Moderator Effect of Financial Aid on Predictors of Community College Graduation Rate

This study examined the resource allocation decisions community colleges make in order to gain insight into the relationship of those decisions to graduation rate and whether those relationships were influenced by the percentage of students at the college receiving financial aid. Much of the literature on persistence and graduation rate in higher education is based on student characteristics such as SAT scores, high school GPA, ethnicity, and socioeconomic status, or on college selectivity. This study switches the focus to the characteristics of the college rather than the student. The relative lack of literature on community college graduation rates and the causes of the high variability in graduation rates provided an opportunity for discovery of how college resource allocation decisions and financial aid can influence graduation rate. By using a hierarchical ordinary least squares regression on data obtained from the IPEDS database, this study explored the relationship between college resource allocation decisions on expenditures on instruction, academic support, student services, institutional support, faculty salary, the percentage of instructional staff who are full-time, and professional staff to student ratio to graduation rate, and examined whether the relationship of those predictors of graduation rate was influenced by the percentage of students at the college receiving financial aid. The results of this study indicate that the moderator effect of the percentage of students receiving financial aid was mixed among the predictors and that some of the predictors are significant in predicting graduation rate singly. The results also reveal two fundamental concepts: resource allocation at community colleges has a small but significant impact on graduation rate, and the percentage of students receiving financial aid at community colleges has an impact on some of the resource allocation predictors of graduation rate. The aggregated data of this study provide a generalized picture of the resource allocation variables\u27 impact on graduation rate and establish a foundation for further research on the complex interactions of community colleges and the graduation goals that benefit students and society