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Nov 02, 2016 11:22 AM EDT

Students Who Receive Reduced Amount of Financial Aid Are More Likely to Drop Out

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A recent study looking into the correlation between financial aid and student persistence has found that the larger the amount of financial aid a student loses, the more likely he will drop out from school altogether.

EAB, an educational research firm, conducted a study that looked into the relationship between a drop in the amount of financial aid that a student receives and the likelihood that the student will continue studying, the Marketplace reported. Their findings included the following:

  • On average, students who lose $1,500 to $2,000 in financial aid are three percentage points more likely to drop out compared to their peers;
  • Students who lose $4,000 and above are 4.5 percentage points more likely to drop out; and
  • Students who lose more than $10,000 are 19 percentage points more likely to drop out.

Researchers also found that losses in amounts of financial aid affects even top-performing students. They found that when students with a grade point average (GPA) of 3.0 and above lose about $1,000 to $1,500 in financial aid, they become more likely to drop out compared to their peers by 2.5 percentage points.

"Our research shows that monitoring changes in financial aid is another tool schools can use to determine where they should focus limited resources to improve student success," Ed Venit, senior director at EAB, said in a press release.

Venit noted that among the students involved in the study were those who had a GPA between 2.0 to 3.0, or what EAB calls the "Murky Middle." This group accounted for 45 percent of all dropouts. Although they needed more data to determine the exact students who will drop out, what they found was that:

- Murky Middle students who lose $2,000 to $4,000 are four percentage points more likely to drop out compared to their peers; and

- If they lose about $4,000 to $6,000, they are more than nine percentage points more likely to drop out.

However, a raise in the amount of financial aid received also correlates with an increase in student persistence. High-performing and Murky Middle students that receive an increase of $1,500 to $2,000 are almost three percentage points more likely to persist compared to their peers.

The EAB study involved more than 40,000 students who have filed for Free Application of Federal Student Aid (FAFSA). International students, non-dependents, transfer students, and athletes were not included.

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