A 3-Step Process for Using Financial Aid to Boost Student Retention
As colleges and universities look to meet enrollment goals, they are enacting new recruitment strategies, targeting non-traditional learners, and using data to create more in-demand academic programs. Many institutions are also strategizing how to retain more students, turning to technology to help them identify at-risk students and implement early intervention strategies. But another tool available to improve student retention rates—one that should not be overlooked—is financial aid.
Retention remains a big problem for higher education. The overall undergraduate student dropout rate is 40%. One of the main reasons students give for dropping out of school is that the cost of attending college is too high. It stands to reason that institutions looking to retain more students should offer more financial aid, but there are few institutions that have the resources to offer aid to students who need it. Yet this doesn’t mean institutions can’t leverage financial aid as a retention tool.
Let’s dive into a three-step process that institutions can follow to use financial aid to boost student retention.
1. Identify Students With the Highest Unmet Need
Unsurprisingly, students with the highest unmet need—the amount of money a student is responsible for paying after obtaining financial aid—are less likely to persist in their educations than those with lower amounts of unmet need. Institutions should take steps to identify these students and look for additional signs that may indicate they are in danger of dropping out—poor grades and attendance, a drop in credit hours, etc. Institutions can then intervene.
Intervention strategies might include meeting with financial aid counselors or even with academic advisors or other faculty members. Together, the institution and student can collaborate on ways to increase a student’s financial aid.
2. Use Financial Aid to Incentivize Student Engagement
The more engaged a student is on campus, the more likely that student is to persist with their education. Promising more financial aid to engaged students—those with high GPAs or who participate in extracurricular activities—ensures that funding goes to students who are more likely to re-enroll. Once an institution identifies students with high unmet need, they can use financial aid to incentivize further campus involvement.
By becoming more invested in an institution, students with high unmet need not only strengthen their affiliation with a school, they also strengthen the possibility of qualifying for merit-based aid. Increasing engagement and lowering the amount of need strengthens the chances of a student returning to campus next semester.
3. Make It Easy to Reapply for Financial Aid
Intervention strategies can only work if a student follows through on completing the FAFSA. Financial aid can be a complicated process, and application anxiety doesn’t only impact students applying to academic programs, it can also impact students applying for aid. Additionally, if students are heavily engaged in their schoolwork or extracurricular activities, they can miss key deadlines.
Colleges and universities should make every possible effort to simplify the financial aid renewal process—which will help retention rates across the board. Financial aid staff need to increase communication with students around important deadlines and need to create more opportunities for students to access help.
Supported Student Return to Campus
The less worried a student is about the cost of college, the more connected they feel to their campus, the more likely that student is to remain enrolled. It may be difficult for colleges and universities to find enough funding to offer aid to students in need, but even a little bit can improve the odds that a student will return to campus. If institutions can identify the students who need additional help, if they can get these students more involved in campus life and make sure they complete the FAFSAs, they’ll be better able to meet retention goals.
