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The State of Higher Education Finance During the COVID-19 Pandemic

This past year COVID-19 has completely changed the way education looks.

Funding and programming shifted, and states, students, and professors made major adjustments as a response. Some states were forced to make budget cuts, which impacted programs and policies students rely on. Others were able to maintain funding because of federal stimulus funds. What changes did states make to ensure underserved students & the institutions that serve them remained supported during the pandemic?

Our latest project with the Gates Foundation, State Responses to COVID-19 – Implications for Outcomes-Based Funding and Promise programs, examines how funding for Higher Education programs and policies, like Promise programs and Student Success Funding (SSF), changed due to the pandemic. Our researchers conducted a 50-state policy scan to determine how Promise programs and SSF policies shifted in response to COVID-19. Their findings are presented in these briefs:

Overall, most states adjusted to keep Promise programs intact, while about half of states with SSF suspended the use of the formula. A few key findings can be found below:

  • Though most Promise programs (15 out of 26) adjusted the details of their policy in response to COVID-19, all 26 statewide Promise programs remain intact.
  • Of the 15 Promise programs that made changes, we found 11 programs adjusted eligibility requirements, with many relaxing requirements to maintain access and others imposing additional eligibility requirements in response to budget cuts.
  • Within states with SSF models 13 out of 30 paused the formula or held institutions harmless.
  • Eight states increased the amount of money allocated through its SSF model in FY21, compared to FY20.
  • In contrast, Arkansas, Kentucky, and New Mexico decreased funding allocated through the SSF model in their respective states.

The effects of the pandemic on SSF and Promise programs has been varied. Building upon RFA’s prior research on outcomes-based funding and Promise programs RFA continues to monitor the effects of the pandemic on higher education funding and programming. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided relief to those in need and of the $2.2 trillion, $14 billion was given to the Office of Postsecondary Education as the Higher Education Emergency Relief Fund (HEERF). Thanks to adjustments made by states to policies and programs, and the relief funds provided by the Biden administration, Higher Education institutions have been able to continue supporting and protecting their students.


Kasey Meehan & Virginia Hunter