Grants Vs. Loans

Career College Central summary:

Much of the debate about encouraging college completion has focused on academic requirements, advising or the curriculum. Many experts commonly say that completion rates are about much more than money. But a study released here Thursday at the annual meeting of the American Educational Research Association suggests that money, and different kinds of money, matter a lot in the graduation of low-income students.
Specifically, the study found a direct positive relationship between government aid and the graduation rates of low-income students from four-year colleges. And the study found a negative relationship between obtaining unsubsidized student loans and graduation rates.
Ray Franke, the author, is an assistant professor of education at the University of Massachusetts at Boston, and he used two databases from the National Center for Education Statistics to track low-income students, and to control for various experiences.
These were among his findings:
- For every $1,000 in additional aid received, federal grants increase the chances of a low-income student graduating within six years by 2.42 percent to 2.82 percent.
- State need-based aid has a similar impact, with each $1,000 increasing the chances of graduation by 2.4 percent to 2.59 percent.
- Institutional need-based grants have a similar, but smaller, impact, with each $1,000 increasing graduation odds by 1.31 percent to 1.62 percent.
- Each additional $1,000 in unsubsidized federal loans, however, makes low-income students 5.66 percent less likely to graduate in six years.

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