Incentivizing Behavioral Change with Aid Dollars

Administrators across higher education have been calling student success a “top priority” for years, but pressure to improve success is growing. State governments are pushing for more completions, even as state support declines. Slower revenue growth due to weak demographics and price sensitivity is also making it crucial that institutions keep every student they recruit.

Enrollment managers have a significant opportunity to promote student success within the functions they often control, particularly financial aid. By understanding how aid provides additional leverage for academic and engagement interventions, EMs can play a crucial role in persistence.

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Best practices for using aid to incentivize behavioral change

Realizing the EM’s opportunity in student success

Performance-based scholarships have received growing notice in recent years, but the concept of tying aid to academic performance is not new. Merit aid and graduation rebate or guarantee programs are intended to incentivize students to graduate faster. In reality, much of this aid functions as a reward for existing high performers who are disproportionately affluent. Newer, more effective performance-based scholarships target students more likely to benefit from explicit behavioral incentives.

• Practice 1: On-pace academic grant
• Practice 2: Year-round enrollment incentive
• Practice 3: Career-linked paid internships

Reducing financial attrition risk for continuing students

Substantially increasing the financial aid budget to subsidize costs for continuing students is not feasible for most institutions. Therefore, progressive EMs need to deliver additional persistence leverage for every dollar to reduce their demands on the unfunded aid budget.

• Practice 4: Targeted continuing student outreach
• Practice 5: Continuing student merit award
• Practice 6: Unpaid balance grant