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Enrollment and financial aid decisions of first-year students at a private institution

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Enrollment and financial aid decisions of first-year students at a private institution

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Content ENROLLMENT AND FINANCIAL AID DECISIONS OF FIRST-YEAR STUDENTS

AT A PRIVATE INSTITUTION

by

Guadalupe García Montaño

A Dissertation Presented to the
FACULTY OF THE USC ROSSIER SCHOOL OF EDUCATION
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF EDUCATION

August 2010

Copyright 2010 Guadalupe García Montaño
ii
Dedication

This dissertation represents an accomplishment dedicated to the person who,
more than anyone, helped me reach it. From preseason to March Madness, training
camp to the Super Bowl, and spring training to the World Series, I typed. All the while,
Antonio Arvizu Peralta prepared “nacks,” and cheered more for me than for the teams.
Through the courses, the homework, the tears and the celebrations, you waited and you
loved me. I am eternally grateful. Thank you for getting me here. I love you back.

iii
Acknowledgments

The most significant finding to arise from this study is that it takes a village to
write a dissertation. I did not enter this program alone, literally and figuratively, and I
certainly leave it with many wonderful new friends, colleagues and mentors. I know
this accomplishment is due to the many who came before me, and I hope I am part of a
growing line of immigrant, first-generation college students to earn a doctorate.
My deepest gratitude goes, first and foremost, to the ones who have shared the
entire journey with me: my family. I am the product of many years of sacrifice and
hard work on the part of my parents, Maria Ines Montaño Alatorre and Rafael
Hernandez Garcia. Gracias. To say that my sisters keep me grounded is an
understatement. There really were, and probably will continue to be, times I felt my
mind too saturated with academic research to allow me the luxury of “common sense.”
My sisters never fail to save me with laughter, understanding, translations, and, mostly,
patience. Thank you, Maria, Teresa, and Janet for leading me by the hand when I need
it. Thank you and your husbands, above all, for allowing me to be a second mother to
your children. They are my whole world. Those wonderfully incredible babies who
showed up to rescue our family are the foundation for my life’s work, the reason I
chose to go to graduate school, again, and the light at the end of this tunnel. Denise,
Daniel, Briana, Ruben and David teach me, every day, the meaning of pride and joy.
Throughout my journey in higher education, one person has, literally, been by
my side from day one. Sandra Ochoa became an instant friend at freshman orientation,
iv
a constant companion through college, a needed shoulder and ear through life’s ups and
downs and a classmate in this Ed.D. program. I am very proud of you.
I also sincerely thank those who provided advice and support in my decision to
pursue this study. Dr. Homero del Pino’s advice and accomplishments inspire me to
keep moving forward. Dr. Tara Yosso’s research and friendship add extra meaning to
my work. Erica Hamilton joined me on this path and let me know we would get it right
eventually. Mrs. Estella Peralta offered long distance motherly counsel.
The students I met in this program are some of the most dedicated,
compassionate, and intelligent educators currently in practice. I am lucky to have you
as classmates and friends. I especially thank Laura Castañeda, Wendy Stewart,
Kneeland Brown, David Stevens, and Jason Pappas for your support and
encouragement. Fight On!
I owe a debt of gratitude to those who were there to catch me when I took a leap
of faith. My coworkers in the USC Ed.D. Program Office have been generous, caring,
and patient friends and mentors in my time here. Thank you, Dr. Kathy Stowe, Jessica
Gibson, Margaret Cyrus, Nadine Singh, and Rocke DeMark.
The faculty members of the USC Rossier School of Education provided me with
a first-rate education and many eye-opening moments. I particularly thank Dr. Sylvia
G. Rousseau for giving me the language with which to intelligently and effectively
address discrimination in education and in everyday situations. The learning I gained in
your class changed my life. I am grateful to Dr. Margaret Reed for validating my
ability as a leader at a time when I questioned it, and I am indebted to Dr. Estela M.
Bensimon and Dr. Alicia C. Dowd because their high expectations allowed me to
v
become the academic I have always wanted to be. I thank Dr. Rey Baca for dedicating
much of his own time to helping me conceptualize this study. Dr. Linda A. Fischer is
largely responsible for the success of the many hours that went into writing this
dissertation. Thank you for keeping the doors open for so many of us.
Writing this dissertation was by no means a one-woman endeavor. Many
people facilitated access for me before even meeting me. My heartfelt thanks go to the
administrators and faculty at the institution where I conducted this study. Your
assistance made my research possible. The conversations I had with the interview
respondents fill me with hope. I am privileged to have met such talented young people.
The village which produced this study came together due to the strong
leadership of my village leaders. I sincerely and deeply appreciate the efforts of my
dissertation committee. Dr. Campbell, I thank you for agreeing to support this study
almost sight unseen and for the advice which made this work better. Dr. Tambascia, I
thank you for helping me understand the context into which I was walking, for your
care and concern as I made slow, but steady progress, and for your availability and
understanding during my last-minute concerns. Above all, I wholeheartedly thank Dr.
Mark Power Robison for your guidance through each step. Words cannot capture the
gratitude I feel, for you walked me through this journey and did not allow me to waver.

vi
Table of Contents
Dedication ii
Acknowledgments iii
List of Tables viii
Abstract ix
CHAPTER 1: Introduction 1
Background 1
Merit Aid 4
The Freshman Year 6
Purpose of the Study and Importance of the Problem 7
Theoretical Framework 7
Research Questions 10
Limitations, Delimitations, and Assumptions 11

CHAPTER 2: Review of Literature 13
Introduction 13
Enrollment Management 15
Merit Aid and Needy Students 19
Freshman Retention 22
Institutional Aid and Persistence 25
Private Institutions 27
Theoretical Framework 28
Conclusion 30

CHAPTER 3: Methodology 32
Setting and Population Sample 32
Qualitative Methods 36
Data Recording and Analysis Procedures 40
Validity 43
Limitations and Bias 44

CHAPTER 4: Results 46
Cohort Comparison 47
Individual Cohorts 49
Summary 77

vii
CHAPTER 5: Conclusion 79
Introduction 79
Summary of Findings 80
Sociocultural Analysis 82
Recommendations 84
Closing 87

References 88

Appendix: US Department of Education EFC Formula 95

viii
List of Tables

Table 3.1: Interview Protocol 39
Table 3.2: Creswell’s Steps for Data Analysis in Qualitative Research (2009) 41
Table 4.1: Freshmen 2008 and Freshmen 2009 Comparison 48
Table 4.2: Freshmen 2008 Academic and Financial
Statistics by Academic Quintile 50

Table 4.3: Freshmen 2008 Statistics by Estimated
Family Contribution 52

Table 4.4: Freshmen 2008 Home Community Economic
Data – 2000 Census 53

Table 4.5: Freshmen 2009 Academic and Financial
Statistics by Academic Quintile 55

Table 4.6: Freshmen 2009 Statistics by Estimated
Family Contribution 56

Table 4.7: Freshmen 2009 Home Community Economic
Data – 2000 Census 57

Table 4.8: Interview Participants 61

ix
Abstract

With the goal of determining how institutional financial aid practices affect
student enrollment beyond the first year, this study examined the decisions first-year
college students make as a result of the financial aid packages they receive. In
particular, this study analyzed the effect of students’ family finances, perceptions of
likelihood of college completion, financial aid packages, and level of comfort with
campus resources on these decisions. The sample consisted of twelve first-year college
students, as the freshman year is most telling of future academic success. The setting
was a small, selective, private liberal arts college. The respondents had already proven,
through having been admitted, to be education-driven, and this academic achievement
helped dispel assumptions, discussed in the literature review, about students’ lack of
desire for or valuing of higher education in regard to their enrollment decisions.
This study found that family served as a motivating factor and a financial
resource. The respondents felt well prepared for college academics and were
apprehensive about accepting student loans. They also considered completing at least
some coursework at another campus in response to their financial circumstances, which
previous research has shown may be detrimental to eventual degree attainment. In
addition, this study found students are not knowledgeable about the components of their
own aid packages and are not comfortable seeking help on campus. A central finding
of this study is that, in order to maximize the probability that students make informed
decisions regarding both aid and enrollment, student services providers should seek to
integrate resources and broaden communication channels among those who interact
with first-year students.
1
CHAPTER 1: Introduction
Background
Currently, among colleges and universities, competition for talented students
places those whose academic accomplishments are less than stellar at a disadvantage in
terms of earning a college degree. Consistently, students who meet but do not
significantly exceed entrance requirements find that their financial aid packages include
student loans. The 2009 CIRP Freshman Survey found that approximately 53% of the
more than 200,000 respondents currently hold student loans (Higher Education
Research Institute, 2010).
While loans are a common way to finance education, the prevalent reliance on
them across institutions may pose a significant barrier for students who are unwilling,
unable, or misinformed as to taking on this debt (Perna, 2008). When these package
offers are accompanied by reluctance to incur debt and limited finances, students may
make uninformed or detrimental decisions regarding their education or choose to take
extended breaks from education altogether (Cabrera, 1988). This study seeks to analyze
select sociocultural factors that contribute to students’ enrollment decisions when they
receive aid packages that do not cover the total cost of attending college.
The College Board reports that, during the 2007-2008 academic term, the
amount of federal loan money students in the United States borrowed for postsecondary
educational expenses reached almost 67 billion dollars, while private lender money
borrowed reached almost 18 billion (College Board, 2009). Within federal loans, the
Stafford loan is the most widely used and one for which the government may cover the
interest while the student is enrolled in at least a half-time equivalent course load. This
2
type of loan is available to those who qualify for need-based aid. The amount borrowed
under this type of loan for the 2007-2008 academic term was close to 28.5 billion
dollars (College Board, 2009). A second type of Stafford loan, unsubsidized, is
available to all students regardless of need. The interest on this second type of loan
accumulates and is added to the principal until the student enters repayment (Wei,
Berkner, & Carroll, 2008). Under this loan program, students borrowed 26.5 billion
dollars during the 2007-2008 term (College Board, 2009). In addition, the rate of
students who received a subsidized loan increased from 22 percent in 1995-96 to 28
percent in 2003-04, and the percentage of those who received an unsubsidized loan
grew from 10 to 21 from 1995-96 to 2003-04 (Wei, Berkner, & Carroll, 2008).
In a fairly recent development, students now turn to subsidized and unsubsidized
government loans as well as private loans to pay for tuition, and a much higher number
of students are now taking out the maximum allowable amounts of loan money. Wei,
Berkner, and Carroll (2008) report that the rate of those receiving both types of
government loans increased from 7 to 15 percent between the 1995-1996 and 2003-
2004 academic terms. Also, while the percentage of students who borrowed the
maximum from both types of loans stood at 57 in 1995-96, in 2003-04, that number
grew to 73 percent. Although these numbers indicate significant growth, private loans
currently represent the fastest growing element in financial aid packages (Jensen, 2008).
This trend is troubling for two reasons. The first is that this growth is facilitated by
escalating college costs and the resulting need encountered by students. The second is
that private loans do not guarantee the same safeguards, such as fixed interest, of
government loans (Institute for Higher Education Policy, 2006).
3
While the cost of tuition is set by individual campuses, students can take steps to
reduce the amount of money they owe during any particular term by enrolling in less
than a full-time course load, relying on family to cover some of the costs, or taking
prolonged breaks from their primary campus or from college education altogether.
Unfortunately, registering for less than continuous full-time status carries its own risk.
A report from the National Center for Education Statistics looks at the more than 5
million undergraduate students who were enrolled part-time during the Fall 2004 term
and finds that this type of enrollment is negatively correlated with persistence and
eventual degree completion (Chen & Carroll, 2007). Considering the steady increase in
tuition costs across institution types, it can be expected that the trends of taking on
loans, borrowing the maximum allowable amount, and seeking alternative means to
reduce debt will continue and probably increase even as institutions of higher education
seek to diversify their student populations and offer as much assistance as financially
feasible (Hubbell, 1992).
The National Association of Independent Colleges and Universities reports that
its member institutions use aid funds to further their dedication to providing access for
students from diverse socioeconomic backgrounds (NAICU, 1997). However, given
the current economic climate, the New York Times (March 30, 2009) recently reported
that colleges and universities are more apt to accept students who do not apply for
financial aid or whom they determine to be less likely to require large amounts of
assistance. This practice, though necessary for the stability of a campus, challenges
socioeconomic diversity on college campuses, and the resulting homogeneity of student
bodies creates social inequity in the population of college graduates (Marin, 2002).
4
Private institutions are particularly affected by the economic downturn because
they do not have the benefit of government subsidies, and their budgets rely most
heavily on revenue generated by tuition. McPherson and Schapiro (1998) state that the
financial stability of private colleges and universities depends on a continuously
increasing number of students on their campuses. In addition, they present that
increased public awareness and perceptions of rankings and prestige place pressure on
institutions to enroll a pool of academically talented students. To compete with peer
institutions, campuses use institutional funds to attract highly accomplished applicants.
The dual goals of revenue generation and prestige maximization can create a conflict
for administrators: elevating their school’s position within rankings based primarily on
the achievements of the entering class while providing opportunities for students across
the socioeconomic spectrum. To achieve the goals of access and prestige
maximization, campuses entice admitted students to enroll by, among other tactics,
offering tuition scholarships based on students’ individual characteristics (McPherson
& Schapiro, 1998).

Merit Aid
At the outset, the practice of rewarding accomplishment seems administratively
practical and economically sound. However, given the relationship between socio-
economic status and academic achievement, merit aid can widen the higher education
attainment gap between the classes (Marin, 2002). To illustrate, Kahlenberg (2004)
finds that the connection between income level and scholarly success is observed
relatively early in the American educational system. He cites a study by the Economic
5
Policy Institute which found that, in K-12 settings, middle-class schools are 24 times
more likely to produce high academic outcomes for their students than schools
considered high-poverty campuses. Beyond secondary education, students whose
family economics place them at an academic disadvantage early in life see that
impediment carried into their college options through institutions’ practice of using
merit aid awards to attract high-achieving students (Heller & Marin, 2002). Therefore,
aid awarded on the basis of academic accomplishment excludes populations who may
need financial assistance the most (Davis, 2003; Gerald & Haycock, 2006).
Given the link between money and academic achievement (Grinberg, Price &
Naiditch, 2009), merit aid opens the door for high-income, high-achieving students
while making it that much harder for low-income and less academically accomplished
students to compete in the university environment. With minimal or nonexistent grants
and scholarships, these students rely on work-study, loans, employment, and/or their
families’ savings to pay tuition. The monetary burden can have adverse consequences
on the attainment of their degrees (Davis, 2003; Gerald & Haycock, 2006). In addition,
because they come to college under-prepared in relation to their more affluent peers
(Kahlenberg, 2004), these students face further obstacles in terms of educational
performance.
While both public and private schools face the dilemma created by merit aid
practices and an increasing competition for students, private campuses are uniquely
well positioned to respond. Independent campuses can address the needs of low-
income and less academically accomplished students more readily because their
governance structures impose fewer restrictions on the allocation of resources.
6
The Freshman Year
Many campuses, both public and private, respond to the needs of students whose
academic achievements place them in the lower percentiles of their class by focusing on
the freshman year due, in part, to the significance of a students’ experience during the
first few months of college in relation to eventual degree attainment. To illustrate this
point, Horn (1998) looked at students who first enrolled in college during 1989-90 and
finds that approximately 61% of students who persisted into their sophomore year at a
four-year institution received their bachelor’s degree by 1994. In addition, Thayer
(2000) states that the largest number of students who leave higher education do so
within the first two years. Therefore, campuses turn their attention to freshman-year
retention strategies. According to Ishler and Upcraft (2005), to be successful, those
strategies should be based in an understanding that issues such as socioeconomic status,
gender, and parental influence are as salient in students’ college decisions as academic
preparation and a sense of commitment to earning a degree.
Among the most frequently examined efforts to retain students during the first
college year are tutoring and counseling centers, seminars aimed at academically at-risk
students, and the placing of students into small learning communities. Studies show
these interventions serve to acclimate students to the college environment and to
increase their academic performance (Ishler & Upcraft, 2005). Given that institutions
puts forth efforts to address the academic needs of the studied population, attention can
turn to the efficacy of its financial aid practices in retaining these students.

