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28 Nov 2011
Report

Targeting Financial Aid for Improved Retention Outcomes

With public funding for financial aid facing constraints at both the state and federal levels, there is heightened interest in the question: How do strategies allocating financial aid affect student retention and completion? Indeed, a growing body of literature addresses this issue, with most studies suggesting that increasing the size of individual financial aid packages creates relatively modest improvements in student retention. In one such study, Eric Bettinger found through a broad review of the literature that, on average, a $1,000 increase in Gift Aid for needy students results in a 2 to 4 percentage point increase in student retention. However, he concludes that, in the absence of better targeting of financial aid, “The marginal benefit might not be sufficiently large to offset the cost of a large-scale expansion in the program’s generosity. To expand the generosity, we either need to identify more cost-effective forms of financial aid or find ways to target aid programs more effectively.”

This paper investigates financial aid policies and approaches affecting public institutions in the state of Louisiana and suggests a research-based approach to leveraging declining state resources in order to enable the greatest possible number of students to complete their postsecondary education. This work was conducted with generous support from the Bill and Melinda Gates Foundation.

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Related Work

28 Nov 2011
News Release

New Study Shows College Retention Rates Improved by Targeting Students Receiving Pell Grants for Supplemental State Aid

A study by the American Institutes for Research and Noel-Levitz has found that targeting supplemental financial aid to students receiving Pell grants in Louisiana improved retention rates by more than 14 percent.

Further Reading

  • New Study Shows College Retention Rates Improved by Targeting Students Receiving Pell Grants for Supplemental State Aid
  • Losing HOPE: Financial Aid and the Line Between College and Work
  • Can Financial Aid Improve Student Success at Louisiana’s Community Colleges?
  • Reforms to Increase Transparency in Higher Education
  • Trends in College Spending: 2003-2013- Where Does the Money Come From? Where Does It Go? What Does It Buy?
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Postsecondary Education

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