Priced Out? The Influence of Financial Aid on the Educational Trajectories of First-Year Students Starting College at a Large Research University

Daniel R. Jones-White, Peter M. Radcliffe, Linda M. Lorenz, Krista M. Soria

Research output: Contribution to journalArticlepeer-review

8 Scopus citations


While the literature on postsecondary student success identifies important academic and social factors associated with student outcomes, one question that persists concerns the influence of financial aid. We use the National Student Clearinghouse's StudentTracker service to develop a more complete model of student success that accommodates opportunities for students to choose to either graduate from the university of first-entry, graduate from a transfer university, or depart from college without a degree. The multinomial regression model reveals differential effects of financial aid. Results suggest that loan aid appears to encourage students to search out alternative institutions or drop out of college entirely, and merit aid appears to increase the likelihood of students persisting and graduating from the university of first-entry.

Original languageEnglish (US)
Pages (from-to)329-350
Number of pages22
JournalResearch in Higher Education
Issue number4
StatePublished - Jun 2014

Bibliographical note

Funding Information:
To discern the independent effects associated with of each of the forms of financial aid available, our study grouped different financial aid variables into three broad financial aid types: need-based grant aid, loan aid, and institutional merit aid. Need-based grant aid is a continuous variable that measures the total amount of need-based aid awarded to the student from the following sources: (1) the federal Pell Grant program, (2) the federal SEOG grant program, (3) the Minnesota state grant program, and (4) institutional need-based awards offered by the University’s Office of Student Finance. In fall 2002, more than 39 % (n = 2,035) of new high school students received some form of need aid with the average first-term need award among recipients being $2,417.05. Of the 2,035 need-based awards allocated to students, 49.5 % (n = 1,008) included money from federal grant programs, 59.0 % (n = 1,200) included money from the state grant program, and 49.9 % (n = 1,107) included money from institutional resources.

Funding Information:
Cost Unmet Need (in $1,000s) Financial aid award Need aid (in $1,000s) Loan aid (in $1,000s) Merit aid (in $1,000s) Student characteristics Demographics Female Underrepresented minority Asian First generation Age [19 Geographic origin Out-of-state Reciprocity state Academic background Composite ACT No. AP credits Remedial course taken First semester academic performance Course completion ratio C Count D Count Academic and social integration First choice college Living on campus Living learning community Athlete


  • Financial aid
  • Graduation outcomes
  • Multinomial logit model
  • Student success


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