7
Purpose of the Study and Importance of the Problem
Currently, there exists a self-perpetuating cycle of college access and income
distribution in this country along with a prevailing myth of success achieved through
persistence and effort (Grinberg, Price, & Naiditch, 2009). Degree attainment plays a
role in determining career options, income over a lifetime, and quality of life issues.
Those with higher income backgrounds are more likely to go to college, and those with
college degrees are more likely to earn higher incomes. The potential result of giving
aid to those who least need financial assistance is that only a small sector of society will
receive a college education and the benefits that come with it, thus widening social and
economic gaps that cannot be eliminated solely by individual effort (Dynarski, 2002).
Because students from lower income backgrounds are less likely to meet the
rigorous standards required for acceptance into selective private colleges, retaining
those who are admitted is vital to promoting equality of opportunity and economic
mobility for the larger population (Hill, Winston & Boyd, 2005). Campuses respond to
the needs of these students through various student service initiatives, and those efforts
pay off in lower attrition rates. When institutions address academic performance,
attention must shift to the other factors contributing to degree attainment, and foremost
among these is affordability as perceived by students in light of mitigating factors such
as the possibility of incurring debt.

Theoretical Framework
The literature that forms the conceptual basis for this study posits that students’
decisions regarding college in general and financial aid in particular are largely colored
8
by a complex set of beliefs, attitudes, and perceptions that shape expectations, strategies
and actions. These are formed within a student’s family, but are influenced by
community and peer interaction (McDonough & Calderone, 2006). In short, the
literature states that the sociocultural experiences students bring to college from their
families, communities and cultures shape the decisions they make regarding college
affordability and enrollment. Therefore, it is important to study the confluence and
effect of these factors to understand how and why students make decisions regarding
student loans and college enrollment status.
Dowd (2008) writes that the long accepted notion of college as a profitable
investment is not an objective reality, but, rather, a construct born of a socially
dominant group’s privileged financial position. She calls for integrated research
approaches that take into account the interrelatedness of students’ financial
circumstances, perceptions of likelihood to earn a degree, and prior academic
experience, among other factors. She states that though these factors have often been
used in the study of college students, little exists in terms of the influence of these
factors on the ways in which students respond to college debt. She notes that providing
information on financial aid alone is not sufficient to prompt students to take full
advantage of financial aid opportunities. Therefore, a focus on students’ motivations,
expectations and aspirations regarding degree attainment and debt is needed.
McDonough and Calderone (2006) state that understanding the interplay of
beliefs, attitudes and perceptions is necessary to better capture the college enrollment
and financial aid decisions of low-income students and their families. They argue that
research regarding college affordability can be enhanced through a sociocultural
9
conceptual lens because an individual’s evaluation of college affordability is based on
an existing internalized assessment of his/her own need, cost-benefit tolerance and
competing demands. They call for new research that incorporates sociocultural factors
into studies of students’ and parents’ perceptions of college and financial aid. This new
line of inquiry, they state, will aid in indentifying ways to effectively market college
costs across sociocultural groups.
Additionally, Perna (2006) finds that current research has not determined the
extent to which knowledge is a cause or consequence of college outcomes. She argues
that considering the many levels of context affecting students’ college decisions allows
researchers to better gauge how individuals from different backgrounds attain and
utilize financial aid information. Edward P. St. John (2006) finds that the lived
experiences of minority students shape the way they view financial aid and that it is
important to study the ways in which perceptions of finances and college costs
influence the decisions students make.
This study arises from the perspective that students’ financial circumstances,
academic experiences, and perceptions of likelihood of earning a degree influence their
willingness to accept student loans as well as their decisions regarding enrollment
status. The research of McDonough and Calderone, St. John, and Dowd reveal that
students’ decisions regarding college costs and attendance arise from a combination of
several personal dynamics and influences. This study analyzes students’ perceptions of
their likelihood to earn a degree, their families’ financial circumstances as understood
by the students and their knowledge of the institution’ costs and financial aid
10
opportunities to determine the influence of these factors on the decisions students make
regarding student loans and enrollment options.

Research Questions
This study seeks to answer the following research question: How do first-year
students’ family finances, perceptions of likelihood of college completion, financial aid
packages, and level of comfort with campus resources shape their enrollment and loan
acceptance decisions at a selective, private, four-year institution? To aid in reaching an
answer, the following questions must be addressed first:
1. What do students perceive to be their families’ influence and financial
circumstances? What role do these play in their decisions regarding
student loans and their plans for degree completion?
2. What do students perceive as their likelihood of earning a degree, and
how does that perception affect their decisions regarding student
loans?
3. To what extent are students knowledgeable about their institutions’
cost of attendance, their own financial aid packages, and the resources
available to assist them with concerns regarding these?

11
Limitations, Delimitations, and Assumptions
This study is limited to one academic institution, but the findings presented may
be beneficial to similar campuses. A delimitation of this study is that the population
sample consists of twelve first-year students of diverse backgrounds. Lastly, this study
controls for the variations in enrollment caused by academic performance by operating
under the assumption that the supplemental services this population receives are
successful in their efforts to boost students’ grades and rates of course completion.

Definitions
Enrollment management: Tactics used by a college or university to meet
enrollment, retention and revenue goals. These can consist of any combination of
marketing strategies, recruiting and admissions practices, financial aid distribution, and
retention services
Financial aid leveraging: The process of determining the amount of financial aid
that will ensure a student’s enrollment and the granting of that amount.
Institutional aid: Money awarded to a student directly from his/her college or
university and outside of any government or outside agency scholarship or grant
programs.
Merit aid: Institutional aid awarded to students based on academic
accomplishments.
Persistence: For purposes of this study, defined as successfully completing the
first year of college and re-enrolling for a second year.
12
Subsidized loan: Under the federal Stafford loan program, a loan guaranteed by
the federal government for which the interest is paid by the government while the
borrower is enrolled in college and for a six-month grace period once the student leaves
higher education.
Tuition discounting: In this study, this term is used interchangeably with
“financial aid leveraging.”
Unsubsidized loan: Under the federal Stafford loan program, a loan guaranteed
by the federal government for which the interest accrues and is added to the principal of
the loan while the student is enrolled in college.

13
CHAPTER 2: Review of Literature
Introduction
The literature regarding freshman student retention largely finds that academic
performance and financial assistance in the first year play key roles in a student’s
decision to remain enrolled full-time, drop to part-time status, take time off from
school, or leave higher education altogether (Hossler, 2000). Studies consistently show
that students’ first-year experience plays a significant role in persistence and eventual
degree attainment (Zhang & RiCharde, 1998; Zhu. 2002). Studies also show that
students who face financial pressures generally lag behind their peers in terms of
academic achievement during the first year and are less likely to graduate (Murdock et
al, 1995; Cabrera, 1988). The role of the distribution of institutional aid funds in
exacerbating this situation is not as well studied. Because of the stated goal of
socioeconomic diversification of institutions’ student populations (NAICU, 1997), this
study seeks to add to the body of knowledge on the use of aid dollars by a private
institution to retain and graduate students and how that use affects the decisions of first-
year students. An analysis of the literature reveals the relationship between
socioeconomic status and educational opportunities. It also provides insight to issues
particular to private institutions regarding these topics. In addition, it finds that private
institutions are particularly well positioned to address issues that arise from the
relationship of financial assistance with retention.
The Advisory Committee on Student Financial Assistance (2001) finds that
access to higher education for academically prepared low-income students is hindered
by financial concerns. It also finds that qualified low-income students attend four-year
14
colleges at half the rates of high-income students. The Committee’s report states the
nation as a whole loses out on the revenue that would be generated by closing the
higher education attainment gap – as much as 85 billion dollars if most qualified
students reached college graduation. Furthermore, the Committee finds that the cost of
college has risen as a percentage of income solely for low-income families.
Unfortunately, the report states that current federal, state and institutional policies do
not address this fact, but, instead, focus on affordability for middle-income families and
on students’ academic merit. As a result, the amount of low-income students’ unmet
need is steadily increasing, and these students find themselves attending college part-
time or working full-time jobs to be able to afford their education. (Advisory
Committee on Student Financial Assistance, 2001).
Compounding the issue, institutions of higher education increasingly see their
options for ensuring equal access diminish. As income from state appropriations
decline, college campuses become more and more dependent on tuition as the primary
means of remaining economically stable (DesJardins, Ahlburg and McCall, 2006;
Hossler and Kalsbeek, 2008). In addition, while working to increase revenue and
reduce expenses, campus administrators are also charged with improving the publicly
perceived quality and reputation of their campuses (Davis, 2003). The response to
these needs was a relatively new organizational structure referred to as enrollment
management.

15
Enrollment Management
While no uniform inter-campus definition of enrollment management exists
(Wilkinson et al, 2007), the term relates to the strategies utilized by an institution to
meet its enrollment, retention, and revenue goals (Russo, 1999). Hossler (2004) states
that enrollment management is both an organizational structure and a process meant to
exert influence over how many and what types of students enroll at a particular college
or university and plays a role in how well those students do once enrolled. Further,
according to Smith (2000), institutions utilize enrollment management to ensure higher
student satisfaction with the ultimate goal of retaining those students until graduation.
Enrollment management, which originated in the policies of tuition-dependent
private colleges, creates a more direct relationship among the offices of Admissions,
Financial Aid, and Student Services. These branches are charged with recruiting,
admitting and retaining students in order to generate revenue for the institution
(Humphrey, 2008) and provide the desired student body composition. Enrollment
management also influences the manner in which an institution seeks to position itself
in the marketplace, its recruitment strategies, its pricing and financial aid policies, and
the types of curricular and student services it offers (Hossler, 2004).
Early approaches to enrollment management dealt with the relationship between
financial aid awards and matriculation under the assumption that the two were
positively correlated (Hossler, 2000). In addition, most institutional grant money went
to students who demonstrated financial need (Redd, 2000). However, that practice
began to erode in the late 1980s and early 1990s with the emergence of Strategic
16
Enrollment Management, strategies specifically targeted at producing particular
outcomes.
Less selective private colleges use Strategic Enrollment Management to attract
highly academically qualified students as college rankings become more salient in the
public perception of campuses (Hossler, 2004). These policies borrow from the
business world in the areas of advertising, sales and public relations to present a
particular picture to the public and to make that picture a reality on the campus (Davis,
2003). Especially through the last ten years, these types of strategies play a large role in
the administration of higher education, with most of the credit going to the strategic use
of financial aid as a tool to attract students to a campus (Wilkinson et al, 2007).
Because the majority of internal financial aid is derived from tuition revenues,
the most effective way to increase funds is to raise tuition prices. However, a rise in
tuition creates a rise in student need (Astin and Oseguera, 2004). Due to this
relationship, Strategic Enrollment Management is at the center of one of the most
important debates in higher education today (Hossler, 2004). Along with recruitment
and admissions, the use of institutional aid funds is a key player in the development of
an institution’s student body in terms of numbers, racial diversity, academic profile, and
other demographic variables (Hossler and Kalsbeek, 2008). To help ensure the desired
students enroll, campuses use this data to estimate the financial aid award that would
increase the probability of those students’ matriculation (Hossler, 2000).
The process of determining the amount that will ensure a student’s enrollment
and the granting of that amount is known as “financial aid leveraging” or “tuition
discounting” and is the focus of controversy because financial aid funds are used as a
17
tool to attract tuition dollars or to create a particular demographic on campus instead of
being used to ensure affordability for students with financial need (McPherson &
Schapiro, 1998). As a result, institutions of higher education, particularly private
institutions, are accused of using tuition discounting to increase the enrollment of
economically stable students and decrease the representation of lower-income students
(Dowd, Cheslock, and Melguizo, 2008).
The strategic use of financial aid is an integral part of budgeting decisions, as its
effect on student enrollment is crucial to the economic health of a campus (Hossler,
2000). McPherson and Schapiro (1998) argue that these changes in the use of financial
aid funds came about because the environment in which colleges and universities
operate has changed. Increased competition for students, they state, results in a kind of
bidding war among institutions for a paying student’s tuition dollars. As a result,
schools that do not have the same level of resources as the best-endowed institutions but
wish to compete for their applicants craft institutional aid policies that will allow them
to do so. These campuses purposely set out to meet the dual, and often conflicting,
goals of enrolling the most academically accomplished students and obtaining the most
revenue possible from them. Students with very high GPAs or entrance exam scores
are much more likely to receive institutional aid than their less accomplished
classmates.
In addition, college rankings raise the stakes in the race to enroll academically
talented students (Hossler, 2004). Private colleges, under pressure to maximize
revenues, must attract a student body with the ability to pay the cost of attendance and
also enroll those students who will add to the academic environment they seek to create.
18
Russo and Coomes (2000) write that, to do so, campuses must present an image of
quality and prestige. They argue that colleges and universities must spend money to
maintain this image, but must also make their prices affordable. Therefore, campuses
turn to institutional aid funds in a process called “tuition discounting.” Students who
meet particular criteria are offered a discount on tuition in the form of a scholarship or
grant when campus administrators feel their presence will help meet one or more
institutional goals, be it revenue generation or student diversity (McPherson &
Schapiro, 1998). Unfortunately, Allan (1999) finds that institutions immerse
themselves in a self-perpetuating cycle of increasing costs and increasing discounts. As
colleges increase their tuition discounts, the revenue for other campus services
decreases. Therefore, the price of tuition must increase to help cover those costs.
Less wealthy institutions imitate the practices of the more affluent campuses in
their efforts to compete for the same kind of students. McPherson and Schapiro (1998)
write that administrators on these campuses face growing pressure to use financial aid
resources effectively to attract the types of students their campuses deem desirable, and
they often do so through financial awards presented to students who meet certain
criteria considered necessary to help raise the overall academic and/or demographic
profile of the student body (Redd, 2000). This type of institutional financial assistance
is referred to as merit-based aid or, simply, merit aid, and it is from the awarding of this
type of aid that differentiation of students along socioeconomic lines begins to emerge.

