Performance-Based Scholarships: Paying Students for Academic
Performance
Tags: Degree attainment, student services, improving achievement, pay-for-performance,
persistence, retention, tuition reduction, data collection/use
Introduction:
Performance-Based Scholarships
Performance-based scholarships provide low-income college students with scholarships
based on their completion of certain academic benchmarks. Students eligible to receive the
scholarship must complete their program’s requirements at various points during the semester
and in exchange receive a scholarship check sent directly to them rather than to their school.
MDRC evaluated a performance-based scholarship program as part of the Opening Doors
Demonstration in Louisiana, which began in 2004.
This program targeted low-income, primarily
female community college students with children. Students in the program were offered a
scholarship up to $1,000 per semester for two semesters contingent upon getting a “C” or better
average in six credits and attending required meetings with an advisor at various points in the
semester. The evaluation was conducted using a randomized controlled trial, widely considered
the gold standard in social science research for its ability to infer causality – that is, the
program’s causal effect on the outcomes of those students who were eligible to receive the
treatment compared to those who did not.
Given the positive early results of performance-based scholarships in Louisiana, MDRC
launched the Performance-Based Scholarship (PBS) Demonstration in four states – Ohio, New
York, New Mexico, and California – in 2008, and in another two states – Florida and Arizona –
in 2010. Although each of the states’ programs varied slightly in its implementation, targeting
different populations and offering different incentives, all had at their core the same program:
providing scholarships to low-income students in exchange for meeting basic academic
benchmarks. A description of each state’s program can be found in Table 1 of this document.
Theory of Change
The theory of change behind performance-based scholarship programs is multifaceted.
By conditioning additional financial aid on academic benchmarks, the program seeks to
encourage students to focus more on their studies, which, in turn, should lead them to perform
better in their classes in the short term. In the medium term, they should progress through their
degree requirements at a quicker rate by increasing their term-to-term enrollment and their
credits attempted and earned. Increases in these academic outcomes may then lead to long-term
gains, including year-to-year persistence, more total cumulative credits earned, and graduation or
transfer to a four-year or more selective postsecondary institution.
Key Findings and Impacts
Although the program is still ongoing in some states, MDRC now has preliminary results
from performance-based scholarship programs in Ohio,
New York, and New Mexico, in addition
to the original results in Louisiana. All of the sites have found impacts on credits earned by
students in the treatment group. The Louisiana study saw an average increase of 1.2 credits
earned in the first term, and 1.3 credits earned in the second term. In the Ohio program, which has a target population similar to that of Louisiana, the program group students earned an
average of two full credits more than the control group students over two terms of study. The
New York site, which targeted students in need of remedial education, had an increase of 0.6
credits earned in the first term. The New Mexico study, which is the only one housed at a fouryear institution, found no impact on credits earned over the first academic year, but showed an
increase of 0.6 credits in the second term.
All sites, including the original Louisiana study, showed an increase in credits attempted
and/or full-time enrollment in the second term. In Louisiana, there was an increase of 1.2 credits
attempted in the second term, and a 15.3 percentage point increase in full-time enrollment.
Similarly, in Ohio, program participants showed an increase of 0.6 credits attempted in the
second term, and a 6.3 percentage point increase in full-time enrollment. In New York, while
there was no increase on credits attempted in the second term, the program did have a 7.4
percentage point increase in full-time enrollment. Lastly, in New Mexico, students in the
program attempted almost one full credit more than control group members in the second term.
Finally,
both the Ohio and New Mexico studies found evidence of debt reduction as a
result of the performance-based scholarships. Loans made up a smaller proportion of total
financial aid for program group students in Ohio and New Mexico than for control group
students.
These mostly short-term results suggest that performance-based scholarships can move
the dial on some important markers of academic success. If the programs can show lasting
effects after the scholarships are no longer available to the students — and impacts on
persistence emerge in later terms — performance-based scholarships could lead to higher
graduation rates. MDRC will follow these longer-range outcomes closely in Ohio,
New York
and New Mexico in the coming terms. In addition, forthcoming results from three more states in
the PBS Demonstration — California, Arizona and Florida — will add to the body of knowledge
on the effectiveness of these scholarships on improving academic success for low-income students
Challenges to Implementation
Perhaps the biggest challenge in implementing performance-based scholarships is
identifying funds to be used for these scholarships. In the study, the bulk of the scholarships were
provided by foundations, but colleges had to identify a source for a matching contribution from
their own financial aid funds. With limited resources, colleges may find funding their part of the
scholarships difficult, especially with competing financial aid priorities.
Another challenge is communication.
Most important, students must be clear on what
they need to do in order to receive the money. Colleges must be careful to craft marketing
materials and communications that are clear and concise for students. Colleges in the study
found that it was helpful to inform students about scholarship details through multiple modes,
including in person during intake, hardcopy via mail, and electronic copy via email. In addition,
students received regular reminders about the scholarships at many sites Emerging Factors for Success and Potential Implications
Performance-based scholarships are paid in addition to Pell grants and other state and local
financial aid for students, and thus its results can only speak to the impact of their use on top of
the existing aid structure. However, in a time where policy makers are looking for more ways to
make financial aid more effective, there are some notable differences in the delivery of
performance-based scholarships that could be relevant to current and future aid and scholarship
programs:
Performance-based scholarships are paid directly to students. This creates a potentially
powerful tool to signal to students what is expected of them in terms of enrollment (e.g.,
full-time versus part-time) and academic performance, and means that this scholarship is
potentially more salient to students versus other forms of aid that are paid directly to the
students’ institutions.
Performance-based scholarships create an opening for more constant communication
with students. In this way, an aspect of student support is built into financial aid. Indeed,
colleges that incorporate student services with the scholarship have seen bigger impacts
than those that do not.
Performance-based scholarships are generally paid in increments over the semester. This
means that students get their aid over the entire semester, rather than in a large lump sum.
Students may be encouraged to consistently work towards an end goal while receiving
modest benefits along the way,
which also keeps the benchmarks salient to students. In
addition, students may be able to make better financial decisions throughout the term
with this type of disbursement schedule.
The Performance-Based Scholarship Demonstration is ongoing, but its early impacts across sites
are promising for student retention and credit accumulation.
For more information, see Richburg-Hayes, Lashawn, Paulette Cha, Monica Cuevas, Amanda
Grossman, Reshma Patel, and Colleen Sommo. 2009. Paying for College Success: An
Introduction to the Performance-Based Scholarship Demonstration. New York: MDRC.
www.mdrc.org.
Project contact: Lashawn Richburg-Hayes, lashawn.richburg-hayes@mdrc.org.