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Policy Framework
For many low-income college students, one of the biggest barriers to attendance is cost. While federal and state financial aid is available to help with tuition, fees, books, and some living expenses, students still often have unmet need, particularly if they are from the poorest families or are independent from their parents. Working while going to school is obviously one answer, but too many hours on the job can contribute to poor academic performance and dropping out. Loans are another answer, but many low-income students are reluctant to take on debt — especially if they have doubts about their ability to complete a college degree, or if they do not come from families where college attendance is the norm.
MDRC launched the Performance-Based Scholarship Demonstration to test an innovative strategy for addressing two policy objectives: increasing the financial support available to low-income students, and creating an incentive for such students to complete their courses and make more timely progress toward degrees. The idea is to provide a supplement to existing federal and state financial aid that is contingent on enrolling in a minimum number of credit hours and making passing grades. The performance-based scholarships are paid directly to students (rather than to the colleges or universities they attend) in order to reward students for their progress and to allow them to make choices of how best to support their schooling. For some, this may mean buying books or paying for transportation to campus; for others, it may mean cutting back on work hours or hiring a babysitter for their children during finals week.
The Performance-Based Scholarship Demonstration is based on positive findings that emerged from MDRC’s Opening Doors Demonstration. At two colleges in the New Orleans area, Delgado Community College and the Louisiana Technical College-West Jefferson, low-income parents were offered a $1,000 scholarship for each of two semesters (or $2,000 total) if they met two conditions: they stayed enrolled at least half-time and maintained at least a 2.0 (‘C’) average. Program counselors monitored students’ performance, and paid students who met these conditions in three increments: $250 upon enrollment, $250 at midterms, and $500 at the completion of the semester. The Opening Doors scholarships were paid on top of Pell Grants and other financial aid for which students qualified.
MDRC evaluated the Louisiana program using a random assignment research design, in which the outcomes of group of students who received an Opening Doors scholarship were compared to a similar group who did not. The results were generally quite positive. Students who received the scholarship:
- were more likely to enroll in college full time
- exhibited higher rates of semester-to-semester retention: they registered for classes at higher rates in the second and third semesters following random assignment
- passed more courses and earned more college credits
These positive impacts notably persisted into the third and fourth semesters, when students no longer were eligible for the scholarship. Tragically, both campuses in the study were hard hit by Hurricane Katrina, and, as a result, longer-term findings must be interpreted through the lens of this event.
While the Louisiana results are impressive, there is an open question about whether performance-based scholarships would be effective in other college settings for a broader range of target groups. There are additional questions about the payoff of varying scholarship amounts or of offering the scholarship for different durations.
Agenda, Scope, and Goals
With anchor funding from the Bill & Melinda Gates Foundation and commitments from other funding partners, MDRC is testing variations of the performance-based scholarship at six colleges. The program at each college is targeted to low-income students with high unmet need, based on the cost of attendance and gaps in state financial aid. The goal is to inform changes in state policy, if warranted by the research findings.
The Performance-Based Scholarship Demonstration is designed to produce rigorous evidence of the programs’ impacts and to answer policy-relevant questions:
- Do performance-based scholarships increase academic achievement?
- What is the “right” scholarship amount? That is, what amount would provide an incentive without being a windfall for students?
- What is the effect of the duration (number of semesters) of the scholarship?
- For what target population do the scholarships have the greatest impacts?
- What are the effects of bundling the scholarships with enhanced financial aid or debt-avoidance counseling?
- What is the effect of making the scholarships portable (available to travel with the student) instead of tied to one institution?
Design, Sites, and Data Sources
The six sites for the Performance-Based Scholarship Demonstration are Borough of Manhattan and Hostos Community Colleges in New York City; Lorain, Owens, and Sinclair Community Colleges in Ohio; and the University of New Mexico. Additional states and colleges are expected to be added in the future.
Because the scholarship dollars are limited, the demonstration can use a random assignment research design to compare the outcomes of students who receive a performance-based scholarship (on top of their regular financial aid) with a control group who would not receive the performance-based scholarship but would have access to other scholarships that would otherwise be available. MDRC will use a variety of quantitative data sources, including transcript data, other administrative data, and surveys, to determine the impacts of the scholarships. Qualitative data from focus groups and interviews will be employed to understand why (or why not) the scholarship intervention had an effect on outcomes.
What's Next
MDRC is identifying additional sites for the 2009-2010 and 2010-2011 academic years. We are planning to invite minority-serving institutions to participate in one of these future waves. A major report will be published in 2012.
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