19
Merit Aid and Needy Students
While financial aid is generally perceived as an attempt to provide equity in
access to college, historically, student assistance has been used for other purposes.
According to Hossler (2000), prior to the 1960s, financial aid focused on promoting the
priorities of the institution and was often directed by the individuals who endowed
scholarships. McPherson and Schapiro (1991) write that financial aid was used for
myriad purposes, including rewarding military service, encouraging enrollment in
particular majors, and stabilizing the finances of campuses. Rudolph (1991) concludes
that aid programs served to help maintain the financial stability of colleges and
universities.
Based on this history, merit-based awards are well liked because the notion of
rewarding students’ academic or personal accomplishments is worthwhile (Marin,
2002). However, lost among the debates regarding rising costs, discounts, and profiles
are students with financial need. Critics of institutional merit-based aid argue that the
economic situation it creates within higher education is a barrier to social equality
(Barnes, 2007). For example, Hill, Winston, and Boyd (2005) find that the relationship
between family income and academic achievement leads the most selective campuses to
enroll high numbers of students from affluent backgrounds and lower numbers of
students from middle- and low-income families. Marin (2002) finds that the highest
proportion of merit awards go to students who graduate from high schools that have
high college-going rates, and, therefore, merit aid programs decrease access to college.
She states that these programs lead to the exclusion of students who have the highest
financial need, thereby increasing the discrepancies in college-going rates for these
20
students. McPherson and Schapiro (1998) ask institutions of higher education to
consider the groups who are most at risk of being underserved. They find that the
group most likely to suffer as a consequence of the new economic climate is made up of
low-income students who lack the strong academic qualifications to earn merit awards
at selective private institutions. These students are left to finance their education
through federal assistance, personal savings, or employment. The authors state that the
financial burden imposed on those without high academic qualifications adds to the
uphill struggles these students face once they enter college.
Pike, Duh and Massa-McKinley (2008) find lower rates of success among state
students who must work to pay for their education. They write that, among all college
students, 68% are employed. Of these, approximately one-third work more than 20
hours a week. The researchers looked at students’ work hours and grades and found a
statistically significant negative relationship between the two, even when adjusting for
individual student characteristics such as background and engagement level. Students
who work more than 20 hours a week, whether on or off-campus have much lower
grades than students who either do not work or work fewer than 20 hours per week.
They also found a significant positive relationship among grades, entering ability and
employment. In particular, they note that lower-ability students are much more likely
to work more than 20 hours per week than their high-ability peers. Their advice is to
encourage full-time students to work less than 20 hours to minimize the harmful effect
of employment on grades. This advice is not useful to students whose economic
situations dictate they work to pay for their education and particularly irrelevant to
21
those whose prior academic achievement made them ineligible for institutional merit
aid.
Grinberg, Price, and Naiditch (2009) note that, while it is commonly believed
that educational and economic success or failure arise solely out of individual efforts,
social class indeed affects schooling experiences and opportunities. Citing the Coleman
Report (1966) they argue that a student’s background determines academic success
more than any other related factor. In addition, Dowd (2008) finds that students’
relationships with family, peers, teachers and counselors shape their motivation
regarding college. These findings are further supported by the work of Stanton-Salazar
(1997) when he states that students’ social networks, in terms of the institutional agents
they encounter in their academic settings, serve as resources useful to working-class
students in overcoming barriers to academic achievement. Social class provides access
to resources and institutional agents, thereby granting privilege and advantage on those
from higher socioeconomic backgrounds. However, the post-secondary on-campus
class stratification which results from unequal distribution of resources and social
capital in secondary and pre-secondary educational settings is not as commonly found
among the literature as is the use of institutional merit aid to increase tuition revenue.
To illustrate, Hossler and Kalsbeek (2008) argue that the debate surrounding
enrollment management in general and tuition discounting in particular arises from the
differing contexts of individual institutions and the various economic needs that arise
from those circumstances. While campus funds are used more and more for strategic
recruitment, questions arise as to how to maximize the effectiveness of those funds in
bringing about the institution’s desired goals in terms of revenue and student body
22
composition. The answers lie, at least in part, in the retention of admitted students
(Smith, 2000) and in the contribution that institutions make to that retention in terms of
resource allocation. Therefore, institutions have a vested interest in ensuring their
students remain enrolled through degree completion. To aid in achieving that goal,
studies have consistently shown that academic performance during the freshman year
plays a crucial role in persistence and eventual degree completion.

Freshman Retention
Reporting on their freshman outcomes, The University of Wisconsin System
(2000) states that administrators, the public, and legislators see retention and graduation
rates as a measure of how successful institutions are in serving students’ needs.
Previous studies address students’ individual characteristics as sole contributors to both
retention and eventual graduation. Zhang and RiCharde (1998) studied the reasons
behind the attrition of 462 freshmen who enrolled at a public four-year campus in the
fall of 1997. They found that students who left did so for one of three common reasons:
a mismatch between their expectations and the reality of the college experience, a lack
of commitment to college and a lack of self-efficacy regarding college academics.
They argued that adjustment to the college environment is essential to the retention of
first-year students and suggest that student services personnel use these findings to
provide guidance and early intervention strategies for entering students. Thayer (2000)
adds that first generation and low-income students are particularly vulnerable to leaving
college due to obstacles commonly faced by this population, such as inadequate
academic preparation and bureaucratic systems on campus. The focus on individual
23
traits, however, obscures the view of the role institutional characteristics play in
retention and attrition.
Hossler (2000) finds that academic success and the persistence of students are
important elements of enrollment management strategies. Extending this finding, Smith
(2000) states that the interrelation of services throughout a campus allows an institution
to better respond to students’ needs, and this coordination leads to the retention of the
student and to the acquisition both of that student’s tuition dollars and of his/her other
contributions to the campus environment. Therefore, colleges and universities are
moving towards incorporating their recruitment and retention programs, though not
their institutional aid policies, to bring about the best possible enrollment situation.
Most of the literature analyzed here focuses on the importance of the first year
experience in maximizing students’ chances for retention and eventual degree
completion.
Studies find that retention into the sophomore year is a strong predictor of
overall degree attainment (Zhu, 2002). For example, Bradburn (2002) writes that lower
academic performance in the first year of college is associated with high attrition. Her
analysis of data from the 1996/98 Beginning Postsecondary Students Longitudinal
Study revealed that, regardless of type of institution and even when accounting for other
factors related to withdrawing from college, academic performance during the freshman
year was positively correlated with retention into the sophomore year. Lichtenstein
(2002) came to the same conclusion in her study of the factors affecting persistence of
first-year Hispanic college students in New Mexico. In addition, an analysis of the data
from the 1989-1990 Beginning Postsecondary Students Longitudinal Study conducted
24
by Horn (1998) found that almost thirty percent of students who enrolled in college for
the first time in 1989-90 left before the beginning of their second year. About 61
percent of students who persisted to their second year earned a degree by 1994, and, of
these, students enrolled at a private institution were more likely to earn a degree than
those at public institutions.
Furthermore, Johnson and Molnar (1996) examined the differences and
similarities in the retention of 3,000 first-year Black, Anglo and Hispanic students at a
four-year institution in Florida and found that GPA was a more significant predictor of
retention than any other factor they investigated. They looked at information on the
students’ academic performance, demographics, and test scores and found that
academic performance far outweighed demographics such as ethnicity and citizenship
status as a predictor of retention. Thayer (2000) also found that the largest proportion of
students who leave college do so within the first four semesters. Therefore, he argues,
retention strategies must serve to address the adjustment of students to the college
environment.
While the effectiveness of student services on academic performance provides a
valuable starting point in the quest to retain students, this success must not be used to
mask the role of finances in students’ decisions to persist. Looking at the shares of
tuition costs which were paid by families and institutions, Mortenson (1994) writes that,
in the early 1990’s, students and their families paid a share of tuition approximately 138
percent above that which parents paid in 1980. Because of this shifting of cost to
families, he states that anywhere from 62 to 92 percent of entering freshmen require
25
some kind of financial assistance. As the costs of attaining a college degree increase,
research begins to look at the effects of financial aid on persistence and graduation.
Murdock et al (1995) studied three freshmen cohorts at an independent four-
year institution. They found that all students in their sample who persisted through the
third year received significantly higher amounts of aid and had much lower unmet need
than their peers who did not persist. Furthermore, Cabrera (1988) finds that a student’s
ability to pay, not surprisingly, directly affects his/her decision to persist. What is
surprising, however, is that his findings indicate that persistence decisions are affected
by finances even when a student holds strong aspirations for completion. This finding
contradicts the popular notion that students who truly wish to complete a college
education will find a way to overcome financial barriers. At times, the onus of high
costs does prove too great for students, particularly those who also struggle
academically.

Institutional Aid and Persistence
The National Association of Independent Colleges and Universities (1997)
reports that tuition price does not cover the entire cost of educating a student. In
addition, federal grant money awarded to students helps to restrain increases in tuition,
but the decreasing availability of such monies help to spur the growth in tuition costs.
Nonetheless, one must ascertain whether the high tuition prices and the current
distribution of institutional aid affect persistence and retention differently.
To begin this analysis, St. John and Starkey (1995) report that students enrolling
in college for the first time respond to prices and price subsidies differently. They state
26
that the high-tuition, high-aid strategies utilized by many campuses have limited
effectiveness because students’ decisions to persist are sensitive to tuition charges, and
that this finding holds true for students across income groups. In particular, they find
that low-income students are most responsive to fluctuations in tuition prices. The
researchers caution that institutional formulas may not accurately measure need, and
they call for research regarding the effects of aid on student retention.
The need for this type of research is particularly salient given recent findings of
growing inequalities in financial aid awarded by private institutions. Mulugetta (1999)
uses data from the National Postsecondary Student Aid Study for 1989-90 and 1995-96
to analyze the effects of the awarding of merit and need-based aid by private colleges
and finds that, since competition for students has increased, the commitment of these
institutions to help those most in financial need has decreased. The author also found
that SAT score is the major determinant in awarding merit aid and that the positive
relationship between SAT score and family income raises the concern that private
colleges award institutional monies to students with less financial need.
Awarding these monies to students with less need is problematic on a social
level due to the increased stratification it creates (Marin, 2002). At an institutional
level, a policy of awarding money to students with less need is challenging because, as
Horn and Peter (2003) point out, students who receive institutional aid awards are more
likely to persist beyond their first year in college and less likely to transfer out of their
first campus. They also find a relationship between receiving institutional aid and an
increased chance of graduating from an institution, though they do not differentiate
between merit aid and need-based grants. However, Cabrera (1988) finds that the
27
amount of money a student receives and the manner by which that money comes,
whether loans or grants, does play a role in a student’s decision to persist. Additionally,
Singell (2002) finds that merit aid has the largest retention effect among types of
financial aid used in his study, and Alon (2005) finds that grant dollars are the most
effective component of financial assistance in enhancing college success. Thus,
institutional aid given on the basis of academic accomplishments serves to further the
disadvantage experienced by those who enter college under-prepared, under-funded or
both.

Private Institutions
Researchers argue that financial aid should be used by campuses to address
inequalities in higher education and that administrators must utilize strategies for using
aid dollars in a manner that is fair to all students. Hu and St. John (2001) studied the
effects of financial aid on students of different ethnic backgrounds and find that, for
African Americans and Hispanics, financial aid awards had a positive effect on
persistence. In addition, St. John, Paulsen and Carter (2005) find that tuition and
student aid are important in the decisions of African American students to enroll and
grants have a positive impact on persistence. They argue that admissions, aid and
retention policies should combine to target students with high need who have achieved
academically despite difficult circumstances, and it is in this arena of targeting
particular students that private institutions can have a significant impact. Because they
are exempt from government regulations, private institutions are free to pursue the
student body that best helps them meet their goals. In this sense, and because of the
28
commitment to diversity embraced by them (Pattillo, 1990) private institutions are well
positioned to address the question of whether different types of financial aid affect
retention.
To begin this discussion Carnevale and Rose (2003) ask whether, if given
tuition assistance, students from low socioeconomic backgrounds would be successful
at a selective institution. This study seeks to further this discussion and build on efforts
to dispel the previously mentioned popular notion of individual effort leading to
success. The students selected for this study proved, by virtue of their acceptance to a
selective institution, that they put forth strong effort. Once on campus, they receive
further academic support to help ensure their retention. In the cases where all of these
efforts combined do not result in retention, it is important to seek the underlying causes.
This study begins that process by examining the financial issues these students
encounter, the context in which they make sense of those issues and the decisions
arising from that context. Findings from the exploration of the effects of financial aid
on enrollment decisions can yield the next step in ensuring the graduation of first-year
students from a campus which has already addressed the academic barriers faced by this
population. Attention can now shift to the sociocultural issues.

Theoretical Framework
The commonalities in the literature which forms the theoretical basis for this
study lay in the holistic notion that a student’s individual financial decisions, including
those regarding enrollment options, originate in a larger, sociocultural context.
29
McDonough and Calderone (2006) state that individual’s expectations,
strategies, and actions are shaped by internalized, class-based perceptions and contend
that decisions regarding college arise from the unconscious deliberations which occur
within said process. They find that researchers can more fully understand college
affordability if analysis includes sociocultural conceptualizations such as the personal
assessment students make regarding whether a college degree is within their financial
grasp when weighed against competing demands. They call for inquiry that takes into
account a sociocultural understanding of the meaning of costs and financial aid for
different populations in hopes that such research will lead to improved marketing of
college affordability.
St. John (2006) contributes to the premise of multiple influences on college
decisions by stating that researchers often study student background and academic
preparation when looking at college access and neglect to consider the effect family
income has on this topic. He states that previous research obscures financial
inequalities and that it is important to consider how income and work-loan burdens
affect the level of involvement in academics that students achieve. He adds that
students’ lived experiences provide an additional lens through which students and
families view financial aid. Therefore, critical social theory, which addresses the many
interrelated factors affecting college-related decisions, is necessary to help future
research fully understand students’ choices and actions.
As a step toward encompassing the above-mentioned factors, Perna (2006)
presents a conceptual model for analyzing students’ college-related actions based upon
the idea that their decisions arise from a multi-layered personal context consisting of
30
personal, school, community, social, economic, and policy factors. She states that,
while most families want their children to achieve a college education, economic, social
and psychological factors often limit the ability to provide the paths for such attainment
and calls for a more integrated approach to studying low-income student achievement.
Focusing on student borrowing, Dowd (2008) states that the interconnections of
an individual’s financial circumstances, perceptions of likelihood to attain a degree, and
personal demands and support structures determine his/her enrollment and continuation
in college. She finds that previous research on students and borrowing yielded
inconsistent results, but do indicate that students’ and families’ stance on debt and
borrowing do not stem from vague concepts such as cultural values. Rather, these
views arise from influences such as parental education level and immigrant generation.
She points out that, while constructs such as motivation, control and self-efficacy are
widely used to study college students, these concepts are underutilized in the analysis of
students’ views and actions regarding college debt. According to her, there is a need
for a research agenda focused on these concepts, as the availability of information on
college costs and aid is not sufficient motivation for students and families to seek aid in
light of debt.

