Instructional Quality, Student Outcomes, and Institutional Finances

Explores the question of whether improvements in instructional quality can increase a postsecondary institution’s net revenue. The paper lays out a conceptual framework in which improvement in instruction leads to better student outcomes such as increased retention rates, decreased repetition of courses, and faster time to degree. These improvements in student outcomes, in turn, lead to increases in marginal revenue that are larger than the marginal costs of improving instruction and of serving a larger student population. Surveying the literature finds some evidence supporting this hypothesis, though no previous study has explored it directly.