The Effect of Need-Based Financial Aid on College Persistence

The relatively low rates of college success among poor students already entering higher education must be addressed if investments in access are to have long-term payoffs for disadvantaged populations. It is especially notable that differences in completion rates by family income persist even among students who are well-prepared for college. Are income differences a reflection that money matters, that increases in financial aid could improve college completion rates? Or, do the root causes of these differences lie elsewhere (for example in lasting effects of poverty not remedied by a short-term influx of cash)?

For more than thirty years researchers have attempted to isolate effects of need-based aid on college outcomes. Yet no previous study has been able to provide clear and convincing evidence that need-based aid works. Moreover, research to date has not been able to inform policy makers as to exactly how much grant aid is required to increase completion rates, how much change in those rates could be generated by the provision of aid, and for which students.

A new large-scale scholarship program, the Fund for Wisconsin Scholars provides a golden opportunity to study one of the fundamental questions of higher education: What are the impacts of a need-based scholarship on college graduation? Answering this question will also provide invaluable evidence about the potential of need-based aid to reduce the income gap in graduation rates.

This project is partially supported by the Wisconsin Center for the Advancement of Postsecondary Education.