PFS Shows Promise to Improve Higher Education Outcomes for Disadvantaged Populations

The ability of disadvantaged students to navigate a path to and through college has never been more critical in an era with a broad wage gap based on post-secondary educational attainment. While Pay for Success (PFS) has been deployed effectively in a variety of social policy domains, the movement has largely bypassed the field of higher education. This comes despite the fact that the achievement of longer-term metrics such as a persistence, graduation, and labor market outcomes, rather than student enrollment or other interim measures, are now driving the conversation about the value of education and are increasingly being used as the basis for funding higher education institutions (HEIs).

Third Sector recently completed a PFS feasibility assessment designed to evaluate the appropriateness of PFS for higher education to help heighten the focus on and attainment of these outcomes. With generous support from the Kresge Foundation, we worked with uAspire, a national provider of college affordability and financial aid counseling serving primarily low-income and first-generation students, to develop a preliminary assessment of PFS in higher education. uAspire’s interest in PFS, as with many service providers, stemmed from a desire to find organizations who might be willing to pay for the delivery of their high-quality, evidence-based programming.

Our analysis was anchored by an initial focus on text-based student support services offered by uAspire; however, this work was designed to generate lessons that are broadly applicable to other types of interventions or programs in the college access and success realm. These interventions are critically important given declining financial support for higher education at the state level, which limits the ability of HEIs to offer such interventions using internal resources.

In an effort to bring our findings to the broader stakeholder community, we extended our work by developing a white paper that attempts to distill these lessons for stakeholders interested in exploring how PFS may hold promise for achieving better outcomes for students pursuing post-secondary education.

Our analysis determined that there is a clear pathway for PFS to improve student outcomes through college access and student support services delivered prior to and/or during enrollment in higher education. However, there are several gaps and areas of uncertainty to be addressed prior to bringing a successful PFS project to fruition.

From this analysis, we developed three specific recommendations for organizations interested in exploring PFS as a method for improving long-term outcomes in higher education for disadvantaged students:

Identify jurisdictions ready for Pay for Success: Our analysis determined that the state-level policy context (such as the presence of robust outcomes-based funding formulas for HEIs) and existing relationships matter tremendously in leveraging PFS to scale in higher education and imply a strategy that targets jurisdictions that provide favorable state and system-level oversight and financial incentives for HEIs to value matriculation, persistence, and graduation.

Equip HEIs with the tools and guidance necessary to pursue Pay for Success: The ability to share data necessary to measure outcomes and the capacity to develop precise financial valuations are critical PFS baselines. HEIs lacked clear consensus on the permissible level of data sharing within their institution or between it and other entities. They also lack the expertise to conduct a full-cost accounting of how the various factors related to matriculation, persistence, and graduation affect their bottom line. A process of developing data sharing guidance and financial valuation tools for use by HEIs could help address these challenges.

Conduct PFS pilot projects: Testing Pay for Success in higher education through the development of initial pilot PFS projects allows stakeholders to test operational models and develop proof points to accelerate the engagement process with potential project parties. Given the nascent stage of the field, these initial pilots would likely be philanthropically-funded efforts designed to help develop the evidence base for these interventions and project models and allow the field to iterate on and refine what works in practice for higher education PFS, ultimately leading to future projects that include market-rate return-seeking capital.

PFS holds real promise as a mechanism for helping at-risk students reach their full potential by driving resources towards programs that actually work. Our hope is that the field can build upon this initial work and develop projects that test and iterate on these efforts, and that these initial efforts can help orient more of the government dollars spent on higher education to the attainment of specific outcomes that are proven to have a measurable impact on students’ lives.