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Community college students often face a wide array of barriers to academic success, ranging from burdensome work and family obligations to inadequate financial aid. As a result, of all students who enroll at two-year institutions, only about a third of them earn a certificate, associate degree or bachelor’s degree within six years.

For many community colleges, low-income students are especially hard to retain. A new study, however, suggests that performance-based scholarships -- offered as a supplement to traditional financial aid -- could help encourage more of these students to stay enrolled longer and work toward graduation.

The study, conducted by the social policy research organization MDRC, reports on the success of a 2004-5 performance-based scholarship program aimed at low-income parents enrolled at two New Orleans-area community colleges -- Delgado Community College and Louisiana Technical College at West Jefferson. These institutions were shuttered because of the devastation left by Hurricane Katrina in August 2005, and by truncating the study and aid program, the chaos in the aftermath of the hurricane also constrained the ability of researchers to evaluate the long-term effects of these scholarships on degree completion. Many students and their families had no choice but to pack up and leave New Orleans following the disaster, skewing the initial three-year graduation rates of the study’s cohort.

Lashawn Richburg-Hayes, the study’s lead author and MDRC senior research associate, said that -- despite these unforeseen circumstances and a decision to withhold graduation figures from the report -- the study still provides compelling evidence that this performance-based scholarship program boosted student retention, grades and credit load. She added that the initial data, gathered prior to Katrina, indicate some of the program’s retention success with low-income students.

Student participants in the program needed to be the parent of at least one dependent child under 19 and have a household income under 200 percent of the federal poverty level, making them eligible for welfare. Being a recipient of welfare, however, was not a requirement. MDRC randomly assigned 1,019 parents into two groups -- those who received performance-based scholarships in addition to financial aid and those who only received traditional financial aid based on personal financial need.

Those who received the scholarships had to take at least six credit hours of work in a semester and maintain an average grade point average of at least 2.0. Students could receive a maximum of $1,000 per semester, paid in three installments -- $250 after enrolling, $250 at midterm contingent upon maintaining full-time status and at least a C average and $500 upon completion of courses with at least a C average. The scholarships were only offered to participants for a maximum of two semesters. Only 30.5 percent of these students received the maximum of $2,000 over the course of two semesters, and the average payout over this period was $1,133.

Compared to the control group, which received only traditional aid, the scholarship students were 5.3 percentage points more likely to register during the first semester of the program and 6.4 percentage points more likely to enroll in 12 or more credits.

In one of the more statistically significant figures in the study, scholarship students were 15 percentage points more likely to continue their studies into a second semester -- 64.8 percent compared to 49.8 percent of non-scholarship students. Richburg-Hayes said such increased retention levels highlight the effectiveness of these scholarships, noting that many community colleges are often satisfied with considerably lower levels of retention.

The retention rates for scholarship students even remained higher past the point during which students could receive the additional aid. These students were nearly 12 percentage points more likely to register for classes in a third consecutive semester and more than 7 percentage points more likely to follow with a fourth semester of classes.

Academically, the scholarship students fared better than their counterparts. They were 11 percentage points more likely to earn a grade point average of 2.0 or better, the cutoff for payment to scholarship students. Still, only 38 percent of these additionally aided students had at least a C average. Considering course load, scholarship students earned 3.5 more credits than the control group over the course of four semesters. Though this increase is slight, Richburg-Hayes said that every credit helps when pushing students toward the “tipping point” of 20 credits -- a threshold she said many institutions believe results in a greater likelihood of graduation.

The performance-based scholarships were not meant to replace traditional financial aid for participating students, but rather to supplement it. Initially, those who received scholarships and those in the control group were awarded traditional financial aid -- via Pell Grants and other sources -- at a nearly identical rate. In the second semester, scholarship students actually received more outside support than the control group. Richburg-Hayes said it is likely that the frequent counseling these students received and their increased odds of enrolling again contributed to this outcome.

As the scholarships were paid directly to the students, they were used for a variety of expenses in and outside of the classroom. While 65.6 percent of these participants used some of the extra money to pay for “books and school supplies,” 45.7 percent used some “to help pay bills” and 45.5 used some to “buy gas or bus fare.” As Pell Grants often cannot help cover these other costs of living, Richburg-Hayes said she believes the additional scholarships were put to a best-fit use by each individual student.

“While federal and other financial aid provide some incentives for students to make progress toward a degree, the [scholarships] are ‘sticks’ rather than ‘carrots’ (that is, students are motivated by the prospect of becoming ineligible in future years for poor performance),” the study reads. “Pell Grants and other financial aid go directly to the college or university to cover tuition and fees and may seem less ‘real’ to student than a check they can cash.”

Because it was truncated by Katrina, the study still leaves a number of glaring questions. It does not address the issue of remedial coursework or show if such performance-based scholarships help those who must take it. As graduation figures were withheld, it does not determine if these programs improved long-term student outcomes or decreased the amount of time they take to earn a degree. Additionally, as it was applied only to low-income parents, the study does not show whether or not such retention success can be replicated among other, more traditional students. (The study targeted parents on purpose, hoping they would be more responsible with the money and be more driven to stay enrolled.)

MDRC is currently working on a six-site study to examine the long-term effects of performance-based scholarship programs elsewhere in the country -- in California, New Mexico, New York City and Ohio -- and with other groups of low-income students besides parents. The hope is that this additional information can show improved graduation rates, but the first reports are not expected until at least 2010.

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