How Do Successful Colleges Help Financial Aid Students Stay in School?

December 18, 2018


student success


Few metrics highlight inequity in higher education like the correlation between academic success and student financial aid. In multiple studies, students from low-income backgrounds, who receive the most aid, earn poorer grades than those from the middle and upper class. They also drop out at higher rates. The phenomenon has colleges and universities searching for new ways to support financially-strained students. Many start with programs that help students navigate the financial aid bureaucracy itself.


In 2017, Americans owed $1.4 trillion in student loan debt, according to credit reporting company Experian. This growing debt has not brought higher student retention or greater academic success for those from lower-income backgrounds. A study of two-year students at Georgia Southern University, The Relationship Between Financial Aid Type and Academic Success, found a statistically significant correlation between financial aid and lower student performance. Those enrolled without aid had the highest grades — outscoring those with scholarships — and those with scholarships had better marks than students incurring debt. The National Center for Education Statistics (NCES) reports that the graduation rate for students from lower socioeconomic backgrounds is 14% compared to 60% among those from the highest socioeconomic backgrounds.


A taxing financial aid system


Forms, passwords, tax documents, deadlines, deposit dates, funding restrictions, grade requirements, registration delays:  Acquiring and maintaining financial aid demands time, worry and energy. It’s no surprise that finances are among the top reasons students list for dropping out. Sometimes a student might have money to cover tuition but nothing in-pocket for other critical expenses — including course materials and supplies.


If the funding available when classes start covers only part of the Cost of Attendance (COA), students experience repercussions throughout the term that hamper academic achievement. Availability of COA funds can mean the difference between starting the first day of class ready to learn, or arriving ill-rested, ill-nourished, stressed and unable to begin studying until money for course materials comes in.


Schools with robust financial aid services


It might seem like schools aiming to boost student retention would be better off accepting fewer lower-income students. Even after financial aid pays for tuition, lack of funds for other essentials can handicap learning. But statistics at some of the country’s top schools challenge the notion that larger numbers of needy students inevitably result in lower retention and graduation rates.


Consider this: the cost of a year’s tuition at Harvard is $46,340. The COA, including room, board, fees and course materials, is $67,580. Tuition at private liberal arts school Carleton College runs about $49,000; COA exceeds $68,000. At the four-year public institution University of Connecticut, in-state tuition is $24,880. The COA for residents tops $31,000.


The percentage of students receiving financial aid at these schools is greater than 50% — on par with the national average, according to NCES. At Carleton, lower-income students receive famously generous aid packages, which cover 100% of the costs for admitted students whose parents earn less than $80,000. At Harvard, the proportion of those with aid is 70%.


Despite an abundance of lower-income students, these schools boast freshman retention rates well above the national average of 78%. At the University of Connecticut, where 53% of full-time students receive need-based aid, retention is among the highest for national public universities: 92%. At Harvard and Carleton, more than 95% return after freshman year — regardless of financial background.


A simple solution with far-reaching impact


What are these schools doing right? While myriad factors influence student satisfaction, these distinctive institutions have one thing in common: offices and programs that streamline the financial aid process for students.


At Carleton, the office of financial aid promises to help students navigate the loans and costs . At all three schools, the college store has point-of-sale technology integrated with the financial aid system, allowing students to receive funds for supplies, textbooks and courseware before classes begin. A student contemplating an important purchase can ask a bookstore associate to check their aid amount on-the-spot. He or she can also find the needed information while making online purchases for pick-up or delivery. Digitally native students on financial aid have omnichannel access to funds.


As campus demographics shift administrators and faculty are asking important questions about systems in higher education that were established in an era when college was mostly the purview of upper and middle-class Americans. Greater inclusiveness and longevity start with a close look at how lower-income students’ campus experience differs from that of their wealthier peers.


It’s not just in the classroom that students from low-income backgrounds face culture shock. It happens in the dorms, the food court, the bookstore and the registrar. It happens with the bureaucracy surrounding financial aid.


Schools like Carleton take a pragmatic approach. They invest in resources that help students get the money they need when they need it. As a result, they further transform the lives of those most in need of educational opportunity.


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