Students who lose financial aid are more likely to drop out, study says

Nov 2, 2016

The more financial aid students lose, the more likely they are to drop out of college, according to a study released today.

EAB, an education research firm, analyzed the correlation between success and financial aid for more than 40,000 students at three universities. The EAB’s findings included:

  • Students who lose $1,500 to $2,000 in financial aid are 3 percentage points more likely to drop out than their peers.
  • Students who lose $4,000 in aid are 4.5 percentage points more likely to drop out than their peers.
  • Students who lose over $10,000 in aid are 19 percentage points more likely to drop out than their peers.
  • On the other hand, students whose aid increased $1,500 to $2,000 are almost three percentage points more likely to persist than their peers who have little or no change in aid.

How well a student performs academically also matters, according to the study. Even the slightest drop in financial aid may mean a high-performing student was more likely to drop out:

  • Students with a grade point average (GPA) that is above 3.0 who lose $1,000 to $1,500 in financial aid are 2.5 percentage points more likely to drop out than their peers.

The group of students who had between 2.0 and 3.0 GPA accounted for 45 percent of dropouts, but Ed Venit, senior director at EAB, said more research is needed to determine which students within this specific group were more likely to leave.

"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," said he in a press release. Among this group of students, what EAB could determine was:

  • Students who lose $2,000 to $4,000 are more than four percentage points less likely to persist than other students.
  • Students who lose $4,000 to $6,000 are nine percentage points less likely to persist.

The study only covered full time students who have filed for Free Application for Federal Student Aid (FAFSA). It also excluded international students, non-dependents, transfer students and athletes.

EAB’s findings probably don’t come as a surprise to students who feel the burden of rising college costs, or to those working in education. In September, the U.S. Education Secretary John B. King, Jr. highlighted the importance of funding for college students. He made a push to streamline the FAFSA process in hopes of reaching the students who are eligible, but slip through the cracks.

“Our hope is that by making the process simpler, folks who should be getting aid will be able to take advantage of those opportunities. We know college remains the best investment one can make in one's future," he said in September.