Income inequality in educational attainment is a long-standing concern, and disparities in college completion have grown over time. Need-based financial aid is commonly used to promote equality in college outcomes, but its effectiveness has not been established, and some are calling it into question. A randomized experiment is used to estimate the impact of a private need-based grant program on college persistence and degree completion among students from low-income families attending 13 public universities across Wisconsin. Results indicate that offering students additional grant aid increases the odds of bachelor's degree attainment over four years, helping to diminish income inequality in higher education. The polarization of American society according to family income is sharper and more apparent today than at any point since the 1920s. The share of

This systematic synthesis examines the intended and unintended consequences of performance-based funding (PBF) policies in higher education. Within this synthesis, we focus particularly on evidence from research studies with strong causal inference designs in an effort to understand the impacts of these policies. PBF adoption is generally associated with null or modest positive effects on the intended outcomes of retention and graduation, but there is also compelling evidence that PBF policies lead to unintended outcomes related to restricting access, gaming of the PBF system, and disadvantages for underserved student groups and under-resourced institution types. PBF policies including equity provisions for colleges that enroll or graduate underserved student groups have been found to offset some of these unintended consequences. Based on this synthesis, we offer policy recommendations and directions for future research on PBF policies, including the need to consider variation in policy design and the broader state policy context.

State-level performance-based funding (PBF) policies are an increasingly common way to allocate funds to public colleges and universities. While a growing body of research has examined whether these policies are effective in improving student outcomes, little is known about how colleges respond to PBF policies. In this paper, we examine whether two-year and four-year colleges subject to PBF change their patterns and allocations of revenues, expenditures, and financial aid. We find limited evidence that colleges facing PBF receive different levels of revenue or reallocate some funds to different expenditure categories. Notably, colleges subject to PBF receive less Pell Grant revenue than colleges not subject to PBF, suggesting potential strategic behaviors targeting students from higher-income families.

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