Unpacking the Black Box of Institutional Quality in Higher Education

Session Submission Type: Panel

Abstract

What makes an institution of higher education (IHE) higher quality? Although the share of the population enrolling in IHEs in the US has grown since the 1990s, the share who complete a degree has not grown nearly as much (Lovenheim and Smith 2023). However, there is causal evidence that students who attend institutions that are more more selective, have higher per student spending, or are four-year or flagship IHEs are more likely to graduate and earn more (see for example Cohodes and Goodman 2014 or Hoekstra 2009). These features are often proxies for high quality; yet the ingredients that allow an institution to increase graduation rates or labor market outcomes are only beginning to be understood (Mountjoy and Hickman 2021). This panel explores the impacts of three different margins with the potential to affect college quality and provides insight into design choices institutions or policy makers could make to improve student outcomes.

The first paper, "The Effect of Large Unconditional Donations to Institutions of Higher Education," asks whether the availability of more resources leads to more spending and better student outcomes. Large donations are often earmarked for particular uses, making it difficult to know how money is used to best serve students in the absence of donor-imposed constraints. This paper uses a difference-in-differences design to examine the impact of unexpected, unconditional donations to 54 postsecondary institutions across 29 states between 2020 and 2021, averaging just over 2 million dollars each. The study finds that two- and four-year schools responded very differently. Four-year schools saw a large jump in their endowment and no measurable impacts on expenditures. These results suggest that large unconditional donations may not yield short-run impacts on student outcomes.

The second paper, "Instructor Value-Added in Post-Secondary Education," examines another potential determinant of college quality: faculty. While instructor value-added has been widely studied in K-12 schools, few have attempted it in the postsecondary setting. Credible estimates hinge on quasi-random exposure to faculty, which is difficult in higher education where students often select courses and instructors based on unobserved characteristics. This study develops a method that groups students with similar course histories and identifies instructor effects by comparing outcomes among students in the same course with different instructors. In addition to providing a credible method that can be used to assess the impact of faculty independent of state contexts, this paper suggests that strategic choice of faculty may be a valuable institutional tool for improving student outcomes.

The last paper, "The impact of conditional loan forgiveness: Evidence from the Texas B-On-Time program," explores whether financial aid design can increase degree-completion rates. Using a regression discontinuity design, it exploits a GPA threshold for continued loan receipt and a credit hour limit for loan forgiveness to estimate causal effects on educational choices and post-graduation outcomes including employment and earnings. Although this research is preliminary and ongoing, the findings can inform how financial aid programs might fit affect institutional quality and act as a potential policy lever for governments and individual institutions.

Policy Area

• Education

Chair

• Michael Lovenheim, Cornell University

Discussants

• Lois Miller, University of South Carolina

• Katharine Meyer, Brookings Institution

Organizer

• Silvia Robles, Brown University

Individual Presentations

• The Effect of Large Unconditional Donations to Institutions of Higher Education - Presenting Author: Silvia Robles, Brown University; Non-Presenting Co-Author: Aizat Nurshatayeva, Brown University; Non-Presenting Co-Author: Anjali Pai, Brown University; Non-Presenting Co-Author: Annaliese Paulson, Brown University

• The impact of conditional loan forgiveness: Evidence from the Texas B-On-Time program - Presenting Author: Meredith S Welch, American University

• Instructor Value-Added in Post-Secondary Education - Presenting Author: Anthony Yim, The Church of Jesus Christ of Latter-day Saints