Exploring the Effects of Financial Aid on the Gap in Student Dropout Risks by Income Level

Abstract

Using national survey data and discrete-time logit modeling, this research seeks to understand whether student aid mediates the relationship between parental income and student dropout behavior. Our analysis confirms that there is a gap in dropout rates for lowincome students compared with their upper income peers, and suggests that some types of aid are associated with lower risks of dropout. Thus, we examine the interaction between financial aid type and parental income to explore whether, and if so how, different types of aid may reduce the dropout gap by income level group. We find that the receipt of a Pell grant is related to narrowing the dropout gap between students from low-and middleincome groups, although overall the interaction between Pell grant and income is not significant. Loans and work-study aid both have similar effects on student dropout across all income groups. Methodologically, our results demonstrate the need to model dropout behavior temporally and to avoid main-effect bias by incorporating interaction effects.

Factores Determinantes en la Deserción Universitaria. Caso Facultad de Ciencias Económicas y Administrativas de la Universidad Católica de la Santísima Concepción (Chile)

“…Además, encuentran que aquellos estudiantes que cuentan con algún tipo de beneficio financiero, presentan una menor probabilidad de desertar, destacando el Crédito con Aval del Estado (CAE). Por su parte, Barrios et al (2011) estudian el efecto de los beneficios financieros sobre los resultados académicos, encontrando que el sistema de financiamiento con CAE es más eficiente que las becas y otros créditos en disminuir las tasas de deserción, contrario a lo propuesto por Chen y DesJardins (2008, 2010.…”

The role of community college-based transfer programming in transfer student success.

“…Astin (2005) found that completing the baccalaureate degree in four years was positively and significantly related to father's education level. Correlated with parental education level, Pell Grant eligibility is based on a student's estimated family contribution (EFC) to financially support their education (Chen & Desjardins, 2008;Lips, 2011;Mahan, 2011) and can also be used as a proxy for SES.…”

Second year college experiences that affect persistence and attrition for first generation and continuing generation students at small, private institutions.

“…For many researchers financial challenges are believed to be one of the primary causes for students leaving an institution (Chen & Desjardins, 2008;Tinto, 1975). Even though no study will be able to understand all the leaving behaviors of college students, Janasiewicz (1987) was determined to recognize the leaving behavior of students at Florida State University.…”