Pay for Success Holds Promise in Higher Education

In February 2019, with generous support from The Kresge Foundation, Third Sector launched the Pay for Success (PFS) in Higher Education National Cohort — a first-in-the-nation cohort of public systems of higher education, college access and success providers, and funders — to use PFS as a way to systematically fund wraparound student support services that improve matriculation, persistence, and graduation outcomes for underserved students. After six months of training and technical assistance (TTA) supporting four state and system partners in exploring PFS, it is clear there is an immediate opportunity to leverage PFS in higher education.

During 2019, all four states, including Arizona, Connecticut, Colorado, and Ohio, made significant progress in bringing together stakeholders to address outcomes disparities among priority populations and demonstrated a deep commitment to understanding and leveraging PFS within their jurisdiction as stakeholder support allows. Furthermore, engagement with college access and success providers and potential project funders surfaced interest, availability, and readiness to participate in PFS contracts.

Some of the major learnings that Third Sector and our partners took away from this cohort include:

• The ideal PFS project is likely to be anchored by a state or system-level institution end-payer with strong oversight and centralized decision-making that also has a robust performance-based funding formula.
• Actionable insights and shared tools create greater capacity for potential PFS end-payers to pursue PFS with other stakeholders. By creating shared tools, states and systems wanting to participate in PFS contracts have better access to the resources necessary to get started.
• Testing PFS in higher education through the development of initial pilot projects allows stakeholders to trial operational models and develop proof points to accelerate the engagement process with potential project partners.

As a result of the cohort, two states, Colorado and Ohio, are actively building toward PFS projects. In each state, the PFS initiatives are being led out of their respective Departments of Higher Education. Third Sector invited team members from Colorado and Ohio to convene at the Winter Innovation Summit in Salt Lake City, Utah this past February with goals to accelerate progress on their projects’ development and to connect with others in the social impact field. Third Sector is continuing to support the transaction structuring phase for both sites as they build their PFS projects throughout 2020.

To learn more about the cohort learnings,Third Sector’s TTA, and how this work grew beyond Third Sector’s initial PFS feasibility assessment, you can read the Cohort Project Summary. If you have any questions about the PFS in Higher Education National Cohort, please email Sarah Walton at swalton@thirdsectorcap.org.