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 in 2008 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 in Louisiana, which showed that such a program had a number of positive effects for students, including boosting students’ credit accumulation, grades, and persistence. The program targeted low-income parents, and, as a result, the study sample comprised older, unmarried, and mostly female students. Unfortunately, the devastation inflicted by Hurricane Katrina intervened partway into the study, making it difficult to confirm the program’s long-term effects.
While the Louisiana results were impressive, there was an open question about whether performance-based scholarships would be effective in other college settings for a broader range of target groups. There were additional questions about the payoff of varying scholarship amounts or of offering the scholarship for different durations.