Community colleges, which now enroll over one-third of the nation’s postsecondary students, have become increasingly important to the training of the nation’s workforce and as a gateway to bachelor’s degree programs. The Obama Administration has emphasized community colleges as key to achieving its goal of the United States having the highest proportion of college graduates in the world by 2020.
However, student success rates in these colleges are low. According to the American College Testing Program, for first-time, full-time students, the first-to-second year retention rate at two-year public institutions is 55 percent and the three-year graduation rate is only 27 percent. At the same time, state and federal governments are contending with fiscal constraints, and many states are cutting back on their support to higher education.
As these trends collide, a policy question has come to the fore: Does financial aid affect student retention and completion in the two-year sector? This leads to a related question: Can financial aid be deployed more efficiently to increase student success rates without significantly increasing the aggregate cost of the aid programs?