The way students perceive a learning climate (e.g. controlling or stimulating) is significantly influenced by feedback and assessment. However, at present much is unclear about the relation between feedback and motivational state. More specifically, the interplay with student characteristics is unclear. Since there is a strong increase of group work, the central research question is what are the effects of positive, neutral or negative feedback presented to collaborating teams of students, on students’ intrinsic motivation, performance and on group processes? One hundred thirty‐eight higher education students participated in this study. There were no significant differences in performance across conditions. Multi‐level analysis enabled a detailed comparison between groups and individual members of groups. Amongst others, it was found that feelings of competence facilitate the effect of positive feedback at the group level, which suggests that positive feedback boosts interest especially in groups of highly competent students.