Does Financial Aid Affect Academic Performance? The Effects of Student Aid on GPA
Dr. Sarah Estelle
Increasing numbers of students are attending higher education institutions. From 2001 to 2011 enrollment in degree-granting institutions increased by 32 percent. Over the past seven years, the proportion of students receiving any amount of aid at these institutions has increased by 10 percentage points. As more individuals receive aid and pursue college degrees, it is important to recognize the potential financial aid has for effecting where students attend and how they perform when they get there. Using a dataset internally acquired through Hope College, this research focuses on the effect of financial aid on student academic performance as measured by GPA. Understanding the factors that contribute to greater academic performance can help both students and institutions. The empirical results of this research, though not causal, show a positive correlation between merit financial aid and collegiate GPA, though the magnitude of this relationship diminishes with the addition of controls for observable student ability. Needs-based aid appears to decrease GPA, although this correlation may be confounded by unobservable student characteristics, such as the student's financial resources and necessity of maintaining school year employment. The main control factors of race, gender, and past academic history prove to be the biggest indicators of collegiate academic performance and significantly affect student GPA.
A recommended citation will become available once a downloadable file has been added to this entry.