Study: Losing Financial Aid Can Increase Likelihood of Dropping Out

By Allie Bidwell, Communications Staff

Helping students maintain their levels of financial aid from year to year is critically important, a new study points out, as even high-performing students can be impacted by a small loss of aid.

A new study from the Education Advisory Board (EAB) found that high-performing students (those with a grade point average above 3.0) in particular are more likely to drop out of college if they lose small amounts of financial aid—around $1,000 to $1,500. Those students are 2.5 percentage points more likely to drop out of school than their peers who do not see a change in aid.

And the likelihood that a student will drop out of school only increases with the amount of financial aid they lose, the study found.

EAB’s analysis included data from more than 40,000 students at or above sophomore standing at three universities. The students included had refiled the FAFSA and maintained eligibility for federal financial aid. International students, independent students, part-time students, transfer students, and athletes were not included in the analysis.

“Most students assume the financial aid they get for their first year will stay the same for future years, especially if they do well academically and family circumstances do not change materially. And while that is the prevailing practice, it is not always true,” said Jim Day, vice president at Hardwick Day, a division of EAB, in a statement. “When aid gets reduced, some students simply are unable to pay the increased tuition required to stay in school.”

Day added that students who see a reduction in their financial aid might also lead them to “question the value of their college experience, and how much their school values them.”

Overall, students of all GPA standings who lose financial aid are more likely to drop out than students who maintain their aid, the study found. Students who lose between $1,500 and $2,000 are 3 percentage points more likely to drop out, those who lose $4,000 are 4.5 percentage points more likely to drop out, and those who lose more than $10,000 are 19 percentage points more likely to drop out than students who maintain their aid.

The study also found that increases in financial aid correlate with student persistence. Students with GPAs between 2.0 and 3.0 and high-performing students with GPAs above a 3.0 are nearly 3 percentage points more likely to persist with aid increases of $1,500 to $2,000.

Gathering more information about which groups specifically are more likely to drop out, the study said, could help schools home in on where they should direct their financial resources.


Publication Date: 11/8/2016

Henry Q | 11/8/2016 11:59:38 AM

Really? This seems pretty obvious to me. Not sure it was even worthy of study.

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