Institutional Merit-Based Aid and Student Departure: A Longitudinal Analysis

The use of merit criteria in awarding institutional aid has grown considerably and, some argue, is supplanting need as the central factor in awarding aid. Concurrently, the accountability movement in higher education has placed greater emphasis on retention and graduation as indicators of institutional success and quality. In this context, this study explores the relationship between institutional merit aid and student departure from a statewide system of higher education. We found that, once we account for self-selection to the extent possible, there was no significant relationship. By contrast, need-based aid was consistently related to decreased odds of departure.