Impactful Allocation of Performance Based Scholarships

Performance based scholarships aim to reduce reliance on loans and provide incentives for academic success. This is particularly true for students identified as at-risk of dropping out. There are a variety of risk factors specific to each student and institution. This makes leveraging data essential to award these critical scholarships to the individuals who will capitalize on the opportunity.

Target Candidates for Performance Based Scholarships

SightLine research has shown that financial aid offers play a crucial role in enrollment decisions, but are less impactful on retention. Conversely, students taking out large loans are considered to be serious applicants, despite being at a higher risk of dropping out. SightLine’s goal is to identify students who are burdened by student loans and other risk factors. These are the students to target for allocation of performance based scholarships.

According to,

“In the college financial aid arena, the lion’s share of attention is given to academic and athletic scholarships. But there are other scholarship programs dedicated to servicing the needs of particular student groups, such as women and minorities, and students from low income households or disadvantaged backgrounds.”

This is a much more personalized approach. The emphasis is on a student’s holistic story, including their background, distance from home, financial abilities, socioeconomic standing, support, and opportunities.

Performance Based Scholarships Impact Recipients

The MDRC performance based scholarship demonstration evaluated more than 12,000 students across six states through a randomized controlled trial to determine the effect of allocating incentive or performance based scholarships. The report stated,

“The results show that these scholarships improved students’ academic progress during the program — effects that remained evident several years after the program ended. In addition, one program targeted high school seniors and succeeded in increasing their matriculation in college, and three of the programs reduced students’ dependency on loans. Most important, this evaluation finds that the programs modestly increased degree completion, measured after five years.”

A separate study, The Impact of Performance Based Scholarships on Student Time Use , determined these scholarships

“induced students to devote more time to educational activities and to increase the quality of effort toward, and engagement with, their studies; students also allocated less time to other activities such as work and leisure.”

This study also found students with performance based scholarships completed more credits by the end of their first year in college.

Performance based scholarships provide opportunity for early intervention of students at risk of dropping out. Academic advisers and other student success professionals meet with early identified at-risk students periodically throughout their first year. The scholarship incentivizes improved academic performance, and accountability. This will reduce the students’ reliance on loans and expose them to other retention resources. More frequent meetings with advisers affords the opportunity to discuss on campus work and academic engagement opportunities.

Funding Performance Based Scholarships

These funds may not come from a typical institutional scholarship or grant fund, so institutions may look outside for these opportunities. The MDRC performance based scholarship demonstration, included funders such as the Bill & Melinda Gates Foundation, Helios Education Foundation, The Kresege Foundation and more.

However, incentive based scholarships do not need to be funded by large foundations. Instead, the funding, could be supplied through university alumni donors. These alumni understand the challenges students undertake every day, and are enthusiastic to support students who might not otherwise have the resources to succeed.

Predictive Analytics to Optimize Allocation

How do we identify students who would gain the most benefit from these incentive or performance based scholarships? Additionally, how do we determine the amounts?

SightLine research has indicated significant loan reliance increases likelihood of dropping out. The negative effects of financial burden also increases as students continue toward graduation. SightLine develops predictive algorithms to identify the individual applicants likely to be negatively affected by loan reliance.

We can then use the same algorithm to adjust financial aid inputs to model multiple scenarios and retention outcomes. Based on those scenarios, we can identify:

  1. Individual students at-risk of dropping out before their second year
  2. Students who would gain the most benefit from an additional performance based scholarship
  3. The optimal scholarship amount for each individual identified

With incentive or performance based scholarships, universities and colleges have the opportunity to budget a small amount of money to make a huge impact in targeted retention efforts. Not to mention the lives of scholarship recipients who find academic success and graduate despite financial hurdles and other challenging circumstances.

Originally published at

SightLine | EdTech Data Scientist | Founder

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