Conclusion
Numerous studies show that students’ prior preparation affects performance
during the freshman year and that this performance positively affects persistence and
retention. When a campus provides services to help ensure strong academic outcomes
for its least academically prepared students, it can turn its attention to the lesser studied
31
issue of the effects of financial aid practices on academically underprepared students.
Lack of government intrusion into policy-setting efforts gives private institutions an
opportunity to adjust practices in relation to these findings as they seek to hold on to
their admitted students. To aid in the discovery of these findings and of what they may
mean for a private institution, this study aims to answer the following question: How do
“at-risk” students’ family finances, perceptions of likelihood of college completion and
knowledge of financial aid shape their enrollment and loan acceptance decisions at a
selective, private, four-year institution?
While persistence depends on a multitude of factors, colleges and universities
already mobilize resources to ensure the greatest number of graduates. Programs run by
student services divisions prove very successful in transitioning and acclimating
students to the academy, but more needs to be done to address the social inequalities
still present in the American higher education system. An analysis of financial aid
practices and the decisions students make because of these can reveal whether a private
campus is using aid funds effectively in terms of maximizing student retention.

32
CHAPTER 3: Methodology
This study examines the college enrollment decisions first-year students make as
a result of the financial aid packages they receive through an analysis of the make-up of
said packages as reported by both the institution and the students. In addition, it
analyses these students’ views regarding enrollment in light of loan debt. The goal is to
determine how institutional financial aid practices affect these students’ decisions
regarding re-enrolling beyond the first year.

Setting and Population Sample
The population sample for this study consisted of twelve students in their first
year of college, as the literature herein discussed presents the first year as most telling
of future academic success. The research questions in this study relate to these
students’ and their enrollment decisions in relation to their financial aid packages, and
the population and setting for this study allowed a richness of information to be gleaned
from them in terms of the issues central to this study (Patton, 2002).
The setting was a small, residential, private, liberal arts college founded at the
turn of the 20
th
century. At the time of the study, the institution offered 30 majors to
approximately 1,300 undergraduate students and also housed two graduate programs.
The costs of tuition and fees, at about $33,000 was comparable to that of the top ten
private liberal arts colleges in the country, according to US News and World Report
(June, 2009). To illustrate, the cost of tuition and fees at these top ten schools ranged
from $33,490 at Davidson College to $49,210 at Middlebury College. The faculty to
student ratio at this campus was slightly more than ten to one, and the institution readily
33
advertised having all undergraduate courses taught by faculty members rather than
teaching assistants. In addition, this campus offered numerous support systems for first-
year students, such as a faculty mentor, a counseling center, a supplemental services
office, and an administrator charged with overseeing the services offered to their
population, the Dean of First-Year Students.
During the Fall 2007 cycle, the campus reached an acceptance rate of 66.9%,
according to the College Board, and the student body was comprised primarily of in-
state students. This institution was designated a Hispanic Serving Institution, and more
than 30% of its population was Hispanic, which, the college’s website stated, was one
of the highest proportions of Hispanic students among the states’ private colleges
(institution’s website, July 2009).
This institution was selected for three primary reasons. First, the campus is a
selective institution with a mostly traditional student body largely drawn from the
mainly Latino community within which it is located. Second, the fact that the students
enrolled in this institution have already proven, through having been admitted, to be
education-driven helps to dispel assumptions, briefly mentioned in the literature review,
about students’ lack of desire for or valuing of higher education in regard to their
enrollment decisions. Third, the administration of this campus is widely known for its
commitment to students from low-socioeconomic and underrepresented backgrounds as
well as to students who enter their campus underprepared for the rigors of college
academics.
As mentioned, the participants in this study were drawn from population of first-
year students. The data collected concerned the kinds and amount of financial aid
34
awarded to students and anecdotal accounts of the effects of said aid on the students’
enrollment decisions. The literature previously discussed addressed both this
population’s risk in terms of retention and the importance of the first college year in
diminishing that risk.
In addition to interviews of twelve students, the researcher also analyzed data on
the admissions and financial aid profiles of the college’s last two entering cohorts as
presented in spreadsheets provided by institution’s leadership. These data were
analyzed mathematically to compute means and medians of aid amounts awarded as
grants and loans for the college’s last two entering cohorts and to glean the economic
characteristics of these students’ home communities. These spreadsheets provided the
overall picture of the aid offered to students at this campus and of the average academic
accomplishments of the admitted students. This information served as background
regarding the demographics from which the interview respondents were drawn.
Because it is not feasible to interview every student, the information gathered from
these reports served to place the interviewed students’ experience in context within the
larger demographic picture found on the campus. The researcher also computed the
average high school GPA, admissions exams scores and amounts of aid offered to
incoming students to establish a starting point from which to analyze the information
obtained from the interviews.
The researcher gained entry into the campus by meeting first with the
institution’s Vice President for Enrollment Management. The initial discussion
revolved around the topics covered in the literature review, such as affordability and the
use of institutional aid to reward academic merit. A subsequent meeting with the same
35
Vice President as well as the President of the institution in which the researcher
presented the goals of the study, the methodology to be used, and the plans for having
the proposed study approved by the University of Southern California’s Institutional
Review Board, secured permission to review institutional reports on admissions and
financial aid as well as to interview first-year students recruited through in-class
presentations by the researcher in four First Year Seminar course sections.
With approval to access the campus and its reports secured, the researcher
conducted data collection on separate, rather than consecutive, days to minimize the
potential for disruption to campus operations caused by the study. Coordination of the
researcher’s visits with the campus staff also aided in ensuring there was no adverse
effect on normal daily operations. When present on the campus, the researcher made
every effort to present a demeanor representative of scholarly work and to conduct data
collection in such a way as to have the findings be useful to the school as well as to the
study.
The institution’s supplemental services center was selected as the place within
which to meet students due to their familiarity with its location in the building which
also houses the library. Interviews were used as the primary method of data collection
because of the individual nature of the issues central to this study. To understand how
finances and financial aid affect a student’s decisions regarding re-reenrollment, one
must place the particulars of those decisions into the context of the student’s
circumstances. While Admissions and Financial Aid efforts aim to select the right
students for the institution and provide them with the right amount of aid to help them
earn a degree, the consequences of these efforts are played out at the personal level.
36
Reports regarding retention, attrition and graduation rates provide a generic overview a
campus and provide little in terms of identifying solutions. Individual conversations
allow campus staff to determine the aspects of institutional efforts that directly benefit
students and those which, though necessary and efficient, may be ineffective at helping
students attain their degrees.
Questions centered on the students’ families’ financial circumstances as
understood by the student, the self-reported likelihood of completing a college degree,
and knowledge regarding college costs and aid options as well as the composition of aid
packages themselves. The information collected from the interviews consisted of those
individual factors related to family finances, perceptions of likelihood to earn a degree,
and knowledge of costs and aid that affect students’ college-related financial decisions.

Qualitative Methods
The literature previously discussed yields a view of the problem at hand from a
detached and “outsider” perspective (Patton, 2002). To provide the view from the
“inside,” one must go directly to those who experience the phenomenon one wishes to
explore. For this purpose, qualitative methodology yields inimitable results. Therefore,
this type of methodology will be utilized to conduct an in-depth analysis of the
relationship described in the previous two chapters.
Patton (2002) states that qualitative methodology allows the researcher to delve
into issues with close attention to detail and within the situational context of those
issues. Gall, Gall and Borg (2007) find case study allows for a thorough analysis of an
instance of a phenomenon in the daily context of and from the perspective of the
37
individuals who participate within it. Because it most readily reflects the views of the
participants themselves, case study design was selected for the study presented here.
According to Creswell (2009), the starting point of qualitative inquiry lies in the
selection of the right study participants, for this group must be the best suited to help
the researcher both understand the phenomenon under analysis and answer the research
questions posed. In addition, the resulting analysis benefits from being inductive: it is
molded from the participants’ own experiences phrased in their own words (Creswell,
2009). The personal narratives herein presented provided the researcher with an
accurate account of the significance the participants assign to the topics under
examination and yielded an in-depth view of the relationship between perceptions of
student indebtedness and retention among one college’s first-year students.
The specific qualitative strategies used in this study were document analysis and
in-person interviews because many aspects of the human experience cannot be
observed, and the most efficient manner by which to learn of them is to ask. According
to Patton (2002), the aim of conducting interviews is to gain entry into the perspective
of the interviewee. Primarily, the methods for this study consisted of personal
interviews of academically “at-risk” first year students conducted, with the aid of an
interview guide, on the college campus.
Merriam (1998) states that documentary data are particularly good sources for
qualitative inquiry because they can ground an investigation in the context of the
problem under study. Documents may provide better or more data than other methods
because of the stability and objectivity they provide. Unlike human subjects,
documents are not affected by the presence of the researcher or the conducting of the
38
study (Merriam, 1998). The documents utilized within this study consisted of two
spreadsheet reports provided by the institution’s research office. The reports contained
admissions and financial aid information for the freshmen entering in 2008 and in 2009.
Compared to formal structured interviewing or its opposite, informal
conversational interviewing, the interview guide approach provides a general structure
to the questioning while allowing for flexibility in the direction of the conversation
(Patton, 2002). The interview guide used in this study (Table 3.1) outlined questions
aimed at providing an answer to this study’s research questions. While table 3.1
presents all questions used, the actual number varied with respondent, as some areas
elicited longer responses from some respondents and other respondents required more
prompts to engage in discussion. The information gathered was useful in determining
the role of student indebtedness in the enrollment decisions made by this population.
The participants for this study were identified with the help of the staff of the
institution’s Dean of First Year Students and faculty who teach first-year courses.
Interviews were conducted during the months of November, December and February of
the students’ first year in college. While the researcher met the respondents at the
institution’s supplemental services provider, the interviews generally took place in an
empty classroom to minimize the recording of extraneous noise during the taping of the
conversations. The interviews occurred in the late morning or early afternoon hours
and were approximately one hour in length. All interview subjects received written
notices regarding the nature and purpose of the study as well as an agreement of
informed consent when they decided to participate. The researcher requested that all
participants be first-year students who are at least eighteen years old. To protect the
39
privacy of the students who agreed to be interviewed, the researcher collected no
identifying information and all participants were assigned a pseudonym.

TABLE 3.1 Interview Protocol
1. Please describe yourself and your background for me (childhood, family, community).
2. What motivated you to attend college?
3. Please describe your parents’ and siblings educational background. Were any of them educated
outside of this country?
4. If you had to label your family something like upper income, middle class or working class,
what would best describe your family’s financial situation? Why?
5. In what ways is your family helping you pay for college, or what prevents them from being able
to help?
6. In what ways did your high school education prepare you for college? In what ways did it not
prepare you?
7. Thinking back to just before you started college, what would you say your plan for completion
was? In what ways is that plan different now?
a. How long did you think, then, that it would take you to finish college?
8. How long do you think it will actually take?
9. Can you tell me how much it costs to attend this college?
a. How did you find out this information?
b. Did you find this out before or after you enrolled?
10. How are you paying for college?
a. If you work, why did you decide to work and attend college at the same time?
b. What options did you consider/pursue other than working to help you pay for college?
11. Do you receive financial aid?
a. Can you tell me what types of aid you received? Grants, scholarships or loans?
b. Can you tell me approximately what amount of each type you received?
12. Were you offered student loans? Did you accept them?
a. Can you tell me how you decided to accept/not accept loans?
13. How do you and your family feel about student loans?
14. How have your financial aid package and your current financial situation affected your decisions
regarding student loans?
15. Where on campus do you go to seek help regarding financial aid issues? Where else might you
go?
16. If you felt you did not receive enough financial aid, what steps would you take to try to make up
the difference?
17. How did you come to your decisions regarding student loans?
a. How do your decisions regarding student loans affect your college-completion plans
and vice versa?
18. What do you think your loan debt will be upon graduation?
19. How willing are you to take on that loan debt? What steps are you taking/might you take to
avoid that loan debt?
20. How many units are you taking right now? How many will you take next semester?
21. In what ways does your financial aid package affect the number of units you are willing to take?
22. If your financial aid package remains the same next year, what do you think the effect on the
number of units you take will be?
23. Have you ever thought of going to school part-time?
a. What would cause you to go to school part-time?
24. (For students already attending part-time or planning to attend full-time) What made you decide
to attend part-time? What role did finances play in your decision?
40
Data Recording and Analysis Procedures
The institutional reports of the admissions and financial aid profile for the
freshmen and sophomores at the institution provided by campus administrators were
obtained in October. The information within these reports was analyzed
mathematically. The researcher discerned the average high school GPA and entrance
exams scores of the entire freshman and sophomore population, at the time of
admission, to gain an understanding of the academic achievements of the interview
respondents and their peers. Similarly, the financial aid information was analyzed to
calculate the average Estimated Family Contribution, financial need, institutional aid
and loan amounts for the cohorts of 2008 and 2009 in order to compare the interviewed
students’ self-reported award amounts. The comparisons served to situate the study’s
sample within the larger campus population.
Requests for interview participants took place as in-class presentations in four
Freshman Seminar courses. Interested students were scheduled in blocks of an hour
and a half to allow extra time in the event the interview took longer than the planned
hour. The interviews took place during the months of November and December of the
students’ first semester in college. These were audio taped and transcribed, and the
transcript was made available to the participant. Thereafter, all transcripts were
reviewed and coded, utilizing computer software programs, for emerging patterns and
themes related to the research question. This method of inductive analysis was based
on Creswell’s (2009) model for data analysis in qualitative research detailed in table
3.2.

