The difference between staying in and dropping out may be smaller than you think

How relatively small grants retain students

Just a few hundred dollars in lost aid may force some students to drop out of college, according to a new study from EAB

Researchers found that out of more than 40,000 students, those with GPAs above 3.0 who lose between $1,000 and $1,500 in grant funding are 2.5 percentage points more likely to drop out of school than students with little to no changes in their financial aid awards.

The likelihood of quitting school increases with more aid lost:

  • Students who lose $1,500 to $2,000 in aid are three percentage points more likely to drop out;
  • Students who lose $4,000 in aid are as much as eight percentage points more likely to drop out; and
  • Students who lose more than $10,000 are as much as 28 percentage points more likely to quit school. 

Help at-risk students understand their college financing options

"A small amount of money could really incentivize positive behavior," says Ed Venit, senior director at EAB. "If you've got a student who is going through a bit of a rough spot, and they've lost a bit of aid, schools might be able to close that gap in some way with the amount of resources they have available."

Students in the "murky middle" with GPAs between 2.0 and 3.0 are especially at risk for dropping out, and make up 45% of the total dropout cohort. Murky middle students who lose between $2,000 and $4,000 in aid are three percentage points less likely than their peers to graduate. Those who lose between $4,000 and $6,000 in aid are almost eight percentage points less likely to graduate. 

But it takes a relatively small financial boost to keep students in school. Providing $1,500 to $2,000 in additional aid to low-performing students increases their likelihood of persisting by eight percentage points. Middle- and high-achieving students who receive financial aid within this range increase their chances of graduating by three percentage points.

"For schools that are trying to improve persistence by 2% or 4%… you're looking at a population of students that you might actually be able to marshal the funds to do something about," Venit says. "It's a pretty large group, so you could go after those students."

Seattle University helps keep high-achieving students in school with small grants. Through the Challenge Grants Program, students with great financial need who attain a GPA of at least a 3.0 receive an extra $1,000 in their financial aid awards for the winter and spring semesters.

Students who meet high GPA requirements can keep the award as part of their financial aid package permanently. The university works with students at risk of losing scholarships to keep them on track and help them retain their awards (Douglas-Gabriel, "Grade Point," Washington Post, 11/1). 

Nudge students to complete their financial aid applications—and all the other things they need to do


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