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Performance-based scholarships (for 2-year college students)

Higher Education
Benefit-cost methods last updated December 2018.  Literature review updated December 2016.
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Performance-based scholarship programs provide students with financial incentives to remain in college, often targeting low-income young adults. Scholarships are provided when students fulfill certain academic benchmarks such as maintaining a 2.0 GPA or enrolling in college. There are no initial academic requirements for the receipt of performance-based aid. Students usually receive their aid in monthly or quarterly installments over one or more terms.
The estimates shown are present value, life cycle benefits and costs. All dollars are expressed in the base year chosen for this analysis (2017). The chance the benefits exceed the costs are derived from a Monte Carlo risk analysis. The details on this, as well as the economic discount rates and other relevant parameters are described in our Technical Documentation.
Benefit-Cost Summary Statistics Per Participant
Benefits to:
Taxpayers $11 Benefits minus costs ($3,778)
Participants $175 Benefit to cost ratio ($0.41)
Others $88 Chance the program will produce
Indirect ($1,377) benefits greater than the costs 1 %
Total benefits ($1,102)
Net program cost ($2,676)
Benefits minus cost ($3,778)
1In addition to the outcomes measured in the meta-analysis table, WSIPP measures benefits and costs estimated from other outcomes associated with those reported in the evaluation literature. For example, empirical research demonstrates that high school graduation leads to reduced crime. These associated measures provide a more complete picture of the detailed costs and benefits of the program.

2“Others” includes benefits to people other than taxpayers and participants. Depending on the program, it could include reductions in crime victimization, the economic benefits from a more educated workforce, and the benefits from employer-paid health insurance.

3“Indirect benefits” includes estimates of the net changes in the value of a statistical life and net changes in the deadweight costs of taxation.
Detailed Monetary Benefit Estimates Per Participant
Benefits from changes to:1 Benefits to:
Taxpayers Participants Others2 Indirect3 Total
Labor market earnings associated with higher education $90 $197 $88 $0 $375
Costs of higher education ($78) ($22) $0 ($40) ($141)
Adjustment for deadweight cost of program $0 $0 $0 ($1,337) ($1,337)
Totals $11 $175 $88 ($1,377) ($1,102)
Detailed Annual Cost Estimates Per Participant
Annual cost Year dollars Summary
Program costs $2,019 2015 Present value of net program costs (in 2017 dollars) ($2,676)
Comparison costs $0 2015 Cost range (+ or -) 20 %
Costs include scholarship payments, administrative costs of providing scholarships, and student support services. Source: Mayer et al. (2015). Evaluation and start-up costs are excluded. Performance-based scholarships are in addition to standard programming received by the comparison group. Performance-based scholarship programs duration varied, but on average, the program lasted one to two years.
The figures shown are estimates of the costs to implement programs in Washington. The comparison group costs reflect either no treatment or treatment as usual, depending on how effect sizes were calculated in the meta-analysis. The cost range reported above reflects potential variation or uncertainty in the cost estimate; more detail can be found in our Technical Documentation.
Estimated Cumulative Net Benefits Over Time (Non-Discounted Dollars)
The graph above illustrates the estimated cumulative net benefits per-participant for the first fifty years beyond the initial investment in the program. We present these cash flows in non-discounted dollars to simplify the “break-even” point from a budgeting perspective. If the dollars are negative (bars below $0 line), the cumulative benefits do not outweigh the cost of the program up to that point in time. The program breaks even when the dollars reach $0. At this point, the total benefits to participants, taxpayers, and others, are equal to the cost of the program. If the dollars are above $0, the benefits of the program exceed the initial investment.

^WSIPP’s benefit-cost model does not monetize this outcome.

^^WSIPP does not include this outcome when conducting benefit-cost analysis for this program.

Meta-analysis is a statistical method to combine the results from separate studies on a program, policy, or topic in order to estimate its effect on an outcome. WSIPP systematically evaluates all credible evaluations we can locate on each topic. The outcomes measured are the types of program impacts that were measured in the research literature (for example, crime or educational attainment). Treatment N represents the total number of individuals or units in the treatment group across the included studies.

An effect size (ES) is a standard metric that summarizes the degree to which a program or policy affects a measured outcome. If the effect size is positive, the outcome increases. If the effect size is negative, the outcome decreases.

Adjusted effect sizes are used to calculate the benefits from our benefit cost model. WSIPP may adjust effect sizes based on methodological characteristics of the study. For example, we may adjust effect sizes when a study has a weak research design or when the program developer is involved in the research. The magnitude of these adjustments varies depending on the topic area.

WSIPP may also adjust the second ES measurement. Research shows the magnitude of some effect sizes decrease over time. For those effect sizes, we estimate outcome-based adjustments which we apply between the first time ES is estimated and the second time ES is estimated. We also report the unadjusted effect size to show the effect sizes before any adjustments have been made. More details about these adjustments can be found in our Technical Documentation.

Meta-Analysis of Program Effects
Outcomes measured Treatment age No. of effect sizes Treatment N Adjusted effect sizes(ES) and standard errors(SE) used in the benefit - cost analysis Unadjusted effect size (random effects model)
First time ES is estimated Second time ES is estimated
ES SE Age ES SE Age ES p-value
College grade point average^ 26 1 366 0.148 0.483 26 n/a n/a n/a 0.148 0.759
Graduate with any degree^ 26 3 2036 0.055 0.053 29 n/a n/a n/a 0.055 0.305
Persistence into 2nd year 26 3 2036 0.052 0.046 27 0.052 0.046 27 0.052 0.259
Persistence into 3rd year 26 2 1425 -0.001 0.102 28 -0.001 0.102 28 -0.001 0.992
Persistence into 4th year^^ 26 1 751 0.054 0.063 29 n/a n/a n/a 0.054 0.387
Persistence into 5th year^^ 26 1 751 0.136 0.065 30 n/a n/a n/a 0.136 0.035
Remedial credits earned^ 26 1 505 0.250 0.481 26 n/a n/a n/a 0.250 0.603

Citations Used in the Meta-Analysis

Mayer, A.K., Patel, R., Rudd, T., & Ratledge, A. (2015). Designing scholarships to improve college success: Final report on the Performance-Based Scholarship Demonstration. New York, NY: Manpower Demonstration Research Corporation.

Richburg-Hayes, L., Brock, T., LeBlanc, A., Paxson, C., Rouse, C.E., & Barrow, L. (2009). Rewarding persistence: Effects of a performance-based scholarship program for low-Income parents. New York, NY: Manpower Demonstration Research Corporation.