41
TABLE 3.2
Creswell’s Steps for Data Analysis in Qualitative Research (2009)
1. Organize and prepare the data for analysis
2. Read through all the data
3. Begin detailed analysis with a coding process
4. Use the coding process to generate a description of the setting or people as well as categories or
themes for analysis
5. Advance how the description and themes will be represented in the qualitative narrative
6. Make an interpretation or meaning of the data

The first step in the analysis of the data collected for this study consisted of a
careful reading of all resulting transcripts to ensure accuracy in relation to the audio
recordings. Second, the text was arranged into segments of conversation related to each
of the research sub-questions in a process of open coding (Patton, 2002). After further
review, segments of conversation that carried the same line of content were grouped
together using computer software. For example, all responses involving loans were
grouped together into a theme titled “Loans,” while also being labeled according to
respondent as the unit of analysis. Each theme was taken from the elements of the
research question that guides this study.
In order to view the findings through the lens provided by the literature that
forms the theoretical framework for this study, the researcher gathered information
from the respondents regarding the general community within which they were raised.
To obtain a broad picture of the demographics of the neighborhoods from which the
students come, U.S. Census reports were used to learn of the economic characteristics.
The average family income presented in the reports and by the respondents was
compared to that of the families living within the respondents’ zip codes to discern
whether the students admitted to the institution were representative of the students in
the interviewees’ home neighborhoods.
42
To answer the first research question, the researcher sought out the details of the
influences described by Dowd (2008) as significant in the decisions of students. Within
the interview protocol, questions one through five, fourteen, and seventeen sought to
discern the respondent’s financial background and current situation and the ways in
which these shaped their decisions regarding student loans (Table 3.1). These answers
were then placed alongside the subjects’ answers regarding enrollment decisions to
surmise whether their family’s finances correlated to their ultimate decision regarding
enrollment for sophomore year.
To draw conclusions regarding students’ perceptions of their own likelihood to
attain a college degree, questions six, seven, eighteen, twenty-one and twenty-two relate
to the plan of completion the respondent envisioned before he/she began college and the
ways in which finances and student loans affect that plan (Table 3.1). Respondents
were also asked about their high school experiences and the ways in which these affect
their plans for completing college as a secondary means of ascertaining their beliefs
regarding the probability of completing their degrees. These responses were analyzed
for links between plan modifications and the students’ loan acceptance decisions. The
results provided a look at the ways in which students’ loan-aversion behavior, when
present, affected the academic opportunities they pursued (Dowd, 2008) and whether
finances played a determining factor in enrollment decisions even when students’
academic commitment was high (Cabrera, 1988).
Lastly, questions nine through twelve, fifteen and sixteen sought information
regarding students’ knowledge on their own financial aid packages and on financial aid
opportunities at the institution. Based on Cabrera’s (1988) and Alon’s (2005) work,
43
these questions also sought to identify how the source of funds, whether grants or loans,
affected played a role in student’s decisions regarding enrollment options. Students’
responses were further reviewed to discern whether the different enrollment decisions
students make correlated to their level of financial aid knowledge.
From this analysis, the researcher learned of the respondents’ educational
decisions as shaped by their sociocultural contexts. While the situations are particular
to individuals, the commonalities and discrepancies within them speak to the efficacy of
aid practices at this campus in retaining these students.

Validity
In addition to following Creswell’s model, the validity of the data collected was
preserved through the methodology itself. The proper selection of the population to be
studied provided a measure of assurance that the participants had critical knowledge of
the topic at hand as to provide information useful for drawing meaningful conclusions.
Secondly, the interview guides were developed to inquire into themes and relationships
directly relevant to the core of this study. The focusing of the questions served to
minimize the risk of collecting data that does not directly link to the research question.
In addition to his model for gathering and reporting on the data, Creswell (2009)
also presents a plan for ensuring the credibility of the researcher. He states that a good
qualitative researcher should disclose the ways in which his/her data interpretations are
shaped by his/her personal demographics. In keeping with these propositions, possible
biases and other disclosures were presented to the campus administrators and are
outlined in the following section.
44
Limitations and Bias
This study was limited to the topic of financial decisions, such as those related
to enrollment options within a group of first-year students, and the results cannot speak
to the many other factors related to students’ decisions to remain enrolled. Second, the
participants for this study self-selected by agreeing to be interviewed, and their answers
may be skewed by their involvement. Unfortunately, these students’ experiences
cannot be compared to those of students who chose not to participate.
The institution which served as a host for this study provided the researcher with
reports on students’ financial, academic, and demographic information. These reports
served a central role in the analysis provided here. They also presented a specific
limitation in that they presented grant amounts in lump sums and did not differentiate
among, Pell, Cal, and institutional grants. Nevertheless, the presence of the amounts
contained within the reports allowed for analysis consistent with the goals of this study
As previously mentioned, Creswell (2009) states that qualitative inquiry is best
served by disclosing elements within the researcher’s background that may shape
his/her interpretation of findings. For purposes of this study, the researcher entered the
campus as an “outsider” to investigate the effect of indebtedness on the persistence of
one segment of the first-year student population. The role of the researcher was to
conduct interviews and analyze the information gathered through them by organizing
the students’ statements into categories helpful in answering the research question.
Though positive results would be beneficial to the hosting institution, the research
herein presented was not intended as an evaluation of the success of the college’s
efforts to educate, retain, or graduate the participants.
45
Elements in the researcher’s background that may affect the interpretation of the
findings lie primarily in the areas of personal demographics and employment history.
The researcher is a first-generation immigrant and college student with twelve years
experience working in education as a community college instructor of remedial English
courses and as a college counselor to students enrolled in some of the city’s most under-
funded public high schools. Working with these populations, by human nature, colors
the lens through which access to and success within higher education is viewed.

46
CHAPTER 4: Results
The central research question guiding this study focused on particular elements
of students’ college-going experience and the ways in which these might shape their
decisions regarding enrollment when these decisions involve the accumulation of
student loan debt. The findings in this chapter were attained through institutional
reports and answers provided by students during recorded interviews. This chapter is
divided into three sections. The first section presents the findings of a side-by-side
comparison of the two freshman cohorts examined in this study to provide the
demographic context within which the interview respondents attend college. The
second section presents a detailed examination of the students within each cohort. Both
sections provide the necessary context in which to place the results of the interviews
conducted with members of the cohort of 2009. The findings reached through those
interviews comprise the third section of this chapter, which is organized research sub-
question:
1. What do students perceive to be their families’ influence and financial
circumstances? What role do these play in their decisions regarding student
loans and their plans for degree completion?
2. What do students perceive as their likelihood of earning a degree, and how
does that perception affect their decisions regarding student loans?
3. To what extent are students knowledgeable about their institutions’ cost of
attendance, their own financial aid packages, and the resources available to
assist them with concerns regarding these?

47
Cohort Comparison
The context for the respondents’ college experience lies in part in the student
population from which they are drawn. The following tables provide a snapshot of two
entering cohorts at this institution in terms of academic and financial characteristics.
Within the academic data, two terms require definition. In this analysis, “admission
grade point average” refers to students’ submitted high school grades and does not
include the extra points gained when students successfully complete Honors or
Advanced Placement courses. The grade point average derived through the use of these
extra points is referred to as the weighted GPA, and because many students did not
submit a weighted GPA, this analysis does not use those data. SAT score refers to the
sum total gained when the individual scores for the three sections of the SAT are added.
In this case, as well, many students did not submit SAT scores, but did present the
campus with scores for the ACT test, another college entrance exam. Because ACT
scores do not readily translate into an SAT score equivalent, and because the majority
of students took the SAT, this analysis relies on those scores as representative of
entering student achievement on college entrance exams. To situate the findings
derived from the financial data, other terms must also be defined. The US Department
of Education defines the term “Estimated Family Contribution” (EFC) as the monetary
amount a family is deemed able to contribute to a student’s college costs. The formula
for calculating the contribution is different for dependent and independent students and
both are located in Appendix A.
The basis for the analysis of the data presented in this chapter lies in the
literature regarding factors which shape students’ college-related decisions (Dowd,
48
2008; McDonough & Calderone, 2006; Perna, 2006; St. John, 2006). Perna (2006)
states that students’ decisions are the result of many levels of context. Dowd (2008)
calls for research on the relationship between students’ financial background and the
choices they make regarding loan debt. Therefore, outlining the financial
characteristics of students’ families and communities provides a first step in
understanding the role of these in loan- and enrollment-related decisions.
Table 4.1 presents an overall comparison of the freshman cohorts entering in
2008 and in 2009. The group who entered in 2008 faced an average total cost of
attendance of $46,991. One year later, the average total cost was $49,198.

Table 4.1 Freshmen 2008 and Freshmen 2009 Comparison
Freshmen 2008 Freshmen 2009
Avg total cost $46,991 Avg total cost $49,198

Students 419 358
Average GPA 3.03 3.08
Average SAT 1571 1574
Tuition $31,950 $33,686
Average Budget $46,728 $49,198
Financial Aid Applicants 348 293
Average EFC $24,091 $19,577
Average Need $22,576 $29,579
Students who received grant 395 334
Average grant amount $19,308 $22,368
Students who received loan 275 243
Average loan amount $8,224 $9,018

Table 4.1 shows a decrease in the number of students entering in 2009 in
relation to the number who enrolled in 2008, and the academic indicators for the cohort
of 2009 show a modest increase in average GPA and SAT score compared to the
information on the cohort of 2008. In 2008, the entering cohort’s average admission
49
GPA was 3.03, while that of the cohort of 2009 was 3.08. The average SAT score of
the cohort of 2008 was 1571, and that of the cohort of 2009 was 1574. The data also
show a decrease in the number of students applying for financial aid from one cohort to
the other, although the percentage of applicants remained almost equal. Approximately
83% of the entering class in 2008 applied for financial aid, 395 students out of a class of
419. The proportion of applicants was similar for those entering in 2009, at 82% or 293
applicants out of 358 freshmen. While the number of students who received a student
loan decreased from 2008 to 2009, from 275 to 243, the average loan amount increased
by $794.

Individual Cohorts
Cohort of 2008
The cohort of 2008 is divided into academic quintiles (AQ) based on students’
high school achievement, as reported by the institution. Table 4.2 details the
admissions and financial aid data for this cohort, and shows a positive relationship
between academic quintile and GPA and SAT score. Students in Academic Quintile 1
have an average admission GPA of 3.63 and an average SAT score of 1814. The
remaining quintiles show a downward trend in terms of these indicators. Within
academic quintile 5, populated by students in the bottom 20% of their admitted class,
the average admission GPA is 2.59 and the average SAT score is 1391.

50
Table 4.2 Freshmen 2008 Academic and Financial Statistics by Academic Quintile

Average Total Cost of Attendance: $46,991
AQ 1 AQ 2 AQ 3 AQ 4 AQ 5

Number of students 53 75 110 88 93
Average GPA 3.63 3.31 3.12 2.83 2.59
Average SAT 1814 1702 1567 1502 1391
No. of scores submitted 47 68 100 78 84
No. of grants given 53 74 109 88 71
Average grant amount $24,942 $22,324 $21,307 $15,418 $13,711
Applied for financial aid 45 64 97 71 71
Average EFC $18,860 $22,248 $27,364 $26,356 $22,331
Average need $27,772 $24,698 $19,358 $20,175 $24,167
No. who received loan 31 51 75 57 61
Average loan amount $6,378 $7,692 $7,590 $10,182 $8,555

The data in Table 4.2 also indicate no relationship between academic
performance indicators and financial need. While the cohort of 2008 students who have
the highest amount of financial need also have the highest markers of academic
achievement, the grade point averages and Estimated Family Contributions pertaining
to the remaining quintiles do not present a trend either upwards or downwards.
Students in Academic Quintile 1 entered with an average Estimated Family
Contribution of $18,860 and an average financial need of $27,772. The students
deemed wealthiest, those with the highest Estimated Family Contribution, were found
in Academic Quintile 3. In that group, the average EFC was $27,364, which is only
$408 lower than that of those in the first quintile. Lastly, students with the lowest
markers of academic achievement, those in Academic Quintile 5, had an average
Estimated Family Contribution of $22,331, which is $3471 higher than that of the
Academic Quintile 1 students. These results contradict the literature presented in
Chapter 2 regarding the relationship between socioeconomic status and academic
51
achievement. Hill, Winston, and Boyd (2005) found a positive relationship between
family income and academic outcomes. Similarly, Grinberg, Price, and Naiditch (2009)
found that students’ background is the most significant factor in determining academic
success. However, at this institution, the students with the highest indicators of
academic achievement come from the least affluent families in the studied population.
These results lead to the conclusion that, within the cohort of 2008, there is no evidence
that family wealth has a positive impact on academic indicators.
In terms of student loan amounts, those in Academic Quintile 4 have the
highest average amount, $10,182, although that quintile does not include the students
with the highest financial need or lowest Estimated Family Contribution. In fact,
students in this quintile have less need than students in Academic Quintile 5.
Therefore, the fourth quintile’s acceptance of higher loan amounts does not correlate
with their need as determined by the Department of Education or as expected by their
placement in this quintile.
Within the cohort of 2008, there is no relationship between income and
indicators of academic success (McPherson & Schapiro, 1998; Marin, 2002; Hill,
Winston, and Boyd, 2005). To explore the finding of highest academic achievement
among those in the lower socioeconomic strata, table 4.3 details the academic
characteristics of the cohort of 2008 differentiated by EFC.

52
Table 4.3 Freshmen 2008 Statistics by Estimated Family Contribution

Average Total Cost of Attendance: $46,991

EFC $0 $1 - $1,000
$1,000-
$3,000
$3,000-
$6,000 $6,000-$10,000

Total Students 44 19 27 33 43
Average GPA 2.95 3.07 3.17 3.15 3.13
Average SAT 1519 1595 1579 1552 1486
Average EFC $0 269 $2,203 $4,459 $8,054
Average need $47,256 $45,835 $44,101 $42,485 $38,969
Students receiving grant 44 19 27 33 42
Avg grant amt $26,836 $26,964 $27,323 $25,971 $21,559
Students receiving loan 40 18 25 29 $40
Avg loan amt $8,274 $7,850 $7,695 $9,545 $8,485

EFC
$10,000 -
$20,000
$20,000 -
$40,000
$40,000 -
$70,000
Above
$70,000
Did not apply for
Financial Aid

Total Students 54 56 31 41 71
Average GPA 3.07 3.14 3.02 2.96 2.88
Average SAT 1578 1604 1606 1571 1604
Average EFC $14,486 $28,515 $53,052 $92,680 NA
Average need $32,100 $17,816 -$6,185 -$45,617 NA
Students receiving grant 53 55 30 38 54
Avg grant amt $18,590 $14,681 $14,687 $11,928 $13,828
Students receiving loan 49 43 15 14 2
Avg loan amt $8,455 $6,902 $9,717 $6,215 $18,403

Table 4.3 shows that the students with the least economic resources, as
determined by the Department of Education’s financial need calculation, do not have
lower grades or SAT scores than students who come from more affluent families. In
fact, students with a $0 Estimated Family Contribution have essentially the same
average admission GPA as those whose families are deemed to be able to contribute an
average of $92, 680 towards their education. The average admissions GPA for these
two groups are 2.95 and 2.96 respectively. The highest academic achievement, judging
by average admissions GPA, is found toward the lower end of the EFC scale, among
those whose families are found to be able to pay an average of $1000 to $3000 of
college costs. Unfortunately, there is not enough information available to discern the
53
reasons behind the high level of achievement among those whom the literature deems
least likely to reach such accomplishment (Grinberg, Price, and Naiditch, 2009). What
is evident, again, is that, among the students who entered this institution in 2008, family
wealth did not necessarily result in a high GPA or SAT score. Worth noting, however,
is the fact that approximately 60% of the students in this cohort come from families
with an EFC of at least $10,000 or from families who did not apply for financial aid at
all. Only 166 of 419 students have an EFC lower than $10,000. The uneven
distribution of students among income levels may account for the lack of relationship
between socioeconomic background and academic accomplishment. To further examine
the trend of highest academic achievement among students from the middle of the
socioeconomic spectrum, table 4.4 presents the economic characteristics, as found by
the 2000 US Census, of these students’ home communities.

