Budgetary concerns and program changes have limited grant aid for low-income students. Students who received frontloaded grants had a lower dropout probability than other comparable students. Grants versus loans: Grants significantly reduced dropout probabilities for low-income students. First-year students: Grants were most effective in reducing low-income students’ dropout probabilities in the first year. Such a pilot program, moreover, would need to address several implementation issues. Although some of these students would graduate, on the whole their dropout rate could be higher than that of the current student population. Restructuring federal grant programs to feature frontloading could improve low-income students’ dropout rates without changing any student’s overall 4-year allocation of grants and loans. Recommendation to the Department of Education

We recommend that the Department of Education conduct a pilot program of frontloading federal grants at a limited number of 4-year schools to evaluate the impact of frontloading on reducing dropouts among low-income college students. Dropout probability (percent)
Change in probability from baseline (percent)
Low income (income categories 1 and 2)

	Analysis of Data From a Public University

We analyzed financial aid data provided to us by a public university to examine (1) the relationship between different types of financial aid and whether students remained in college from year to year and (2) the effectiveness of a program involving an alternative form of financial aid packaging. Loans did not have a statistically significant effect. Changes in Financial Aid and Student Dropout Rates

In general, most directors said that changes in federal financial aid have not greatly affected dropout rates for the student population as a whole, but some directors were concerned about dropout rates for specific groups.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed how student financial aid affects low-income students' dropout rates, focusing on whether: (1) the timing of loan and grant aid influences students' dropout rates; and (2) restructuring federal grant programs could improve low-income students' dropout rates.

What GAO Found

GAO found that: (1) grants and loans do not have the same effects on reducing low-income college students' dropout rates; (2) although grant aid generally lowers low-income students' dropout rates, loans have no significant impact on these students' dropout rates; (3) the timing of grant aid greatly influences students' dropout rates; (4) grant aid to low-income students is more effective during the first school year than in subsequent years; (5) although financial aid program participants have substantially lower dropout rates than other comparable students, financial aid directors and students have mixed views on the potential efficacy of frontloading aid packages; (6) a pilot program could be valuable in evaluating the cost effects of frontloading student aid for low-income college students; and (7) Department of Education officials need to further review their legislative authority to determine whether they are authorized to conduct such a pilot project.