The Effects of Financial Aid Packaging on the Enrollment Outcomes of the Most Economically Disadvantaged Students at a Large Urban Community College District

Increasing college costs, coupled with decreasing financial aid has raised public concerns over the affordability of higher education. For the past four decades, the nation has seen the cost of tuition rise at levels that exceed inflation, and financial assistance rates that have not kept pace with that growth. Studies suggest that these financial resources play a role in influencing college attendance decisions and persistence for low-income students. This study examines the characteristics of zero-EFC students as compared to non-zero EFC students, and determines the extent to which a gift-aid only, and gift-aid plus loans award’s package affects the likelihood of persistence. Also, it explores the relationship between the ratio of loans-to-gift-aid, and the likelihood of persistence across income levels. By employing logistic regression, this study aims to determine if there are differential effects among financial aid award packages, and if the ratio of a loans-to-gift-aid package affects persistence by income status. Results demonstrated that a gift-aid only package, and a gift-aid plus loans package negatively influenced the enrollment outcomes of zero-EFC students and positively influenced the enrollment outcomes of high-income students. Additionally, when examining the ratio of loans-to-gift-aid for students with a gift-aid and loans package, results showed that the higher the ratio of loans to gift-aid, the higher the likelihood of persistence for all income levels. In an era where the rising costs of a college education are becoming more difficult to cover with present levels of financial aid, earning a higher education credential is possible if students are willing to take on educational debt. A comprehensive higher education plan that acknowledges financial barriers as fundamental obstacles to the college success of its lowest income students is necessary to preserving equal opportunity to upward social mobility.