Table 4.4 Freshmen 2008 Home Community Economic Data – 2000 Census

Academic Quintile 1 (53 students)
Median Household Income (average) $54,248

Academic Quintile 2 (75 students)
Median Household Income (average) $56,874

Academic Quintile 3 (110 students)
Median Household Income (average) $58,072

Academic Quintile 4 (88 students)
Median Household Income (average) $53,920

Academic Quintile 5 (93 students)
Median Household Income (average) $56,168

The institutional reports previously mentioned provided the home zip code for
each member of the cohort of 2008, and Table 4.4 presents information on those zip
54
codes obtained from United States Census 2000. Average household income and is
outlined by academic quintile, and can be compared to the overall United States median
household income, which, at the time of the census was $50,046. Three items are
worthy of note and color the analysis of this information. First, because the Census
collects information solely within the United States, international students’ data is not
included in this table. Second, some students listed home zip codes which did not exist
at the time of the 2000 census. Third, and most significant to this study, the
information provided by Census 2000 reflects income earned in 1999. This study
focuses on students who began college nine and ten years after that information was
collected. The median household income in the communities from which the cohort of
2008 students originate ranged from $53,920 to $58,072, with the average standing at
$55,856. The information in table 4.4 supports the previous finding for the cohort of
2008 that students with the highest indicators of academic achievement, those in
Academic Quintile 1, do not come from the most affluent communities among their
classmates. The median household income in the communities from which Academic
Quintile 1 students come is $54,248. The highest average household income is found
among those who fall in the academic middle. The students in Academic Quintile 3
come from communities whose median household income stands at $58,072. While
discerning the reason the higher level of wealth in some communities does not align
with the academic achievement of its residents is beyond the scope of this study, it is
important to note the considerably higher number of students in Academic Quintile 3
than in Academic Quintile 1. The larger number of zip codes represented by 110 versus
53 students may skew the average in favor of more affluent communities. In addition,
55
the economics of the communities may have changed in the ten years since they were
last analyzed. Nevertheless, it is a significant finding that, despite previous research
affirming the contrary (Marin, 2002; Hill, Winston, and Boyd, 2005), within the group
entering in 2008, the high achieving and the wealthy are not the same students.

Cohort of 2009
The following section presents academic and financial information for the
current first-year students at the institution presented here. Table 4.5 details the
characteristics of this cohort by Academic Quintile.

Table 4.5 Freshmen 2009 Academic and Financial Statistics by Academic Quintile

AQ 1 AQ 2 AQ 3 AQ 4 AQ 5

Number of students 46 76 99 64 73
Average GPA 3.62 3.32 3.05 2.83 2.57
Average SAT 1800 1665 1560 1510 1389
No. of scores submitted 41 72 89 53 63
No. of grants given 46 76 99 64 49
Average grant amount $26,506 $25,545 $23,385 $18,180 $18,520
Applied for financial aid 37 68 82 50 56
Average EFC $23,555 $21,003 $19,138 $17,836 $17,543
Average need $26,137 $27,775 $30,020 $31,688 $31,516
No. who received loan 27 56 68 44 48
Average loan amount $8,507 $7,587 $8,763 $9,250 $11,123

Unlike those who entered in 2008, in the cohort of 2009 the high achieving
students are the wealthiest. The information for this cohort shows a positive relationship
between GPA and Estimated Family Contribution. Students in Academic Quintile 1
have an average admissions GPA of 3.62, an average Estimated Family Contribution of
$23,555, and an average financial need of $26,137. In the remaining Quintiles the
56
average admissions GPAs show a downward trend, from 3.32 to 2.57, to match the
downward trend in Estimated Family Contribution, from $21,003 to $17,543. To further
examine the relationship, table 4.6 presents academic and financial information on the
cohort of 2009 by Estimated Family Contribution level.

Table 4.6 Freshmen 2009 Statistics by Estimated Family Contribution

Average total cost of attendance: $49,198
EFC $0 $1 - $1,000
$1,000-
$3,000
$3,000-
$6,000 $6,000-$10,000

Total Students 58 13 20 41 34
Average GPA 3.06 3.07 3.53 3.03 3.15
Average SAT 1498 1582 1410 1495 1563
Average EFC 0 467 $1,849 $4,448 $7,411
Average need $48,947 $48,520 $47,059 $44,485 $41,648
Students receiving grant 51 13 20 41 34
Avg grant amt $29,516 $30,213 $27,755 $26,214 $24,968
Students receiving loan 47 10 18 39 33
Avg loan amt $9,152 $10,300 $9,829 $8,821 $9,424

EFC
$10,000-
$20,000
$20,000 -
$40,000
$40,000 -
$70,000
Above
$70,000
Did not apply for
Financial Aid

Total Students 34 47 20 26 65
Average GPA 3.05 3.15 3.20 2.91 2.93
Average SAT 1622 1583 1662 1720 1622
Average EFC $15,076 $27,905 $49,789 $93,794 NA
Average need $34,118 $21,506 -$675 -$44,016 NA
Students receiving grant 34 47 18 21 49
Avg grant amt $20,522 $15,996 $5,692 $16,476 $16,006
Students receiving loan 31 37 13 11 0
Avg loan amt $11,000 $8,491 $5,692 $5,500 $0

The students in this cohort are more evenly distributed financially in comparison
to those in the cohort of 2008, although by a small margin. In this group, 166 of 358
students, or 46%, come from families whose EFC is $10,000 or less. However, as with
the cohort of 2008, the highest achievement, as evidenced by admissions GPA, occurs
in the lower end of the socioeconomic spectrum, among those with an Estimated Family
57
Contribution between $1000 and $3000. Students from families who are deemed to be
able to pay an average of $93,794 have the lowest average admissions GPA among
financial aid applicants. Nevertheless, the information available continues to suggest
that most of the students entering this institution in 2009 came from families whom the
US Department of Education considers able to contribute a minimum of $10,000 per
year to the costs of tuition. A closer examination of the economics of these students’
home communities provides more information on this trend.

Table 4.7 Freshmen 2009 Home Community Economic Data – 2000 Census
Academic Quintile 1 (46 students)
Median Household Income (average) $53,407

Academic Quintile 2 (76 students)
Median Household Income (average) $56,290

Academic Quintile 3 (99 students)
Median Household Income (average) $54,596

Academic Quintile 4 (64 students)
Median Household Income (average) $58,679

Academic Quintile 5 (73students)
Median Household Income (average) $58,721

In the communities from which the cohort of 2009 is drawn, the average median
household income, as collected in the 2000 Census, ranges from $53,407 to $58,721,
and the overall average is $56,338. This average is $482 higher than that of the cohort
of 2008. Table 4.7 shows that, in the cohort of 2009, students from Academic Quintile
5, those deemed to be in the academic bottom 20% of their cohort, come from home
communities with the highest average household income. In contrast, those in the top
58
twenty percent come from communities with the lowest average income, $53,407.
These data contradict the literature in that those in the most accomplished subset of
entering first-year students come from communities with the lowest median household
income among their peers. In order to determine the likely cause of this finding, a study
much larger than the present one would be necessary, although, again, the age of the
Census data may play a role in that discrepancy. Because the economic information of
the two entering cohorts is used here to illustrate the demographics of the interview
respondents’ classmates, this study does not delve into the possible roots of the
discrepancy between the data for the cohorts and the literature presented in Chapter 2.
Overall, a succinct examination of the two cohorts presented here revealed some
anticipated similarities as well as some noteworthy differences. An initial side by side
analysis of the two cohorts studied here reveals similarities in this institution’s last two
entering classes. In 2008, the average admission GPA was 3.03, while in 2009, it was
3.08. The average SAT score of those who began college in 2008 was 1571, while that
of those who came a year later was 1574. The two groups were also similar in terms of
proportion of students who applied for financial aid. In 2008, about 83% of first-year
students applied, and, in 2009, the percentage stood at 82%. In addition, most students
in both groups come from families whom the US Department of Education considers
able to pay at least $10,000 of the students’ college tuition, and within both cohorts, the
highest admission grade point average belongs to those whose Estimated Family
Contribution ranges from $1000 to $3000.
The differences arise when each group is examined separately. Students in the
cohort of 2008 come from communities where the average median household income,
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according to the 2000 US Census, ranges from $53,920 to $58,072. Although there is
no visible overall trend linking income and academics, students in the highest academic
quintile of the cohort of 2008 come from families with the highest financial need.
These facts contradict the literature discussed in Chapter 2, which finds that family
income has a positive effect on a child’s academic achievement.
The results of an analysis of the statistics for the cohort of 2009 reveal a trend
which does match the literature discussed here. In this group, Academic Quintile 1
students do come from families with the most financial resources. Moving down the
quintiles, there is an evident pattern of decreasing amount of Estimated Family
Contribution. However, the household income statistics do not match the Estimated
Family Income numbers. The average median household income for the communities
within which these students reside ranges from $53,407 to $58,721, with the average
being $56,338. When these data are disaggregated by academic quintile, those in the
bottom twenty percent of the entering class come from the communities with the most
financial resources, and those in the top quintile come from the communities with the
lowest average income.
For both groups, the economic data utilized was collected nine or ten years
before these students began their college education. Nonetheless, these numbers do
provide a general portrait of the kinds of communities from which this institution
recruits its freshman classes. In addition, the academic and financial statistics for these
two cohorts serve to illustrate important characteristics of the institution’s student body.
This population, in turn, makes up the social and academic environment for this study’s
interview respondents.
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Interviews
Because students’ decisions are founded in many levels of individual context
(Perna, 2006), it is important to understand the personal factors which make up this
context. St. John (2006) calls for an analysis of the ways in which students’ perceptions
of their own finances in light of college costs shape their college-going decisions.
Similarly, McDonough and Calderone (2006) find that students appraise college
affordability based on an internalized assessment of their own needs in relation to
competing demands. Therefore, personal interviews allow a glimpse into this internal
dialogue and add to the information gleaned from the financial characteristics of their
families and communities. The aim of interviewing first year students was to
understand how certain socioeconomic factors, as presented by the students themselves,
affect their decisions regarding student loans. In particular, this study sought students’
views regarding their families’ socioeconomic status, their personal expectations
regarding degree attainment, their level of knowledge regarding their own financial aid
packages and the effect each of these factors exercised in their enrollment decisions.
The researcher conducted twelve interviews with first-year students for this
study. To recruit students, the researcher introduced herself and her study during four
sections of the institution’s Freshman Seminar course. Students were asked to sign up
for interviews using only their first names and the day and time during which they were
available to meet for the interview. Students were not offered any incentive or payment
for their participation. The respondents consisted of one Asian-American female, two
Latinas, one white female, one Latino, three white males and four African-American
61
males. All students were assigned pseudonyms. Table 4.8 presents an overview of the
participants in the order in which they were interviewed.

Table 4.8 Interview Participants

Pseudonym Gender Ethnicity

Adam male White
Benjamin male African American
Charles male African American
Daniel male African American
Esther female Asian American
Frank male White
Gloria female Latina
Henry male White
Isaac male African American
Jerry male Latino
Kelly female White
Leslie female Latina

Research Question 1: What do students perceive to be their families’ financial
circumstances, and how do these affect their decisions regarding student loans and
their plans for degree completion?

In regards to the first research question guiding this study, the answers to
interview questions one through five, fourteen and seventeen were grouped together to
determine patterns in responses (Table 3.1). Three themes emerged. First, all students
interviewed mentioned family as a primary influence in their decision to attend college.
Second, all but two respondents’ parents have at least some college experience, though
not all earned a degree. Last, most respondents evaluated their family’s economic
status as middle-class or higher, although the accuracy of these evaluations may be
limited by the students’ lack of knowledge regarding the specifics of their families’
finances and a possible misunderstanding of income categorization. These students
62
believed their families were financially capable, at least in part, to help cover their
college expenses.
Expanding on the first trend presented, all but one interviewee identified family
as a primary influence in their decision to attend college, either as an encouraging
element or as a determining factor. Kelly, a White female, said, “It was my mom,
looking at her. She didn’t have a chance to go to college when she was young.” Isaac,
an African American male said, “It is just something that was always expected of me,”
The sentiment was echoed by Adam, a White male who stated, “I’ve always been told I
have to get my degree,” Other students mentioned their parents’ desires as the primary
reason they chose to go to college. Esther, an Asian American female, said “my parents
wanted me to go, “and Benjamin, an African American young man, said “I wouldn’t
want to disappoint my parents.” Leslie was the only student to not mention family. She
told of how her learning disability was the primary influence in her decision to attend
college when she mentioned, “back then they told me I was going to be below average,
to expect nothing but Fs, and, to me, it was to prove everyone wrong and to challenge
myself.”
Finding that most participants consider their families a motivating factor in their
decision to attend college is significant in that, as Dowd (2008) states, the
interconnections of both internal and external factors determine students’ decisions
regarding degree attainment. Understanding what these factors are and the extent to
which their influence shows up in students’ decisions can help education practitioners
identify the areas and factors which give rise to first-year students’ motivations and
fears regarding their college experience (McDonough and Calderone, 2006). In
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addition, according to St. John (2006), the role of family influence is understudied in
previous studies on this population. Therefore, the fact that family arises as such a
primary influence provides a starting point from which to embark on future research.
The second trend identified as helping to answer the first research question is
that, in addition to family as an influence in their decision to attend college, most
students mentioned they have at least one parent who attended college, although these
parents did not always earn a degree. Esther and Kelly are the only interviewees
whose parents did not enter higher education. The remaining students have at least one
parent who attended college. Leslie stated her “dad, because of his job as a parole
agent, he went to (a two year college) to get his Associate degree.” Adam mentioned
his “dad went to Central Michigan for three and a half years. He didn’t graduate.”
Similarly, Charles’s “dad went to Sacramento State for his first semester, and then he
had to drop out because he had a baby.” Gloria and Isaac’s fathers also dropped out of
college. Daniel and Isaac stated their mothers graduated college in the United States,
while Jerry said his mother earned a college degree in Mexico. Frank stated his
“parents have some college experience,” and Benjamin stated his “parents both went to
college and have Masters’ degrees.”
The fact that most students’ parents have college experience, according to the
literature which frames the analysis for this study, may provide an explanation to
students’ ready acceptance of loans, as presented in the discussion of the findings under
the third research question. Because their parents may have incurred student loans while
pursuing their own degrees, the respondents may experience fewer fears and have more
practical knowledge regarding the role of loans in their college experience.
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Ascertaining parents’ level of education is an important element in understanding the
basis for students’ decisions. According to Dowd (2008), parents’ educational
achievement, instead of over-utilized concepts like parents’ culture, is a determining
factor in their children’s’ views and decisions regarding debt and borrowing. Families,
she argues, rarely measure the costs of a college education using cost-benefit analysis.
Rather, a students’ reaction to the financial information provided is influenced by
myriad factors stemming from their homes, communities and schools. Among the most
influential of these is their parents’ educational attainment.
The third trend found in the responses pertaining to the first research question
was evident in terms of financial status. Only two students indicated they would label
their families as lower or working class, although the reasons they gave for this labeling
were based on impressions of material possessions and not on precise knowledge of
their parents’ income. The rest categorized their families as middle class or higher.
Kelly said “definitely low. I was poor.” Gloria stated her family’s status was “working
class because they don’t have access to many luxuries. They keep up with their credit.
They never borrow too much.” On the other side of the economic spectrum, Adam
categorized his family as “upper middle class, I guess, because, I mean, my family has a
lot of money but I wouldn’t say I’m rich.” Daniel stated his family was “definitely
middle class to upper maybe. My dad is very smart with his money and I think that
contributes a lot to our family income. You know, he doesn’t just go out spending and
now he drives a nice car.” The remaining students classified their families as middle
class, although, again, their understanding of the term may be framed by a lack of
knowledge regarding the economic definition of middle class. Nevertheless, the
65
median household incomes of the communities within which students in the last two
entering cohorts live is aligned with that of the nation. An in-depth analysis of the ways
in which students perceive middle-class status is beyond the scope of this study, but
may yield information relevant to discerning students’ beliefs and attitudes regarding
the financing of higher education.
Ten participants indicated their parents assumed at least part, if not all, of the
costs of their college education. As an example, Benjamin said his parents are “paying
for it, basically. I don’t face any costs on myself.” Henry said the same thing. His
parents are “paying for the whole thing.” The other eight students stated their families
took loans to help pay for college. Charles’ grandmother “took out a loan to pay for my
college.” Daniel mentioned his mother and stated, “It’s under her name, the loans,” and
Isaac said his parents “take money out of like loans.” Contrastingly, Kelly stated her
family is not helping her pay for college at all due to financial constraints. This
finding is striking in that, looking back at the cohort’s statistics, 69% of students who
entered this institution in the fall of 2009 accepted a student loan.
Financial aid packages are designed to cover, through grants, scholarships
and/or loans, the entire costs of attending an institution, including the student’s living
expenses. Therefore, one would expect other funds would not be necessary. While it is
feasible that most students’ parents do help financially, when asked about their financial
aid packages, described in the section pertaining to the third research question, eleven
of the twelve students reported having accepted student loans in their own names. The
fact that these students credit their parents with taking financial responsibility while
neglecting to take note of their own contributions seems, at least, concerning, and, at
66
most, a noteworthy lack of information regarding the way in which their college costs
are being paid. Further analysis of this knowledge gap may prove beneficial both in
ascertaining students’ understanding of the components of their financial aid packages
and in creating new, more instructive ways to inform them of these components.
However, if most parents do, indeed, take an active role in financing their children’s
college education, new research on loan debt may soon have to take into account that
students are not alone in paying for school. While research has previously addressed
the relationship between students and college costs, new studies may benefit from
analyzing the relationship between entire families and these costs.
To summarize, most interview respondents told of their families’ serving as a
primary motivating factor in their decision to pursue a college education. This finding
provides an opportunity for researchers and practitioners to utilize family support in
designing policies to address the needs of first-year students. Secondly, most students
reported their parents have at least some college experience. This fact may also help
explain the respondents’ willingness to accept student loans in order to obtain their
degree because previous research has found that parents’ level of education plays a key
role in students’ views regarding borrowing in order to pay tuition (Dowd, 2008).
Lastly, and most significant to this study, most respondents stated their families are
taking at least partial financial responsibility for their college costs, although their
financial aid packages appear to prove otherwise. All but one of the respondents
reported having accepted student loans in their own names. This result leads to two
distinct possible areas for research and for the improvement of services provided to
first-year students at this institution. On one side of this finding is the likelihood that
67
first-year students are misinterpreting the way in which their college costs are being
paid and would benefit from services and methods of communication that more clearly
present their financial aid packages. On the other side is that their parents are taking
more financial responsibility in their children’s education than previously thought, and,
therefore, researchers and practitioners may now fold this emerging dynamic into their
work. In all, the role that parents play in a first-year student’s decisions regarding
college enrollment and financing is multilayered and requires further examination.

