Performance-Based Scholarships


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

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