11/08/2010 01:41 pm ET Updated May 25, 2011

Earn Good Grades, Get More Money?

Traditionally, academic scholarships have been either merit or need-based -- but some states have taken steps towards blurring the distinction between the two by offering performance-based scholarships for low-income parents.

A new report (PDF) released by the non-profit research group MDRC details the outcomes of three Ohio community colleges' adaptation of the performance-based method. Using surplus welfare funds, the institutions offered up to $1,800 for participating students who earned at least a "C" in at least 12 credits and $900 for those who received the same mark in completing six to 11 credits.

According to the Chronicle of Higher Education, policy-makers can be encouraged by MDRC's findings. The report, titled "Rewarding Progress, Reducing Debt: Early Results From Ohio's Performance-Based Scholarship Demonstration for Low-Income Parents," shows that the program was successful in prompting students to take on more credits -- and earn passing grades -- while decreasing their debt. Students who participated in the program were 13 percent more likely to enroll full time than their counterparts.

Despite such positive results, the program's replacement of loans with lump sum aid, not granted until grades are reported, makes it difficult for some to utilize the program. Additionally, the report notes that incentivized aid had no affect on whether or not students decided to return to school each semester.

Still, the Chronicle reports that the flexibility of no-strings aid is key for participating students, who might choose to use the scholarship money for day care -- which some view as essential way to allow parents to complete postsecondary degrees.

MDRC plans to publish a full report on long-term findings in the fall of 2011.

Do you think performance-based aid is a good idea? Share your thoughts below.