Research Question 2: What do students perceive as their likelihood of earning a degree,
and how does that perception affect their decisions regarding student loans?

In terms of the respondents’ perceptions of likelihood of earning a degree,
questions six, seven, eighteen, twenty-one and twenty-two sought their views regarding
their high school preparation, their current plan for college completion compared to
their initial plan, and their views regarding the effect of accepting loans on their plans to
earn a degree (Table 3.1). Mostly, students felt well prepared for college, believed their
initial plan for completion was manageable, and exhibited largely accurate knowledge
regarding their school’s cost. Most significant to this study, however, students were
unaware of the particulars of their financial aid packages and, despite this relatively
uninformed position, their views of loans ranged from considering them a necessary
evil at best and a heavy burden at most.
The first relevant point in addressing the second research question is that all
interviewees credited their high schools with preparing them well for the rigors of
college. Jerry and Leslie both mentioned the Advanced Placement classes they took.
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Leslie judged them as “very intense. Now that I’m in college, everything seems so
easy.” Daniel and Gloria both discussed the preparation they received in terms of
general education requirements. Daniel stated that “high school…gave me an idea of
what it was going to be like, you know, gave me my basic skills with science, history,
my basic subjects,” while Gloria said her school, “strengthened my math, and some
things with English, so I didn’t start here without knowing anything.” Adam, Henry
and Kelly all pointed out the reputation of their high schools as evidence of the quality
college preparation they received. Henry said, “I went to a college prep school, a
private school.” Similarly, Adam stated, “I went to one of the better high schools…I’m
doing fine in college now,” while Kelly mentioned, “I went to a very small school. You
had to test into it. It was very prestigious.”
First-year students’ impressions regarding their secondary education have a
significant impact on their chances of retention and eventual degree completion. Zhang
and RiCharde (1998) found that one of the most common reasons freshman students
abandon their education is lack of self-efficacy regarding academics. In addition,
Stanton-Salazar (1997) states that the institutional agents students encounter through
their educational settings serve as useful resources as students navigate the college
enrollment process. If these students’ impressions hold true, they may be the
beneficiaries of more than a “prestigious” education. They may also have received the
advantages that come from interacting with the professionals on their campuses. Perna
(2006) suggests analyzing students’ college-going decisions from a perspective that
encompasses their personal contexts. The views they have regarding their academic
preparation is a large part of that context. Although their course grades may ultimately
69
prove otherwise, the fact that the respondents feel well prepared to tackle college work
may mean that some of the institution’s efforts and resources can be shifted away from
support in this area and into those where students feel less confident.
The second commonality in the respondents’ answers relevant to the second
research question involves the length of time they envision for degree attainment.
When discussing their initial and current plans for completion, all but two students held
firm to the expectation of earning their degrees in a timeline of four years. The first,
Frank, believed both at the time of first enrollment and at the time of interview that he
would finish his degree in three years. The other, Charles, came into college expecting
to take five years to graduate, and his tenure as a college student had not changed his
views when he was interviewed. The remaining students all expected to complete
college in four years. All interviewed students stated their enrollment plans were to
continue registering for sufficient units to be considered full-time students.
Understanding how students’ plans for their education evolve or remain intact is
important because one of the reasons Zhang and RiCharde (1998) found as to why
students leave higher education is a mismatch between their expectations of college
studies and the reality they encounter on campus. Although these students, at the time
of interview, had completed at most a full semester of higher education, the fact that
they feel their original idea regarding the length of time they will need to graduate had
not changed indicates their expectations coincide with the lived experience of being a
college student. This lack of deviation in plans leads to the increased probability that
these students will remain enrolled at least into sophomore year (Dowd, 2008).
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The third finding pertaining to the second research question is that, when asked
about the possibility of receiving the same financial aid package for sophomore year,
the majority of students interviewed responded that they would accept a second round
of loans if it were required to remain enrolled full-time at their institution. All students
interviewed felt the current loan amount they held was small enough to not be of
concern. Fear arose, however, when discussing the possibility of receiving smaller
grant amounts, and, thus, increasing their dependence on loans. For the most part,
students said they would take the larger loans, and accepted that student loans in
general would be an element in their degree completion. In general, their views
regarding the role of loans in their college experience ranged from loans’ being a
necessary evil to a very heavy burden. Only four students considered loans a stumbling
block or absolute deterrent to their education.
Regarding the possibility of taking a larger loan if his financial aid package
included less grant aid, Adam said he “would do whatever it takes to go to college.”
Daniel said he would be “very likely” to take a larger loan “because I want to stay in
school and I understand that this is something that’s a necessity almost.” Other students
had a more pessimistic view of their future if granted less financial assistance. Isaac
said, “the only thing you can do is just loans, to see if you can take out loans because if
you don’t have enough money then there’s no way that you can pay the school. So
loans would probably be the only way.” Gloria said “Well, I would take it. I would take
it so I could keep going to school…it’s like a heavy weight because I know I will have
to find a job to pay it back.” Esther said, “I’ll probably take out more loans, but I don’t
want to, so I’ll probably stay at home, maybe to cut back.”
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Further expanding on students’ perceptions regarding loans and their possible
courses of action if they feel they need more loans, five students discussed the
possibility of supplementing their education with courses at a different campus or
leaving their present institution altogether if asked to take larger loan amounts. Henry
said, “Obviously, that would make us panic. I would even consider some on-line
courses at the community college when I go back home summers just to get those
credits. I don’t want…my parents’ paying for my school to be something that’s so hard
on them that they have to sacrifice like their own things.” Jerry answered he would
“take a bigger loan if there was no other way, but that would be the last thing. If
financial aid starts decreasing, I'll probably just go to a JC school and try to work and
accumulate money so I can go back.” Frank stated, that if he were asked to take a
larger loan, he would “probably just transfer to a different school….hopefully a
different four-year, but if not, a community college.” Kelly answered, “I don’t know
what I'd do. I might have to leave…The loans already affect my education because I'm
so stressed about it constantly.” Charles expressed the most dismal view on taking
further loans and the possibility of leaving his current campus. He stated “that loan is
like a burden. It’s hard because my dad doesn’t really understand I don’t think I should
go here next year because I know I’m not going to be able to pay for it. He doesn’t
really understand like that we don’t have the money for me to go here. He’s like saying
this is the best thing for me to stay here where I’m at, but we don’t really have the
money.”
Students’ weary willingness to take on student loans, and the steps they consider
because of it, is important to note because studies have shown a relationship between
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unmet financial need among college students and an increased likelihood of abandoning
higher education altogether (Murdock et al, 1995). Students who receive student loans
to cover tuition costs are more likely to drop out when compared to their classmates
who receive institutional grant aid (Horn & Peter, 2003). For higher education
practitioners, this relationship between type of aid and persistence points to a need to
heighten awareness among students regarding the loan amounts they face in each
academic term. As the range of responses above illustrates, this relationship also means
that enrollment managers would benefit from a better understanding of the meaning of
costs and financial assistance for the diverse populations found on their campuses, as
this meaning varies by sociocultural context (McDonough & Calderone, 2006).
Overall, these students’ confidence regarding their academic preparation may
represent a quality worth capitalizing on by the student services professionals on their
campus because self-efficacy regarding academics is a strong predictor of retention
(Zhang & RiCharde, 1998). Secondly, the fact that the respondents feel strongly that
they can keep to the timeline they expected in terms of degree completion is also a very
positive sign relating to their retention (Dowd, 2008). The one cause for concern
discerned in addressing the second research question lies in students’ lack of knowledge
and fears about student loans. While the respondents display a willingness to accept
loans, they also exhibit apprehension, and they do consider completing at least some
coursework at a different campus due to the possibility of cumbersome debt. Because
students’ responses ranged from a resignation to do whatever it takes to finish to a
strong belief that one year would be all one could afford at this institution, means that
the understanding of costs varies by individual. While addressing each student is not
73
feasible, student services can be revamped from the perspective that the information
currently provided to students regarding pricing and financial aid is not enough to allay
fears.

Research Question 3: To what extent are students knowledgeable about their
institutions’ cost of attendance, their own financial aid packages, and the resources
available to assist them with concerns regarding these?

Lastly, this study sought to discern the extent to which students’ knowledge
about the costs of attendance at their institution, about their own financial aid packages,
and about sources of advice and assistance on campus affected their decisions regarding
student loans and enrollment status. The information gathered through the student
interviews revealed that all respondents have a realistic idea of the total of their
college’s tuition and fees. Second, the respondents do not know the particulars of their
financial aid packages, and, third, only three of the students could identify a source of
assistance outside of the Financial Aid Office they could refer to with concerns
regarding the effect of finances on their education.
Overall, the students’ knowledge regarding the costs of attending their
institution was realistic. The institution itself reports the costs of tuition and fees is
$33,000, and the average student budget for the respondents’ cohort, as presented in
table 4.1, is $49,198. Leslie mentioned the lowest amount, “somewhere around 35
thousand to 37.” She qualified her answers by stating she did not live on campus and
followed up by stating, “with dorming, it goes up to at least 40 thousand.” Benjamin,
Esther, Frank, and Jerry answered that that their college costs were $45,000. Adam and
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Charles both stated the cost was $49,000. The highest amount was mentioned by
Henry, who said he was paying $50,000. As previously stated, the matching of
students’ expectations and campus reality bodes well for the success of students at this
institution (Zhang & RiCharde, 1998).
In terms of understanding the specifics of their aid packages, the students
interviewed, except for one, could not definitively state the amount of money they
received in either grants or loans. Daniel readily admitted his parents handled the
financial aspect of his education. He said, “I think they have it under control.” Henry
stated simply, “I know I’m getting money, like loans and there’s grants also.” When
asked if he knew the amounts of his loans, he said, “Not individually, but I know that
like the school’s like 50 thousand or something and this semester all I have to pay is 6
thousand, so it’s a substantial amount.” Charles knew he “got like a Pell grant for some
amount, too. I don't know amounts.” Adam said he “got a couple loans. Small loans.
Like a thousand dollar loans.” Kelly answered, “I have everything. Loans, probably
eight thousand a year,” and Esther said, “I have like the Stafford and Perkins loans.
Like ten thousand dollar loans.” Benjamin was the only respondent who knew the
particulars of his aid package. He said, “It was in the form of two scholarships and the
work-study award. One was eleven thousand per year and the other one was seven
thousand per year and the work study is 3,500 per year.”
Although research shows that financial aid of any type has a positive effect on
retention (DuBrock, 2000; Singell, 2001), the fact that most respondents are not aware
of the kinds or amounts of awards they receive may lead them to inadvertently accept
either less assistance than they need or more debt than they expected. Misinformation
75
regarding financial aid is considerable obstacle to college success (Perna, 2008). Here,
again, there is a need for enhanced methods of communicating with first-year students
regarding costs and financial aid.
The last topic covered in this study was students’ knowledge of sources of
advice and assistance on campus. To determine if students knew of the services offered
by their campus and if they availed themselves of these services, questions 15 and 16
(Table 3.1) sought to elicit from the students their awareness of resources, outside of the
Office of Financial Aid, available at their institution.
Gloria admitted she would not know where to turn. She stated, “Well, I don’t
know because the instructors don’t know. I asked them once, and they couldn’t tell
me.” Henry faced the same situation. He said, “I couldn’t think of anybody.” Isaac
said, “I’d probably just look it up online.” Other students mentioned individuals
involved in their daily life on campus. Jerry stated he would probably turn “to
upperclassmen students.” Frank mentioned he “could talk to my football coach.”
Charles stated he would be able to turn to his Residential Assistant for information.
Leslie and Esther both said they would turn to the staff at their work-study jobs, the
Cultural Center and the Office of Human Resources, respectively. Adam and Benjamin
both mentioned the school’s Business Office as a possible source of information.
Frank, Isaac, Leslie and Daniel mentioned the Dean of First Year Students as a source
of advice, although Daniel was the only one to present the Dean as his first option, and,
importantly, these four students were enrolled in the Freshman Seminar course taught
by the Dean of First Year Students. The remaining three students mentioned the Office
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of the Dean of First Year Students as a second possibility, behind, as previously
mentioned, Frank’s football coach, Leslie’s bosses, and Isaac’s on-line search.
Smith (2000) states that interrelating student services on a campus enhances the
ways in which the professionals at that institution respond to the needs of students, and,
in turn, increases the likelihood that those students will persist through graduation.
While this institution’s Financial Aid Office may be best suited to providing the most
accurate or helpful information regarding college costs and sources of aid, its position
as a large department within a much larger institution may distance it from the students
it serves. Outside of that office, this institution offers each first-year student a faculty
mentor, a counseling center, a supplemental services office, and a Dean of First-Year
Students. Given those other resources and the fact that college costs and financial aid
are sources of apprehension for students, as described above, the fact that few students
know of a place or a person on campus where they feel comfortable seeking assistance
is troubling. As Stanton-Salazar (1997) states, institutional agents help students
overcome barriers to degree attainment. The fears and the lack of knowledge regarding
their aid packages expressed by the students in this study indicate that those barriers are
not left behind at their high schools. In order to strengthen the level of services provided
to students and to maximize the chances of retaining them, student services professional
at this institution would do well to solidify communication channels among
departments whose staff has regular contact with first-year students.
In all, the information gathered to address the third research question provides
both positive and disconcerting results. Students, in general, are aware of the costs of
earning a degree at their institution, and having this accurate knowledge speaks well to
77
their persistence (Zhang & RiCharde, 1998). The disquieting elements brought forth by
the students’ responses lie, first, in the fact that they are not familiar with the types and
amounts of aid included in their financial aid packages, and, therefore, cannot make
informed decisions regarding the amount of aid to accept. Secondly, and particularly
significant given their incomprehension of the elements of their aid packages, most
students interviewed here were unable to name a source of assistance on these matters
beyond the Financial Aid Office. Reliance on the staff of this one office may limit the
number of positive institutional agents available to students who may still need help
overcoming barriers to degree completion (Stanton-Salazar, 1997).

