell Grant award.
   
• In Louisiana—the one state studied that had both performance-based funding with a low-income student bonus and a promise program with student need criteria—the authors found no changes in Pell-eligible first-time, full-time student enrollment, the percentage of first-time students receiving Pell Grants, or the average Pell award.
   
• “While the performance-based programs we studied did not increase enrollment of low-income students, it is perhaps reassuring that they did not have the opposite effect,” said study coauthor Amy Li, an assistant professor of educational policy at Florida International University. “Our findings suggest that including a low-income bonus can remedy the tendency of institutions to respond to performance funding in ways that limit access for underprivileged students.”
   
• “It also appears that promise programs with need-based criteria have potential to increase enrollments of Pell Grant recipients, which aligns with the goals of these programs to make college more affordable for lower-income families,” Li said.
   
• “Nonetheless, our findings suggest that existing performance funding and promise programs may not be maximizing the benefits of college access for low-income students,” Li added.
   
• The authors call upon states to redouble their efforts to encourage and assist low-income students in completing the Free Application for Federal Student Aid (FAFSA).
   
• “The benefits of promise programs for students with financial need can only be realized if the students are aware of and take advantage of such programs,” Li said.
   
• The authors also suggest that states continue to include metrics in their performance funding programs that incentivize enrollment of racially minoritized students in addition to low-income students, to ensure that institutions continue to enroll historically underserved students in an outcomes-based funding environment. 
   
• For their study, the authors analyzed data on institutional outcomes from the Integrated Postsecondary Education Data System (IPEDS), and used data from the InformEd States data on performance funding policies, including 26 states that provided a low-income student bonus to public universities. They also examined data from a Century Foundation report on statewide promise programs to assess the impact of programs with need-based criteria in Louisiana, New York, and Washington.
   
• The authors note that they cannot completely rule out other policies and programs as contributing to the Pell Grant increases in states with promise programs.

To request a copy of the working paper, or to talk to the study author, please contact AERA Communications: Tony Pals, Director of Communications, tpals@aera.net, cell: (202) 288-9333; Marla Koenigsknecht, Communications Associate, mkoenigsknecht@aera.net, cell: (517) 803-1591.

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About AERA
The American Educational Research Association (AERA) is the largest national interdisciplinary research association devoted to the scientific study of education and learning. Founded in 1916, AERA advances knowledge about education, encourages scholarly inquiry related to education, and promotes the use of research to improve education and serve the public good. Find AERA on Facebook, Twitter, LinkedIn, and Instagram.