Student Persistence: Effects of Need-based Financial Aid and Merit-Based Financial Aid Sunny Li Kwadwo Owusu-Aduemiri Florida A&M University AIR Annual Conference June 2, 2009
Overview of Presentation • Introduction • Background • Purpose of the study • Methodology • Data Source • Variables • Analysis • Results • Findings and conclusions
I ntroduction W hat Matters in Persistence ? � Today, most postsecondary institutions are under heavy pressure from federal and local governments to increase their graduation and retention rates in a way of fulfilling accountability to the public. � An yet, most public institutions are experiencing high drop-out rates, leading to less persistence, � What are the possible factors related to persistence ? � Does Financial Aid affect student persistence ?
I ntroduction • Since The Higher Education Act of 1965, most financial aid programs are need-based, which is designed for students with low family income to reduce the financial burden associated with college education. Many programs have been established to provide need-based funding for students from low socioeconomic backgrounds, and these initiatives have assisted in increasing access to higher education for needy students. • The effects of need-based aid on college persistence have been studied extensively, in part because need-based aid has been the dominant form of financial assistance in the recent past.
I ntroduction cont’d • As tuition has increased over the years, states have shifted financial aid away from need-based financial aid in responding to political pressure from the middle class (Ehrenberg, 2005). At the same time college compete for the best students they can get, merit-based aid has stand out as an effective way to recruit students with strong academic performance (Duffy & Goldberg, 1998; McPherson & Shapiro, 1998).
I ntroduction Cont’d • While some policy analysts remain skeptical about the potential benefits of merit-based aid, others view it as part of an array of financial aid policies aimed at achieving the broad goals and objectives of higher education. • The inception of Georgia’s HOPE Scholarship program in 1993 started the trend towards merit- based aid. The rational behind most state merit- based programs is to encourage and reward academic work and promote college access within a state.
I ntroduction cont’d • There is an increasing concern among researchers and practitioners that resources historically assisting students from low socioeconomic backgrounds are now being used to bid for academically and financially able students (McPherson and Schapiro, 1991, Heller and Marin, 2002). Evidence of a greater reliance on merit-based versus need-based aid at four- year public and private universities was also provided in research (e.g., McPherson and Schapiro, 1994).
Literature • Several recent studies have added empirical evidence to the merit versus need-based debate in financial aid. • Henry & Rubenste’s (2002) analysis on HOPE Scholarship Program suggested that the merit-based financial aid provided by the HOPE Scholarship Program has improved both the quality of education for college- bound students in Georgia and the equity of educational outcomes across groups. • Dynarski (2000) and Cornwell, Mustard, & Sridhar (2001) have found that Georgia’s HOPE Scholarship has increased student access to college in terms of college- going rates or college enrollment rates.
Literature Cont’d • The Lumina Foundation for Education's 2004 study found that need-based aid plays a bigger role in influencing high school graduates to go to college than a number of other factors, including tuition. • St. John & Hu (2004) reported that the Washington State Achievers Program, need- based, strongly improves participating students' odds of attending college. The authors' suggest that need-based programs are more effective at raising college-going rates than merit-based grants.
Literature Cont’d • Several other research has been conducted on the effects of the these two types of financial aid on college choice, enrollment, and student success (e.g. Dynarski, 2002; Turner & Bound, 2002; Alon, 2005; Bettinger, 2004; Dynarski, 2003; Heller, 1997; Leslie & Brinkman, 1987; Heller & Marin, 2002; Singell,2004; Binder & Ganderton, 2002; Cornwell, 2005; Cornwell & Mustard, 2002). • The results have been somewhat mixed and inconclusive, but the general trend seems to be that need-based financial promotes access and equity while merit-based financial aid promotes education quality.
Purpose of the Study � To identify what factors play important roles in student persistence in a State University System. � Examine the impact of the two different forms of financial aid (need-based and merit-based) on persistence
Methodology: Data Source � This study uses 11 public universities in the State University System of Florida. � The data include: � New FTIC students enrolled in Fall 2006, and � Who applied for financial aid. � The data were extracted from the following sources: � Student Financial Aid File, � Student Data Course File and � Admissions File � Each university submits thes files to the Florida Board of Governors on an annual or a term basis.