Summary
The information gathered for this study yielded several significant findings in
terms of the effect of financial circumstances on academic achievement, the role of
family in educational decisions and students’ knowledge regarding costs and financial
aid options. Within the cohort of 2008, there was no relationship between students’
academic performance and their financial need. In the cohort of 2009, the students with
the highest academic achievement were those with the lowest financial need. In both
cohorts, however, students whose finances would place them at the lower end of the
socioeconomic spectrum held the highest admission GPA.
All students considered their families as primary factors in their decision to
attend college, and all but one had at least one parent with some college experience.
Most students identified their families’ financial situation as one which would fall in the
78
category of middle class and would allow the family to take on at least part of the costs
of the students’ college education.
In all, the students felt their high schools prepared them well for college, and the
majority of them held firm in their timeframe for completing their degrees. While most
students understood the cost of college, paying that price through loans largely troubled
the students interviewed. Their views on loans ranged from a sense of frustrated
resignation to a belief that the need for loans would derail their education.
The students interviewed were not knowledgeable about their own financial aid
packages, and very few of them were able to identify a resource on campus whose
advice they would seek regarding financial concerns. Despite knowing the particulars
of the price of attendance, the students in this study did not know the details of their
own financial aid packages. When asked where or to whom they would turn, outside of
the Financial Aid Office, with concerns about their finances and their education, most
students were not familiar with any office or individual on campus that could be of
assistance.

79
CHAPTER 5: Conclusion
Introduction
Increased competition among colleges for students with impressive academic
achievement and the high cost of educating the students once they arrive on campus
place some students at a disadvantage in terms of reaching graduation. Reluctance to
incur debt may lead students to reduce their coursework or leave higher education
(Cabrera, 1988). McDonough and Calderone (2006) posit that higher education
practitioners would better understand students’ perceptions of affordability if their
analyses included the many elements, relationships, and situations which form the basis
for students’ college-related decisions.
The aim of this study was to analyze the role of certain sociocultural factors in
the decisions students make regarding loans and their education through answering the
following question: How do first-year students’ family finances, perceptions of
likelihood of college completion, financial aid packages, and level of comfort with
campus resources shape their enrollment and loan acceptance decisions at a selective,
private, four-year institution? To discern that answer, three sub-questions were posed:
1. What do students perceive to be their families’ influence and financial
circumstances? What role do these play in their decisions regarding
student loans and their plans for completion?
2. What do students perceive as their likelihood of earning a degree, and
how does that perception affect their decisions regarding student
loans?
80
3. To what extent are students knowledgeable about their institutions’
cost of attendance, their own financial aid packages, and the resources
available to assist them with concerns regarding these?

Summary of Findings
With regard to the influence of family on first-year students’ college-going
decisions, the answer to the first research question revealed both anticipated and
unexpected finds. First, family serves as a motivating factor for students. This finding
reinforces the validity of using sociocultural factors to frame the study of students’
decisions and outcomes because, as Dowd (2008) states, understanding the
interconnections between internal and external factors affecting students’ decisions
provides a stronger basis for institutional policy designed to address student needs.
Secondly, and surprisingly, most respondents stated their parents took at least
partial responsibility for the costs of college, but their financial aid packages
demonstrate their need was met through institutional grants and student loans taken
under their own names. Although parents may contribute funds, the fact that the
respondents did not readily identify themselves and their accumulating debt as primary
means of paying their college expenses may mean their decisions regarding financial
aid are being made without clear knowledge of the consequences.
Addressing students’ perceptions of their own likelihood of earning a degree,
this study sought to analyze their impressions of their level of preparation for college
work, the length of time they expected to be in college, and their beliefs as to the effect
accepting loans may have on their plans to earn a degree. This study found that
81
students felt very well prepared for the rigors of college academics, and this sense of
self-efficacy bodes well for their success (Zhang and RiCharde, 1998).
Additionally, the respondents’ opinion of the length of their tenure at this
institution had not changed from that which they held at the time of admission, which
also foretells of positive results in terms of retention (Dowd, 2008). Lastly, although
they are willing, the respondents are apprehensive about accepting additional student
loans to complete their education. Their answers also show that they give thought to
completing at least some of their coursework outside of this institution. Ensuring that
apprehension does not become unwillingness is foremost in developing policy to
address persistence, as unmet need correlates highly with dropout rates (Murdock et al,
1995).
The most revealing findings attained in this study address students’ knowledge
of the components of their own aid packages and their comfort level in turning to
institutional agents with questions and concerns regarding the costs of their education.
Previous research shows that a principal reason for the under-enrollment of low-income
students in college is a lack of information on, and uncertainty regarding, college costs
and financial aid (McDonough & Calderone, 2006). The answers to the third research
question indicate that students, for the most part, cannot identify the types and amount
of aid they received. This lack of knowledge may lead students to make less than
informed decisions regarding student loans, may cause them to accrue more debt than
they initially expected, and may hinder their goal of degree completion (Perna, 2008).
The examination of students’ level of comfort with the institutional agents on
their campus found that, outside of the office specifically designated for this purpose,
82
students were at a loss to identify a department or person with whom they felt
comfortable seeking assistance. The Financial Aid Office, though appropriate for this
type of inquiry, may be seen by students, especially those new to the campus, as
intimidating. Therefore, other resources and institutional agents take on more
significance. This campus addresses that possibility by offering students several other
helpful resources, one being a faculty mentor. The fact that most students could not
readily identify a person they would turn to suggests these students may not be making
the interpersonal connections proven necessary for academic success (Stanton-Salazar,
1997).

Sociocultural Analysis
St. John (2006), Perna (2006), and Dowd (2008) call for the use of methodology
that incorporates students’ lived experiences in research regarding their college-going
decisions. Within this study, three findings further expand on the need for such
research. First, the fact that most respondents’ parents have some college experience
signals a need for research and recruitment methods which address the influence of
parental educational experiences in students decisions regard the type of institution they
select. Secondly, because the respondents’ did not know the elements of their financial
aid packages but feared loan debt enough to consider taking courses on a different
campus leads to a need to reassess the ways institutions provide information to
incoming students. Lastly, the students’ lack of knowledge regarding sources of
assistance on campus indicates a need to review the interconnections among student
services providers.
83
McDonough and Calderone (2006) state that students’ college enrollment
decisions stem from the interaction of his/her own perceptions, attitudes and beliefs.
Parental education plays a key role in the development of these attributes (Dowd,
2008). The respondents in this study come to college with the background and support
system provided by college educated parents. Therefore, it is feasible that the context
from which they make their decisions differs from that of those who are the first in their
families to attend college. For these students, the decision to make may not be whether
to attend college, but, rather, which college to attend. Understanding the ways in which
these students and their families reach this decision may help practitioners better
communicate with this population in their efforts to recruit them.
Dowd (2008) states that financial aid information, by itself, is not enough to
induce students to avail themselves of all opportunities and resources available to them.
These students must also believe that these opportunities are resources are, indeed, for
them. The interview respondents all received financial aid offer letters, but most were
not able to name the particulars of the packages they accepted. Therefore, their receipt
and signing of the offer letters clearly does not ensure an understanding of the financial
agreements they entered into or of the opportunities which may be available. As a
result, financial aid practitioners would do well to implement methods of providing
information more conducive to ensuring that students are fully aware of the ways in
which their tuition is financed and assuring them that they are eligible and qualified for
other options such as outside scholarships. Such endeavors will aid in dispelling the
students’ internalized perceptions of assistance that is available and possible. The fear
of loan debt which arises from the incomplete picture of college expenses and aid
84
caused some of the respondents to consider taking courses outside of their primary
campus. Because research shows this practice is detrimental to students’ likelihood of
graduating (Hossler, 2000; Zhang & RiCharde, 1998; Zhu. 2002), campus
administrators can enhance retention rates through policies which address first-year
students’ fears regarding the effect of loans on their college completion plans.
Overall, the literature which forms the theoretical framework for this study finds
expectations and actions occur through the confluence of sociocultural factors. A key
factor is community, both that from which students come and that which is formed on
campus. The students interviewed are unaware of resources and personnel on campus
to whom they can turn with concerns regarding financial aid and the decisions they
must make as a result of it. Such lack of connection with institutional agents means
they largely make decisions either alone or with the help of family. In both scenarios,
institutional agents whose knowledge may prove beneficial are missing (Stanton-
Salazar, 1997). To maximize the probability that students make informed decisions
regarding both aid and enrollment, student services providers should seek to integrate
resources and broaden communication channels among those who interact with first-
year students.

Recommendations
The findings uncovered through the answers to the research questions guiding
this study point to two recommendations for practitioners and two for future
researchers.

85
Practitioners
Although this institution offers several resources to its first-year students,
significant benefits would be gained by strengthening the communication channels
among the departments and individuals who work directly with this population and by
increasing the presence of these in students’ college experience. Larger departments’
can enhance their outcomes by integrating financial aid information into existing
processes and providing training for personnel to assist in addressing student concerns.
For example, the supplemental services provider on campus may add a conversation or
questionnaire regarding students’ knowledge of their financial aid packages and options
to their new student intake procedures. In addition, staff members who work directly
with students would benefit from training in helping students understand the different
components of their aid packages.
The second recommendation for practitioners involves the individual internet
portals through which students access e-mail and receive pertinent notices from campus
administration. These sites provide a ready channel for disseminating continuous
information regarding financial aid and scholarship opportunities. This method of
communication can be tapped to enhance students’ financial aid knowledge and reduce
loan-related anxiety through providing students a year-end statement whereby students
are kept abreast of their loan amounts to date and expected costs of attendance for the
following academic term.

86
Researchers
For future researchers, the results of this study point to two avenues of inquiry.
The first concerns the expanding role of families in students’ college-going decisions,
particularly in light of the students’ perceptions of their families as middle-class. First,
although quite salient in the results of this study, St. John (2006) states that the role of
family as a primary influence in students’ decisions to attend college is understudied.
Therefore, the outcomes of the analysis presented here indicate a need for further study
on the ways in which students build perceptions of their families’ influence and
finances. Research can progress from the effect of family influence on the decision to
attend college toward an understanding of the effect of parental education and income
on the decision of which type of institution to attend. In addition, if parents’ role in
paying for college is as prevalent as the respondents expressed, new research on student
loans will have to move from an examination of the relationship between higher
education debt and individual students toward an analysis of that between debt and the
entire family.
Secondly, finding that students are unable to identify programs or individuals on
campus whom they view as sources of assistance and support calls for research on the
ways in which students seek and make these connections. Future inquiries into college
retention rates should focus on the importance and role of campus personnel in reaching
out to students to ensure their successful transition from high school to college
graduation.

87
Closing
Although conducted at one institution, the analysis of the economic, academic
and interview data conducted here both validates preceding research in many areas and
serves as a starting point for future study on previously understudied sociocultural
factors affecting first-year student retention. Researchers’ increasing understanding of
the role of family influence on students’ college-going decisions provides ample
opportunity for enhancing recruitment and student services policies. Secondly,
practitioners should examine their systems and policies for disseminating financial aid
package information, which currently are not effective at helping students understand
the components of their packages or in addressing the fears which arise from such lack
of knowledge. Lastly, student services personnel across institutions would benefit from
reviewing current practices among departments which serve first-year students. As the
respondents in this study demonstrate, many incoming students are at a loss in
identifying sources of assistance at their institution. Higher education administrators
would enhance both their services to their constituencies and their retention outcomes
by addressing the need for students to find the information and support that will help
ensure their graduation.

88
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Appendix
US Department of Education EFC Formula

96

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Abstract (if available)

Abstract With the goal of determining how institutional financial aid practices affect student enrollment beyond the first year, this study examined the decisions first-year college students make as a result of the financial aid packages they receive. In particular, this study analyzed the effect of students’ family finances, perceptions of likelihood of college completion, financial aid packages, and level of comfort with campus resources on these decisions. The sample consisted of twelve first-year college students, as the freshman year is most telling of future academic success. The setting was a small, selective, private liberal arts college. The respondents had already proven, through having been admitted, to be education-driven, and this academic achievement helped dispel assumptions, discussed in the literature review, about students’ lack of desire for or valuing of higher education in regard to their enrollment decisions.

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Asset Metadata

Creator Garcia Montaño, Guadalupe (author)

Core Title Enrollment and financial aid decisions of first-year students at a private institution

School Rossier School of Education

Degree Doctor of Education

Degree Program Education (Leadership)

Publication Date 06/25/2010

Defense Date 04/27/2010

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag college,enrollment management,financial aid,first-year students,freshmen,Higher education,institutional aid,OAI-PMH Harvest,student loans

Place Name USA (countries)

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Robison, Mark Power (committee chair), Campbell, C. Dean (committee member), Tambascia, Tracy Poon (committee member)

Creator Email garcia3@usc.edu,guadalupegmontano@yahoo.com

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m3157

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