Colorado and Ohio Leading the Nation in Collaborative and Innovative Pay for Success Projects in Higher Education

The Colorado Department of Higher Education (CDHE) and the Ohio Department of Higher Education (ODHE), in partnership with Third Sector, have started work on a first of its kind initiative to leverage Pay for Success (PFS) to improve retention and completion outcomes for underrepresented students.

The Partnerships to Achieve Student Success (PASS) initiative aims to launch two pilot PFS projects that will forge direct funding relationships between public higher education institutions and college access and success providers, with the goal of increasing persistence and graduation rates for specific student populations. CDHE’s focus is on re-engaging and retaining low-income adults from a variety of racial and ethnic backgrounds who have stopped out before completing a degree or credential. ODHE’s focus is on improving persistence and completion outcomes among recipients of the Ohio National Guard Scholarship.

“Colorado is eager to continue work on the pilot project with Third Sector,” said Dr. Cynthia Armendariz, Director of Colorado Opportunity Scholarship Initiative (COSI), leading CDHE’s PFS efforts. “We have aligned the project with the state’s higher education plan to increase education attainment, erase equity gaps, and improve student success. The project also impacts our goal to contain costs for students and make college more affordable.

“I am excited to work with Third Sector on this innovative approach for funding services designed to maximize postsecondary student outcomes,” said Stephanie Davidson, Vice Chancellor for Academic Affairs at ODHE who is leading the Ohio project.  “We believe the approach holds great promise for improving the graduation rates of National Guard Scholarship recipients, thereby maximizing the benefit of those scholarship dollars. If successful, the program could act as a model for serving other populations of at-risk students.”

Over the next year, Third Sector will support the CDHE and ODHE to construct and launch pilot projects using PFS financing to fund college access and success services that drive improved student outcomes in higher education. Student support services are expected to begin between the summer and fall of 2021.

In the last ten years, the cost of postsecondary education has increased by 35% while the availability of public funding for state institutions of higher education has declined. Research shows that college-intending low-income, first-generation, and/or students of color disproportionately experience poorer matriculation, persistence, and graduation outcomes in their path to and through college. These students would benefit from additional wraparound student support services to navigate the system and overcome barriers in order to access and succeed in college. While the evidence base of these services continues to grow, funding is often unsustainable.

PFS is a specific form of outcomes contracting where an entity (often a government) agrees to pay for outcomes achieved through social services (rather than on a fee for service basis) . PFS has the potential to drive new public funding relationships between higher education institutions (HEIs) and independent college access and success providers, which are typically funded by philanthropy and frequently operate in parallel to HEIs. 

PASS is a continuation of Third Sector's Pay for Success in Higher Education National Cohort, launched in 2019 to assess the feasibility of PFS projects in four states/systems. Both CDHE and ODHE were selected to participate in the cohort and have since demonstrated readiness for launching a PFS project, including having committed leadership dedicated to positive and equitable outcomes for students.

“Third Sector is honored and excited to be expanding our partnership with higher-education leaders in Colorado and Ohio,” said Caroline Whistler, CEO and Co-Founder of Third Sector. “These leaders, and all of us at Third Sector, recognize that amid all the economic damage caused by the COVID-19 crisis, it has never been more important to support young people in achieving maximum success in college so they can realize their full lifetime potential as learners, workers, parents, and engaged community members.”

Support from the Kresge Foundation will allow Third Sector to support CDHE and ODHE through guidance on provider procurement and contracting, facilitation of multi-stakeholder negotiations of plans and legal documents required for PFS, and support for working capital fundraising and due diligence. 

“Third Sector’s skilled stewardship is creating scalable proof points that demonstrate how colleges can effectively and efficiently partner with nonprofit organizations to help more students reach the degree-completion finish line,” said Bethany Miller, senior program officer with Kresge’s Education Program. “These proof points hold lessons for colleges and nonprofits nationwide. Amidst the COVID-19 pandemic and its fiscal implications, colleges will have the important but difficult task to preserve the nonprofit partnerships that measurably improve outcomes for students historically underrepresented in higher education – including Black students, Latino students and students from low-income households. Under Third Sector’s guidance, Colorado and Ohio’s efforts will lead the way.”  

To learn more about Third Sector’s work in higher education, email Sarah Walton at swalton@thirdsectorcap.org