Higher Education:

Restructuring Student Aid Could Reduce Low-Income Student Dropout Rate

HEHS-95-48: Published: Mar 23, 1995. Publicly Released: Mar 23, 1995.

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Pursuant to a congressional request, GAO reviewed how student financial aid affects low-income students' dropout rates, focusing on whether: (1) the timing of loan and grant aid influences students' dropout rates; and (2) restructuring federal grant programs could improve low-income students' dropout rates.

GAO found that: (1) grants and loans do not have the same effects on reducing low-income college students' dropout rates; (2) although grant aid generally lowers low-income students' dropout rates, loans have no significant impact on these students' dropout rates; (3) the timing of grant aid greatly influences students' dropout rates; (4) grant aid to low-income students is more effective during the first school year than in subsequent years; (5) although financial aid program participants have substantially lower dropout rates than other comparable students, financial aid directors and students have mixed views on the potential efficacy of frontloading aid packages; (6) a pilot program could be valuable in evaluating the cost effects of frontloading student aid for low-income college students; and (7) Department of Education officials need to further review their legislative authority to determine whether they are authorized to conduct such a pilot project.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: The Department of Education offered a similar measure in its proposed amendments to the reauthorization of the Higher Education Act of 1965, but the Congress did not include it in reauthorization, and congressional staff indicated that no further action is contemplated.

    Matter: If Congress is interested in increasing the number of low-income students who stay in college, it may wish to direct the Department of Education to conduct a pilot program of frontloading federal grants at a limited number of 4-year schools chosen to generally typify such schools. The pilot should cover a 4- to 5-year college cycle and enable an assessment of potential benefits and costs and a decision regarding the approach's broader applicability. This action may require Congress to grant the Department authority to conduct such a pilot.

 

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