Designing Scholarships to Improve College Success: Final Report on the Performance-Based Scholarship Demonstration

Abstract

Performance-based scholarships are designed to give students more money for college and to provide incentives for academic progress. MDRC launched the Performance-Based Scholarship Demonstration in 2008 to evaluate the effectiveness of these scholarships for as broad a range of low-income students as possible, in a variety of settings, and with varying incentive structures. The evaluation includes more than 12,000 students in institutions across six states. Institutions created performance-based scholarship programs tailored to what they perceived to be the specific needs of their students, by targeting the incentive, academic benchmarks, and in some cases additional services to address those needs.

Each of the six programs in the demonstration was evaluated using a randomized controlled trial. Students were randomly assigned by researchers either to receive only their usual financial aid package and services or to be eligible to receive supplemental financial aid and services in the form of a performance-based scholarship, contingent upon meeting the given academic benchmarks.

The results show that these scholarships improved students’ academic progress during the program — effects that remained evident several years after the program ended. The effects on students’ academic progress appear generally consistent across the different programs and student subgroups. In addition, one program targeted high school seniors and succeeded in increasing their matriculation in college, and three of the programs reduced students’ dependency on loans. Most important, this evaluation finds that the programs modestly increased degree completion, measured after five years.

These results show that even relatively moderate investments in low-income students’ education can have modest but long-lasting impacts on their academic outcomes. These findings may be especially relevant to states, institutions, and private scholarship providers seeking purposeful and efficient ways to give low-income students additional financial aid that can also help them succeed academically.

Keywords: scholarships, financial aid, random assignment, academic progress

JEL Classification: I22