The Effect of State Appropriations on College Graduation Rates of Diverse Students

This study estimates the effect of state appropriations on the graduation rates of freshman cohorts by race/ethnicity. Data were obtained for public four-year institutions (n = 415) representing six freshman cohorts between 2007 and 2012. Hybrid regression models indicated that a ten percent increase in appropriations would yield a percentage point increase in graduation rates of .59 for all students, .99 for Black students, .84 for Latinx students, and .59 for White students. However, the effect of state appropriations on graduation rates varied across institutions (-1.03 to 2.99 percentage point change) and was frequently larger at institutions with medium or high subsidy reliance (.70 to 1.39 percentage point change). Also, the effect of state appropriations on Black student graduation rates was 2.48 times larger at HBCUs. This study suggests that state appropriations can be an effective instrument for raising the graduation rates of diverse students to help meet state attainment goals.