Considerations for the Study of OBF

Across OBF effectiveness literature, there is a lack of clear consensus about the efficacy of these policies. This is likely due to a variety of factors, which should be kept in mind when reviewing the research:

  • OBF policies are not monolithic. OBF policies vary widely across and within states, as detailed by HCM’s FY18 OBF Typology update, CLASP’s classification of OBF equity measures, and multiple studies that focus on the details of specific states' policies (Ness, et al., 2015; Callahan et al., 2017a; Callahan et al., 2017b). Moreover, current OBF policies evolved from earlier performance-based funding, which did not affect base funding. Research often does not account for these variations, but understanding these differences is important when interpreting the literature. 


  • OBF policies are not static. During early years of implementation, states often adopt “hold harmless” provisions or purposefully delay the full implementation of OBF policy. Others adjust formulas frequently as states and institutions examine the effects of the model and move to limit unintended consequences. Others build in regular periods of OBF policy review and refinement, which essentially guarantee changes. Research that does not account for such changes may not provide an accurate assessment of the effects of OBF.


  • It takes time for the effects of OBF to emerge. Several often-cited studies examine the effects of OBF policies immediately following adoption. However, a growing body of literature demonstrates that policy effects lag several years after adoption, as institutions and states adjust to the policy. More recent studies take this lag time into effect and, in several such studies, some effects emerge in later years.

  • Research on intermediate outcomes is only now emerging. OBF policies frequently include both long-term outcomes, such as graduation, and intermediate outcomes, such as credit accumulation. To date, much of the research focuses on long-term outcomes because they are included in IPEDS, the database that most researchers use to assess the policy. Analyses of more nuanced effects of OBF policies—e.g., institutional response, retention, credit accumulation—are very recent additions to the literature. 

  • The impact of OBF policies on equity is mixed. In the last several years, researchers have turned to examining the impacts of OBF on equity gaps. While there is evidence that the use of equity metrics in OBF policies can have positive impacts, research has also demonstrated how OBF policies can negatively impact Minority Serving Institutions (MSIs), outcomes of underserved student populations, and access to postsecondary education.