Report Ties State Aid to Improved Graduation Rates

Report: “Examining the Role of the State: Need-Based Grants and Their Effect on Student Persistence and Degree Completion”

Author: Ray Franke, an assistant professor of higher education at the University of Massachusetts at Boston

Summary: Although other researchers have looked at how students benefit educationally from federal or institutional aid based on need, few researchers have specifically examined how need-based state aid helps its recipients’ prospects for college completion.

Mr. Franke based his study on data from the American Institutes for Research’s Delta Cost Project and the Education Department’s Beginning Postsecondary Students Longitudinal Study. He examined access to need-based aid, as well as college persistence and graduation rates, in all 50 states, focusing on how the completion rates of four-year-college students in the 34 states that allocate aid mostly in the form of need-based grants compare to completion rates elsewhere. His analysis sought to mathematically control for differences between students and between colleges.

Mr. Franke’s analysis found a strong connection between need-based state aid and persistence for low-income students. For every $1,000 in such aid that they received, they were 4.6 percent more likely to persist beyond their freshman year, and 7.7 percent more likely to graduate within six years. He presented his findings on Sunday at the annual conference of the American Educational Research Association, but his paper is not available online.

Bottom Line: State spending on need-based aid helps ensure that low-income students who enter four-year colleges actually emerge with a degree.

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