By Laurel White
Federal and state budgets that use “equity-based” funding principles for higher education could be the key to addressing achievement gaps for low-income and minority students, according to a new report from UW–Madison researchers.
The report released today by the Student Success Through Applied Research (SSTAR) Lab brings together decades of research about higher education funding and student success to present ways state and federal policymakers can address college and university funding disparities in meaningful ways. It defines “equity-based” funding as government spending decisions that ensure colleges have sufficient resources to meet students’ needs and compensate for historic funding disparities.
Nick Hillman, director of the SSTAR Lab and lead author of the report, says government support for colleges and universities often ends up benefitting the students who need it the least.
“The American higher education funding system is often backwards — students with the least need often attend colleges that spend the most on their education,” said Hillman, who is also a professor in the UW–Madison School of Education’s Department of Educational Leadership and Policy Analysis. “Public policymakers are increasingly concerned about this paradox.”
Hillman co-authored the report with Amberly Dziesinski, research analyst at the SSTAR Lab, and Eunji You, graduate assistant in the SSTAR Lab.
The authors say policymakers are paying more attention to the effects of higher education funding models as data about student success continue to show a strong link between funding cuts and things like lagging graduation rates for minority and low-income students, compared to their higher-income peers.
“While there is growing research and public policy interest in funding disparities and their effects on students, a major unanswered question is how states and the federal government might go about addressing these disparities,” they wrote in the report. “Our goal in this report is to synthesize academic research and theories to help explain why money matters in higher education and how policymakers can address funding disparities in meaningful ways.”
The report breaks the issue into the three sections: an explanation of how finances play a role in supporting student success, an overview of existing state and federal funding models, and a summary of potential “equity-based” funding models.
The proposed models for policymakers include these guideposts, among others:
- Ensure institutions serving low-income and minority students have the financial resources they need to overcome historic disparities.
- Ensure stakeholder groups most affected by funding decisions are involved in (re)designing funding policies.
- Ensure funds help institutions promote a culture of improvement by supporting professional development and ongoing assessment.
- Ensure administrative processes to receive or use funds do not limit institutions participation.
- Ensure funds are tied to measurable results that are transparent, achievable, and based on mutual support among stakeholders.
The authors argue states or the federal government adopting such measures could make a critical difference for American students pursuing higher education.
“State and federal funding models that incorporate equity-based funding principles are likely to help address funding disparities and create a fairer and more effective system of higher education finance,” they wrote.
The project was supported by the Bill & Melinda Gates Foundation and the Joyce Foundation.
The SSTAR Lab is a research-practice partnership embedded in the Division of Enrollment Management. Its research focuses on issues related to college opportunity and student success. The lab’s mission is to produce and elevate practical research aimed at reducing barriers, improving equity, and supporting student success in higher education. In 2023, the lab launched a new project to connect Native students with financial support for postsecondary education.
Hillman also consistently serves as a national expert on financing higher education, including student loans and government debt relief.
Note for media: The report authors are available for interviews about the report and related issues. Please contact Laurel White at laurel.white@wisc.edu for more information.