Higher Education:

Grants Effective at Increasing Minorities' Chances of Graduating

T-HEHS-94-168: Published: May 17, 1994. Publicly Released: May 17, 1994.

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GAO discussed the relationship between changes in student financial aid and low-income student persistence in pursuing higher education. GAO noted that: (1) federal grant aid has not kept pace with increases in college tuitions; (2) minorities could be disproportionately and adversely affected by decreased grant aid despite college efforts to recruit and retain them; (3) additional grant aid could generate higher minority graduation rates and lessen their dropout rate; (4) while shifting federal education aid toward loans could initially save money, it could have an negative long-term impact on the economy; (5) although both grants and loans reduce student or family education outlays, loans do not reduce the net cost of education to the student over time; (6) although federal grant costs exceed loans of equivalent amounts, grants better stimulate the economy since they encourage students to finish their education and increase their earning potential; and (7) several factors contribute to minority student persistence and low dropout rates including high test scores and high school grades, student preparation for college, graduating from high schools with high college-bound graduate rates, and family educational background.

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