Did the Recession Impact Student Success? Relationships of Finances, Staffing and Institutional Type on Retention

Abstract

Economic recessions impact higher education institutions in complex ways. Several analyses have examined the influence of the 2007–2009 recession on tuition, enrollments, revenues, and expenditures, but the connection of these resource allocation patterns to a student success outcome—namely, retention—is limited. This study examined relationships among institutional expenditures, tuition, and staffing patterns on first-year retention rates at private and public institutions in 2007, 2009 and 2011: before, during, and after the economic recession. Private and public institutions increased tuition during this time period and increased expenditures. Expenditures most directly educating students (i.e. instruction) and institutional selectivity were positively associated with retention. However, public and private institutions differed in how they allocated their expenditures. That the findings correspond with past research investigating relationships between resource allocation and retention illustrate principles of the resource dependency theory (Pfeffer and Salancik 1978): institutions impacted by external economic changes, adjust revenues, staffing, and expenditures during economic changes.