Higher Education grad students explore debate over performance-based funding

Xiaodan Hu
Xiaodan Hu

Performance-based funding afforded to public colleges and universities seems straight-forward enough: Post good results, and pocket the public money to stay in operation.

Yet the reality, says Xiaodan Hu, is anything but.

The assistant professor in the NIU Department of Counseling and Higher Education covers the controversial practice of performance-based funding in her graduate-level curriculum.

“Higher education uses financial incentives to motivate institutions to do better in motivating students to attend and complete college. Thirty-one states currently use performance-based funding, based on measures such as completion rate, workforce job placement, or priority enrollment, such as the percentage of low-income students or STEM majors,” Hu says.

“But even with all of these measures,” she adds, “the current research shows that performance-based funding doesn’t increase institutional effectiveness.”

Some community colleges – Hu’s area of scholarly interest – focus on awarding more certificates over associate degrees. According to current research, others might “deceptively” inflate the count of certificates bestowed, she says, while some might “try to water down the quality of their programs to boost up these numbers” of degrees.

It’s troubling information, she says, in light of the core mission of community colleges to serve and graduate a historically marginalized population of students.

What, then, should higher education do to keep those public dollars coming while also making sure that they accomplish their intended purpose? How can they advance educational equity while also serving as good stewards of the taxpayer? How can they prevent the “rich” schools from getting richer while the “poor” schools get poorer?

Hu posed those questions to her HESA 772: Financing Higher Education students during their Jan. 25 session. The 17 members of the class are all working professionals in the field, pursuing their Ed.D. degrees. Each has at least three years of experience in areas such as admissions, enrollment management, residence life and student experience.

“I said, ‘If you were to create a perfect Performance-based Funding model, what would you do?’ There were many good points,” she says.

“One said, ‘How about we don’t wait for them to prove their performance? How about we give them the money in advance to build up their capacity so that they can improve their performance?’ I think that’s a great idea,” she adds. “The cynical answers are really interesting, such as that financial incentives should be eliminated.”

Many students shared their thoughts via Twitter with the #HESA772 hashtag. Among the tweets:

  • Financial incentives for HE should increase the diversity of students at the institution and make HE accessible and inclusive.
  • Financial incentives for higher education should close the equity gap for marginalized and low-income students and be a funding amount significant enough to drive change.
  • Financial incentives for HE should … serve the needs for students to meet the public good.
  • Financial incentives for HE should be applied in an equitable fashion to support those who need them the most.
  • Financial incentives for higher education should be equitable.
  • Financial Incentives in Higher Education should help ease access to all students, and not those who already HAVE the access.

Although most of Hu’s students are on the Student Affairs side of the business, and a few are even faculty, enhancing their knowledge of public policy and finance is important: It’s critical to for them to understand how legislative initiatives began as experiments, how they fared after implementation and how to avoid repeating any ensuing mistakes.

“They are on the front lines, working with our students,” she says. “And, for many years, students and their parents have worried about graduating without jobs.”

Such concerns are justified – families commit hard-earned savings behind the notion that “a higher degree is related to a higher level of earning,” Hu says – and are only part of complicated equation for students and parents who count on college costs proving worth their investment.

Xiaodan Hu
Xiaodan Hu

Other variables include the gender pay gap, different salaries for different majors and even unexpected consequences in the form of lost wages for students on non-traditional academic paths.

“If you attend a community college and then transfer to a four-year university, you probably won’t be able to finish in four years,” she says. “Research says those students are actually getting an ‘earning penalty’ probably because it takes them longer to graduate.”

Hu also asked her HESA 772 class to ponder possible guidance for students who are dropping out for monetary reasons, a decision that only further impacts their financial lives in the future.

“Every student has their own situation, and most people don’t even have the privilege to try college,” she says. “They’re taking out loans, probably working to support their family at the same time. Some students cannot afford to try things out.”

Responses to her prompt included an honest acknowledgement to students and parents that dispel beliefs “that if you don’t go to college, you’re doomed.” Vocational paths or other post-secondary options “may work better for that person at that moment.”

“And students can always come back, even if they are in the workforce already, to continue their education,” Hu heard. “Our class agreed that that’s one of the best things we can provide to our students.”

While the performance-based funding debate rages on in statehouses nationwide, Hu takes comfort in the knowledge that her students – people actually working in higher education – have the best interest of students at heart.

“What impressed me is that all of our students agree – every single one of them – that educational equity is so important. You can’t create a regressive policy that only benefits the better-off institutions,” she says. “We cannot afford to expand our achievement gap any further.”

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