Performance-based scholarships

Local governments can invest in this strategy using State and Local Fiscal Recovery Funds (SLFRF) from the American Rescue Plan Act (ARPA).

  • This strategy can help address educational disparities. The U.S. Department of Treasury has indicated that strategies that help achieve this outcome are eligible for the use of Fiscal Recovery Funds.
  • Investments in this strategy are SLFRF-eligible as long as they are made in qualified census tracts or are designed to assist populations or communities disproportionately impacted by COVID-19.

Program overview

  • Provide financial aid to students conditional on their achieving certain academic benchmarks
  • Aid money is meant to cover 15–25 percent of students’ unmet financial need (the difference between their tuition costs and already existing financial aid).
  • Disbursed to students, who can freely decide how to use the funds
Target Population
Students enrolled in post-secondary education
Cost per Participant
$1,000 to $4,500 maximum scholarship amounts for two, three, or four semesters

Evidence and impacts


Performance-based scholarships are not yet in any of the major clearinghouses, but has demonstrated positive results in an independent, high-quality evaluation conducted by ____

  • Increased academic achievement
  • Increased degree completion
  • Indeterminate effect on persistence

Best practices in implementation

  • Note: This content is under review.
  • Work directly with staff and organizations who have high contact with students to recruit students to participate in the program. Follow up can be conducted both in-person and digitally.
  • Build or procure a system with clear, transparent criteria to verify student eligibility for scholarship disbursements, covering everything from the source of student data to rules for extensions if a student becomes ineligible.
  • Prioritize scheduling and releasing scholarship disbursements in a timely and accurate manner, including regular dialogue with necessary administrative partners, such as a financial aid office.
  • Disburse payments in a way that is distinct from other forms of financial aid, but that still minimizes costs to students (such as bank fees).
  • Develop and implement a communications strategy that distinguishes the program as an ongoing incentive – one that needs to be continually earned separately from a traditional scholarship. Communication, therefore, should occur both before the program and at regular intervals throughout it.
  • Evaluate the health of the program at regular intervals - such as at the halfway point and ends of each semester – to ensure that eligibility criteria are reasonable and that the scholarship disbursement process operates fairly and smoothly.