In today’s economy, employers’ demand for an educated workforce is steadily rising. Policymakers, education leaders, and communities across the country recognize the need to improve college attendance and success, but are constrained by tight budgets. Meanwhile students themselves face mounting college costs, and financial aid has not been able to keep pace.

Performance-based scholarships aim to help reduce the financial burdens on low-income college students while providing incentives for good academic progress. Students are generally paid at multiple points during the semester if they earn a certain number of credits with a “C” average or better. MDRC is currently evaluating performance-based scholarship programs in six states.

The findings presented in this brief (and supplemental tables) are based on one year of follow-up for all sites in the Performance-Based Scholarship (PBS) Demonstration, two years of follow-up for the sites that launched their programs in 2008 or 2009 (California, New Mexico, New York, and Ohio), and three years of follow-up for the first of the sites to complete study recruitment (Ohio).

The PBS Demonstration has shown that this new form of financial aid is feasible to implement.  Interim results also suggest that these programs do improve students’ performance and increase the number of credits they earn, and in some states where data are available, they also appear to reduce student debt. In Ohio, the one location for which data are available so far, the program also increased the proportion of students earning a degree. The programs work in a wide range of institutions and for a wide variety of students, including those normally at risk of performing poorly.

MDRC continues to publish findings on each of the sites and will also publish a synthesis report examining the long-term impacts across all six sites. The programs at all of the colleges in the PBS Demonstration continue to offer scholarships to a small number of new students each semester. Other scholarship providers have also begun to explore the potential of performance-based scholarships elsewhere. To share the operational lessons of the PBS Demonstration, MDRC will release a technical assistance guide in 2014.