Exploring the Effects of Student Aid on Attrition

Abstract

This study explores whether student financial aid reduces or eliminates financial reasons for dropping out of college. The approach uses a new student classification scheme to compare the attrition rates of aided and non-aided students during three successiveyears of undergraduate education in a statewide public university system. The issue is important for several reasons. First, the overall effects of financial aid on basic behaviors such as attrition are unclear and subject to controversy (Jensen, 1981; Leslie, 1986). Second, federal and state governments invest heavily in student financial aid programs (over $200 billion since 1970)1 in the expectation that aid will benefit recipients. Furthermore, laws and regulations governing most student aid programs restrict eligibility to students defined by needs analysis systems as economically disadvantaged; the expectation is that aid will narrow the resource gap between economically disadvantaged students and more affluent students who are not eligible to receive aid. Thus, it is reasonable to expect that differences in attrition between the two groups (non-aided vs aided) are reduced commensurately with the reduction in financial differences. This study focuses on the effects of student aid on attrition because it is logical for policy makers to expect that student aid enhances persistence (Jensen, 1981).Littleis known, however, about whether current levels are adequate, whether aid eliminates financial barriers, or what types of students need more or less aid. Moreover, an ex- tensive literature on attrition exists which provides a framework for exploring the ef- fects of student aid, but also reveals that at present no firm basis exists for judging the o~erall :ffects of student aid. Nonetheless, important data exist which w~en combined with powerful analytical methods, may provide a basis for understanding the effects of student aid (Stampen and Fenske, 1984; Stampen and Cabrera, 1985).