Around this time of year, incoming college freshman are completing their back-to-school shopping and planning their first semesters away from home. Research by ThirdWay suggests that at the average public institution, less than half of first-time, full-time students graduate within six years. Further studies indicate that student attrition is extremely costly. The Educational Policy Institute studied the cost of a single year of student attrition in 1,669 colleges and universities and found that they collectively lost $16.5 billion due to student attrition, with the average school losing nearly $10 million.
Many of our Higher Education clients request research to help them make decisions that will positively impact student retention. There are many tools universities can employ to increase retention, like improved student services and early credit accumulation, but institutional leaders realize that a holistic approach that involves all aspects of student life is likely to have the strongest impact. Although data is unclear about the statistically calculable effects of financial aid on student retention, through our research we’ve identified strategies that can indirectly play a large role in student experience. Below are three tips for schools and universities who are looking to use financial aid to increase retention.
- Simplify the financial aid application process: By making the process less daunting and more approachable to students, colleges and universities can help reduce the financial aid barriers that harm student retention. Higher education institutions can help students identify the opportunities available to them and familiarize them with the process. Advising offices can take further steps to send out reminders, and provide guidance about the financial aid process.
- Target financial aid to students with the largest unmet needs: Because the cost of attending two- and four-year colleges has risen over the past two decades, financial aid now covers less of the cost of higher education than it did in the past. Our research suggests that student retention is most positively impacted when financial aid is targeted to students at the bottom half of the income distribution scale, rather than students who are less in need of aid.
- Tie financial aid to academic progress and student supports: Research shows that retention is higher when financial aid is contingent on academic progress, such as GPA and class credits. This also has additional positive effects: financial aid based on academic benchmarks have also resulted in increasing the number of credits that students earn during their first year of college.
More details about these three approaches are available in our report, Best Practices in Higher Education Retention Strategies. This report covers a wide array of best practices for student retention that are valuable to all types of higher education institutions.
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