Financial Aid as Retention Predictor: The Relationship of Financial Aid to Retention at a Virginia Community College

This study examined the relationship between student financial aid awarded, unmet financial need, and fall-to-spring student retention of students at a small, public, southeastern, U.S. community college. The research hypotheses drew upon past research on retention theory, employing economic persistence theory. This study focused on three areas: the amount of grant awarded per student, the amount of loan awarded per student, and the amount of unmet need per student. These variables were then used as the predictors for student retention. The research methodology was an exploratory, non experimental quantitative study of ex post facto data using logistic regression. The participants of this study included students who enrolled in the fall 2008 and spring 2009 semesters in a community college and received financial aid in the form of Pell grants, Stafford loans, or both. This research discovered the following. First, a positive significant predictive relationship was found between grant award amounts and retention. Second, a positive significant predictive relationship was found between loan award amounts and retention for financial aid students. Both the federal Pell grant and federal loans increased student retention rates, up 12 percent and 14 percent respectively. A negative significant predictive relationship was found between amounts of unmet need and retention for financial aid students. This research on financial aid as a predictor of student retention at community colleges is of interest to higher education, specifically community colleges, because of the increasing need to retain their student population until graduation and/or successful transfer to four-year schools. This study is also of interest to those in public policy and to those who allocate funding for financial aid