This commentary was originally published by Community College Daily.

Community college administrators are better positioned than ever to make decisions about adopting programs based on their effectiveness, with a growing evidence base about interventions that increase graduation rates and put students on the track to labor market success. However, figuring out how to pay for new programs is challenging, particularly in the wake of drastic declines in enrollment.

A new tool developed by MDRC, a nonprofit, nonpartisan research firm, allows college administrators to estimate both the costs of new interventions and the potential increased revenue that can be realized when programs increase rates of student persistence. The free tool creates return-on-investment estimates based on customized regional prices, college expenditures, tuition rates, and state funding models.

It goes without saying that student success interventions—such as tutoring, robust advising, and financial assistance—cost money. However, higher education leaders often lack the tools to accurately quantify the revenue generated by interventions that improve outcomes for students—more students persisting means more students taking courses. This revenue comes primarily from two sources:

• Additional tuition and fees from increased credit-taking. Since most tuition and fees at community colleges are covered by state and federal grants, this is largely a transfer from governments, not from students.
• Additional state funding for public institutions in states that allocate funding based on enrollment and other outcomes.

The new revenue realized from improving student outcomes can help offset some of the costs of these interventions for colleges, lowering the “sticker price” of these programs. In fact, for more modest interventions, the increased revenue can completely recoup the college’s original investment. For example, using an information campaign paired with a last-dollar scholarship grant, the Encouraging Additional Summer Enrollment (EASE) program has positive effects on summer enrollment and credit accumulation for Pell-eligible community college students—effectively paying for itself at most community colleges.

While there is only evidence for EASE’s impacts on short-term (i.e., not completion) outcomes, comprehensive programs that dramatically improve college completion rates like CUNY ASAP also cost less than people may realize, especially in states that allocate additional funding for higher persistence and graduation outcomes.

It is important to acknowledge, however, that we’re talking here only about the costs and revenues incurred by the colleges. Of course, there are also important benefits from effective student success programs realized by the students, their families, the local community, and society at large. These can be difficult to measure, but efforts to quantify these broader benefits across stakeholders suggest that the long-term benefits of highly successful programs like ASAP can surpass the costs of sustaining the program.

Administrators armed with better information about the financial implications of their decisions can work more effectively in service of improving the academic, social, and economic outcomes of their students. However, community college administrators need better access to state funding formula documentation to align institution-level and state-level priorities.

State funding formulas vary widely in the student populations they prioritize and the specific outcomes they reward. Understanding one’s state funding model and aligning practices with it can make interventions more financially sustainable; MDRC’s new tool can help accomplish this goal.

For instance, many states and colleges now have initiatives in place concentrating on student populations who have been historically marginalized in higher education settings, which are reflected as “equity premiums” in some state funding models. These equity premiums provide additional funding for enrollments or outcomes by specific groups of students, such as students from low-income backgrounds, students of color, or students from rural areas.

Community college leaders always face the challenge of balancing their mission to promote student success with persistent resource constraints. New federal investments in evidence-based programs for improving retention and completion rates are an important step forward. By accounting for the revenue resulting from effective student success programs, college administrators can better estimate their real costs, create a stronger case for making these investments, and help their students achieve their goals.

Colin Hill is a research analyst in the postsecondary education division at MDRC.