Instead of giving low-income college students their financial aid in a lump sum, a new pilot program disburses the money every two weeks and participants say the new arrangement is helping promote academic success and smart financial management.

A new paper released by the nonprofit research organization MDRC analyzes the new "Aid Like a Paycheck" project launched by the Institute for College Access and Success in 2009. It was designed to encourage students to think of school as a job in which regular attendance and effort are rewarded. The hope was also to entice students to stay in school, since their aid was tied to continued enrollment.

Typically, a college applies a student's financial aid award toward tuition and fees, and then gives the remaining money to the student as a financial aid refund in one or two installments a semester. MDRC research shows that money often runs out, leaving students short on living and school-related expenses. If students get all of their refund, but then drop out, they may be required to return a part of the money to school.

Aid Like A Paycheck was tested on a small scale first at Mt. San Antonio College, a school with 20,500 students in southern California. The college was chosen, in part, because, with low tuition of just $780 and typical Pell grant awards to students of up to $5,500, students often had large refunds to manage. As part of the pilot, biweekly payments of $125 to $350 were given to about 200 students....

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