Metholdogy: Variables Independent variables Dedependent variables � Gender � Persistence � Race � Persisted: Returned or graduated � Age � Not persisted: Not � Type of institution returned in and not � Fam ily incom e graduated by the � High school GPA next year � SAT score � College GPA � Need-based am ount � Merit-based am ount
Methodology: Variables per $1000 Male: Uncoded Family Income Gender Female: 1 GPA High School GPA Race White: Uncoded SAT Score SAT Asian: 1, 0 GPA College GPA Type of Institution Black:1,0 Research University: Uncoded Hispanic: 1, 0 American Indian: 1, 0 Non Research University:1, 0 Non-Resident Alien: 1, 0 Need-Based Amount per $1000 Not Reported:1, 0 Age Years Old Merit-Based Amount per $1000
Methodology: Analysis � Logistic regression is used to examine the relationship between financial aid and student persistence.
Results: Descriptive Descriptive Analysis Not Persisted All Persisted Variable Percent/Mean Asian 3.14% 6.50% 5.91% 20.86% 20.21% 20.32% Black 18.28% 20.64% 20.23% Hispanic Race 0.61% 0.41% 0.44% American Indian 0.15% 0.24% 0.22% Non-Resident Alien 55.34% 50.10% 51.02% White 1.62% 1.91% 1.86% Not Reported 55.59% 58.73% 58.18% Female Gender Male 44.41% 41.25% 41.80% Non Research University 16.20% 12.41% 13.07% Type of Institution 83.80% 87.59% 86.93% Research University
Results: Descriptive Cont’d Descriptive Analysis, Cont’d Not Persisted Persisted All Variable Percent/Mean 20.76 20.71 20.72 Age 42,720.14 42,698.34 42,702. Family Income 17 3.38 3.64 3.59 High School GPA 1,091.91 1,126.09 1,120.0 SAT 9 2.12 2.98 2.83 College GPA 2,833.66 3,346.40 3,256.3 Need-Based Amount 3 3,918.76 5,010.90 4,819.0 Merit-Based Amount 5 1,975 9,268 11,243 N
Results: Regression Variable B Sig. Gender Female 0.179*** 0.002 Race Asian -0.786*** 0.000 Black -0.451*** 0.000 Hispanic -0.274*** 0.000 American Indian 0.063 0.861 Non-Resident Alien -0.681 0.314 -0.139 0.513 Not Reported Age Years Old -0.092* 0.018 Family Income per $1000 0.001 0.389 0.003*** 0.000 High School GPA 0.000 0.682 SAT 0.929*** 0.000 College GPA 0.231*** 0.004 University Type Need-Based Amount Per $1000 0.066*** 0.000 Merit-Based Amount Per $1000 0.039*** 0.000 1.305 0.271 Constant N 11,243 *p <= .05 ** p<= .01 *** p <= .001
Regression Results show that … � Student characteristics such as gender, race, and age have significant impact on persistence. � Compared to male students, females are more likely to persist. � Minorities such as Black, Hispanic and Asian students are less likely to persist compared to white counterparts. � Younger students are more likely to persist than older students.
Regression Results … � In terms of class level, only second year students have significant advantage to persistence than freshmen while third and fourth year students are not significantly different than freshmen. � Family income has significantly positive effects on persistence. The significance, however, fades away when the Amount of Unmet Needs variable is introduced to the picture. This makes economics sense in that students cannot come back and stay in college if they have significant financial barriers for them to go on no matter what family income they may have.
Regression Results … � Student aptitude and academic preparation such as high school GPA and college GPA also have significant effects on persistence. SAT, however, does not show significant effects. � Compared to the students in Research Universities, the Non-Research University counterparts tend to have higher rate of persistence. � Non-research universities tend to put more emphasis on teaching and enhancing students experience, which in turn promotes social and academic integration of the students into college life that is vital to college persistence according to Tinto’s (1975, 1987) model.
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