Financial Incentives And Student Achievement

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Report on Financial Incentives and Student Achievement

Financial Incentives and Student Achievement

Brief Summary

The article under analysis is “Report on Financial Incentives and Student Achievement: Evidence From Randomised Trials” by Roland G. Fryer. In contrast to education reform efforts that target teachers and schools, meritbased financial aid for college increases the incentives for high school students and their families to directly affect the quality of education by investing more time and effort in schoolwork (Rosenbaum, 2001, 33).

Large-scale merit-based aid programs, such as Georgia's HOPE Scholarship, seek to improve education by encouraging students to meet higher standards, in this case by obtaining a 3.0 grade point average in high school and college. Since the HOPE program began in 1993, the number of high school graduates qualifying for the aid has steadily increased to more than 38,000 graduates in the class of 1998, or 59.5 percent of the graduating class.

At the same time, the relationship between grades and achievement has remained consistent or, in some cases, improved since HOPE began. In fact, African-American males and females with a 3.1 high school core course grade point average have increased their average Scholastic Assessment Test (SAT) scores by more than 20 points. This indicates that merit-based aid has improved the quality of K-12 education in Georgia and reduced racial performance disparities by motivating students and their families to commit greater effort to schooling.


Paying for grades is such an obvious way to improve a child's effort in school that at one time or another most parents have offered ice cream or cash for As on their child's report card. While offering such incentives for performance has intuitive appeal, they have seldom been used as tools of educational reform.

Motivating students to exert more effort in their formal education through financial incentives is an underlying theme, though, in the “I have a dream” program that began in New York City and is now spreading to cities across the United States (Kahne and Bailey, 1999). However, private philanthropists rather than public coffers fund these programs, and the students selected to participate receive a variety of other services, in addition to financial assistance for college. Merit-based financial aid for college stands as the best known public policy instrument available for motivating students through direct, financial incentives.

The majority of recent efforts to improve educational performance and accountability have focused on rewards and sanctions for school districts, schools, and teachers, or on sanctions for poorly performing students (such as mandatory summer school and retention in grade). Policymakers have generally overlooked the use of direct rewards to students, however. Georgia's HOPE (Helping Outstanding Pupils Educationally) Scholarship Program stands as a notable exception.

The program provides full tuition and fees plus a book allowance for any Georgia student attending a state institution of higher education, if the student achieves a 3.0 or better grade point average (GPA) in high school and maintains it in college. Merit-based aid has been criticized as a poor alternative to need-based financial ...
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