Insights & News
The higher education world often distinguishes between need-based financial aid, which is awarded based on students’ financial need, and merit-based aid which is awarded based on other factors such as high academic performance in high school. For low-income students, especially those who are college ready but do not have the academic record to win a merit scholarship, a college degree may seem unattainable due to the high costs of attendance.
Scholarships that are based on financial need and structured thoughtfully can be important tools for increasing college access and success—especially for low-income students and those whose parents didn’t go to college. In California, public financial aid can pay approximately half of the costs of attending a public four-year university. Adding a scholarship can make a difference beyond just helping them pay their next tuition bill.
A new study conducted by MDRC, with support from College Futures Foundation, shows how scholarship programs can be structured to encourage low-income students to attend college and to persist once they get there. Providing More Cash for College reports findings from this demonstration, which used a rigorous experimental design to test whether performance-based scholarships would increase college enrollment, persistence, and progress among low-income students.
More than 5,000 students were recruited from state-funded workshops designed to help lower income students apply for public financial aid. The performance-based scholarships were awarded based on economic need (“need-based”) and students could attend the college of their choice. Once students enrolled in college, payments were made when students met established benchmarks during the school year.
The findings confirm several lessons we have learned in our own work and provide helpful information for those working for student success:
- Performance-based scholarships boost college enrollment across many demographic groups. Overall, students awarded performance-based scholarships were 5 percentage points more likely to matriculate in college compared with the students that did not receive a scholarship. The enrollment increases and other academic impacts were observed across many demographic groups, including young men and Latino students.
- The impact is even greater for students with lower GPAs. Students with GPAs below 3.0 who were awarded these scholarships enrolled at significantly higher rates (8 percentage points) than students who were not. This suggests that the scholarships may have incentivized students to enroll who might otherwise not have seen themselves as “college-going material.” We have seen in our own work and that of our grantees that scholarships, more than other types of aid, seem to confer a special status on students that can positively impact the way they view themselves and, subsequently, their behavior.
- Scholarships can make the difference for low-income students “on the fence” who might not have otherwise enrolled in college. Because the students were recruited from financial aid workshops, they were already thinking of attending college. In fact, 84% of the control group, students who did not receive a scholarship, enrolled in college. A large proportion of the students received Pell and/or Cal Grants in addition to the scholarships. This confirms what other studies have shown: that low-income and first-generation students want to go to college and will do so given the opportunity. Both the already-high enrollment rate and the additional sources of financial aid make the study findings more remarkable. Performance-based scholarships increased enrollment by an additional five percentage points to 89 percent. In other words, the results show that awarding scholarships to low-income students can induce those who are “on the fence” to matriculate. It should also be noted that many of the results were driven by enrollment in community colleges; little effect was observed in four-year institutions. This was likely due to the timing of the award since students were not notified until June, after the deadline for acceptance to a four-year college.
- There are small but significant effects on persistence. While full persistence findings are not yet available, early results of tracking students for three terms of enrollment show statistically significant effects. Students who received performance-based scholarships had slightly higher rates of year-to-year persistence (2.4 percentage points) than students who received no performance-based scholarships.
- The flexibility of the scholarships is an important factor for students. According to students, the scholarships were particularly helpful given their flexibility, structure, and timing. They used the awards to help cover upfront costs before their other financial aid was disbursed and to cover college-related costs that other forms of aid often did not permit such as books, supplies, and transportation costs like parking and bus passes.
Through our own experiences, and those of our partners, College Futures understands the importance of scholarship awards as a tool for increasing college access and success among low-income students. These findings confirm the important role of financial aid in influencing a student’s thinking and behavior, and suggest ways for scholarship providers and educational institutions to design and offer need-based scholarships and incentivize college-going and completion for low-income students, including the following:
- Provide scholarships to more students lower on the academic curve. Many scholarship programs use merit factors to target higher performing students. These findings suggest that scholarships may be more effective when targeted to students with lower GPAs.
- Award scholarships as a supplement to Pell and Cal Grants. Pell and Cal Grants are the lynchpins of college access for California students with financial need, and their continued vitality are essential to our state. Scholarship providers should make every effort to insure that students receive all the public financial aid they are entitled to so that scholarships can be used to reduce the need for student loans, and should structure scholarships to dovetail with financial aid in ways that support better student outcomes.
- Streamline processes and procedures related to financial aid application and disbursement. Whether scholarships or grants, institutions and providers of public financial aid should be aware that far too many students aren’t getting the financial aid for which they are eligible. According to MDRC’s study, 15% of students eligible to receive Cal Grants could have done so if not for administrative issues such as application processing procedures. Our own experience shows that the students who most need public aid—California Community College students, who are more likely to be low-income than their peers in other systems—are the least likely to get their Cal Grants. Streamlining processes and procedures related to financial aid will help ensure that as many students as possible can access support.
We are excited to share this research, enabling stronger, evidence-based practices in financial aid and opening doors to higher education and a better life for more low-income California students.