The Impact of Financial Aid on Persistence: Application of the Financial Nexus Model

• Main Author: Hwang, Dae-Yeop
• Other Authors: Laanan, Frankie S.
• Format: Others
• Language: English
• Published: University of North Texas 2003
• Subjects: Student aid.; College students > Psychology.; Financial aid; persistence; higher education
• Online Access: https://digital.library.unt.edu/ark:/67531/metadc4317/

The purpose of this study was to examine the financial nexus between college choice and persistence for full-time, first-time, first-year freshman college students. The theoretical framework of this study was the financial nexus construct developed by St. John, Paulsen, and Starkey (1996) and Paulsen and St. John (1997). This is the first study to apply the financial nexus construct to full-time, first-time, first-year freshman population; the first to examine baccalaureate/comprehensive and doctoral/research institutions in both public and private sectors separately. The results of this study found that (1) overall, it is slightly evident that there is a financial nexus between college choice and persistence among full-time, first-time, first-year freshman students; (2) the nexus between college choice and persistence may be different by the Carnegie Classification, and (3) the pattern of the direct effects of financial variables (i.e., tuition and financial aid) on persistence was different from the previous results. Unlike in the previous studies, tuition increases appeared to have a positive effect on the enrollment of full-time, first-time, first-year freshman students attending institutions of all Carnegie Classifications. The result suggests that price may reveal a "quality effect" and that higher tuition institution may signal higher quality. In both public and private institution students, students of comprehensive/baccalaureate institutions were more sensitive to tuition than those of research/doctoral institution. This result may raise fundamental questions about the tuition price responsiveness of full-time, first-time, first-year freshman students. The results indicate that public students were more sensitive to grants than private students. Also, students attending comprehensive/ baccalaureate institutions were more sensitive to grants than those of research/doctoral institutions in both sectors.