States invest in public higher education in two primary ways: through direct funds to institutions (general operating support) and direct funds to students in the form of state financial aid programs (student grant aid). General operating support is the larger of the two funding categories, totaling $80.8 billion in 2019, while state financial aid allocations totaled $12.3 billion. Such investments inspire critical questions. For example: What happens to student outcomes if a state increases (or decreases) public funding for higher education? What portion of state higher education funding should be allocated to general operating support for institutions (that may mitigate tuition rate increases for all students), and what portion should be allocated to financial aid programs that target low-income students? To what extent do each of these finance strategies impact enrollment, graduation rates, credential completion, and other important outcomes?
With funding from the Joyce Foundation, SHEEO undertook a research project to gain a deeper understanding of the impacts this state investment in higher education has on student outcomes. We examined the historical data and empirical literature on state support for higher education. We found clear evidence that increased financial investments—specifically, increased state general operating and student financial aid—are directly tied to student success in higher education.
These findings suggest that states will not meet their attainment goals or the workforce demands of the modern economy without sustained investment in the public higher education sector. We recommend a number of finance policy solutions that states and the federal government can adopt to support their efforts to reach attainment goals and close equity gaps in degree attainment and college completion.
- Database of research literature on the effects of general operating appropriations
- Database of research literature on the effects of financial aid
As part of this project, SHEEO organized an eight-week webinar series entitled Public Investment in Higher Education: Research, Strategies, and Policy Implications. Every Thursday from February 11, 2021, through April 1, 2021, SHEEO hosted a webinar where researchers presented new original research related to public investment in higher education. Each session featured several papers and a discussant who reflected on the papers and their implications for policy and research.