New research uncovers the main barrier preventing student success: financial instability
September 29, 2020
Despite massive investments over the past decade, efforts to improve enrollment and retention still aren’t moving the needle. Today, 1 in 3 students who enter universities won’t graduate. 1 U.S. Department of Education, National Center for Education Statistics. The Condition of Education 2020. https://nces.ed.gov/programs/coe/indicator_ctr.aspAnd what’s worse? Students aren’t simply struggling to succeed academically. They’re struggling to succeed financially. Over 19 million adults who have student loan debt did not complete their degree.2 The Chronicle of Higher Education. The Almanac, 2020-2021. https://www.chronicle.com/package/the-almanac-2020-2021
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Academic success is critical, but it’s underpinned by each student’s financial stability and security.
Whether it’s finding ways to afford tuition, to afford transportation to and from class, or to afford taking time away from work to be in school—the main reason students say they don’t finish their college program isn’t related to their ability to learn or perform. It’s about successfully navigating how to pay for it.
The main reason students leave college
Many surveys address why students leave or never even attend college, and financial instability consistently ranks as one of the leading factors. But what is the main factor?
CampusLogic recently surveyed nationally representative populations of high school graduates and college students who had never completed and asked them to specifically identify the main reason they left or did not attend college. In both instances, “I did not think I could afford it” was the most selected answer.
Which of the following best describes the main reason you did NOT go to college?
Became full-time care giver for a dependent
10.56%
Not prepared for college-level work
11.35%
Did not believe I could afford it
30.48%
Personal or family health issues
11.95%
Preferred getting a job to more training
21.91%
Other (please specify)
13.75%
For respondents who did not go to college, 30.48% claimed they chose not to go because they didn’t believe they could afford it.
Which of the following best describes the main reason you left college before completing your program?
Became full-time care giver for a dependent
11.51%
Did not believe I could afford it
19.84%
Struggled to academically succeed
14.68%
Personal or family health issues
17.26%
Actual experience did not meet expectations
9.52%
Other (please specify)
27.18%
For respondents who didn’t finish college, 19.48% claimed they left because they did not believe they could afford it. Also, 17.26% of respondents claimed that “personal or family health issues” were their main reason for leaving, while only 14.68% of the students claimed that struggling academically was the main reason. What this data shows is that each student’s decision to leave college is unique and complex. Often academic struggles aren’t the main factor, money is.
Fragmented financial aid + Outdated technology = A dropout crisis
Students who are worrying about how to pay for college are often unable to focus on the academic training they wanted to pursue in the first place. Two out of every five college alumni who finished in the past 10 years reported that they’d considered leaving their institution due to personal or family stress with paying for college.3 Salerno. Leveling Up for Financial Success. https://resources.campuslogic.com/blog/media-mention-campuslogic-and-gallup-study-financial-aid-process-affects-which-colleges-students-chooseInstitutions that keep education costs transparent and provide students with resources to maximize affordability increase the likelihood that students will complete their program of study.
Virtually all non-completers had some concern about being able to afford the institutions they had applied to, and more than half of respondents said they were “very concerned.”
Today, more than ever, students’ sense of a higher education program’s value is determined not just by the quality of the education, but also by their ability to successfully pay for it. Yet students still struggle to access the funding that’s available to them.
Streamlining and simplifying the financial aid process can help improve student financial success, which will keep more students enrolled and more on the path to graduation.
A handful of rescued students is all it takes
With a modernized financial aid process, higher education institutions can expect a big return on investment. A better ROI through financial aid modernization comes from five key areas: improved verification processes, a rise in scholarship allocation, an increase in outcome-based funding, the reallocation of time from answering routine inquiries to focusing on students in need, and long-term positive impact on brand affinity.
More students complete verification
US Department of Education data shows that on average 22% of students receiving federal aid are selected for additional verification. However, 11% of students selected for verification don’t complete the process. Reducing this fallout rate can dramatically increase enrollment and retention.1 U.S. Department of Education, National Center for Education Statistics. The Condition of Education 2020. https://nces.ed.gov/programs/coe/indicator_ctr.asp
More internal and external scholarships awarded
Using a combination of AI and scholarship management technology, institutions can increase the number and value of scholarships awarded. Many institutions have internal scholarships that go unawarded because students aren’t matched with awards they qualify for. Imagine the difference it would make if 20% more scholarship dollars were allocated internally and externally due to better matching.
More outcome-based funding
With a streamlined financial aid process, public institutions may receive additional outcome-based funding as they demonstrate their impact by enrolling more low-income or minority students.
More time for staff to spend rescuing students
A significant portion of a financial aid counselor’s day is spent with routine inquiries, verification, and overhead. Modern systems with AI powered chatbots and user-friendly digital experiences can decrease call volumes and reduce the administrative burden, freeing staff to spend more time working with first-generation college goers and rescuing other students in need.
More brand affinity
The long-term value of financial aid modernization is the high brand affinity that alumni have for the institution. There is no debate that the student experience is critical to future alumni engagement. Parents and students who have a positive financial aid experience will have a higher overall perception of the institution, making them more likely to engage and donate after graduation.
Improving student financial success is the fastest path to improved outcomes for students and increased enrollment and retention for higher education institutions.
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CampusLogic’s award-winning platform smooths the financial aid experience—for your students and your staff.
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