Performance Based Scholarships (PBS)

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Performance-based scholarships were designed to help students overcome some of the financial obstacles they face in the postsecondary education system. These scholarships aim to help reduce the financial burdens on low-income students while providing incentives for good academic progress. 

Students are generally paid at multiple points during the semester if they maintain a “C” average or better, and other standards set by the colleges. By making scholarships conditional on students’ meeting certain performance benchmarks, the programs seek to encourage students to focus on their studies, which should lead them to perform better in their classes in the short term. In the medium term, they should progress through their degree requirements more quickly, which in the long term may then help them graduate at higher rates. 

Importantly, the scholarships are paid directly to students. They may use the money for any pressing need (for example, books, child care, or other financial obligations that might disrupt their studies). Students have complete discretion over how they use the funds, although most report using them

to help with a range of essential expenses. 

The scholarships are paid in addition to Pell Grants — the main federal source

of need-based aid — and other existing financial aid programs, including state and institutional grants. Students therefore have more money to cover academic and living expenses, and can potentially reduce their dependency on loans. 

Lastly, unlike merit- based aid, performance-based scholarships are paid to students based on their academic performance in the current term, regardless of what happened in previous terms. That is, eligibility for the scholarship is not based on evidence of prior performance such as high school grade point averages (GPAs).

Key Points: 

• Performance-based scholarships are paid directly to students. This creates a potentially powerful tool to signal to students what is expected of them in terms of enrollment (e.g., full-time versus part-time) and academic performance, and means that this scholarship is potentially more salient to students versus other forms of aid that are paid directly to the students’ institutions.

• Performance-based scholarships are generally paid in increments over the semester. This means that students get their aid over the entire semester, rather than in a large lump sum. Students may be encouraged to consistently work towards an end goal while receiving modest benefits along the way, which also keeps the benchmarks salient to students. In addition, students may be able to make better financial decisions throughout the term with this type of disbursement schedule.

• 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?  

Individual students at-risk of dropping out before their second year.

Students who would gain the most benefit from an additional performance based scholarship.

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.