State-supported financial aid impact on baccalaureate degree completion in Texas

College affordability is vital to college access and success. The college affordability issue is very salient in the context of Texas higher education, particularly at four-year public institutions because of tuition increases caused by tuition deregulation since 2003. Although students primarily utilize federal aid to reduce the cost of college education, state-level financial aid also plays a critical role in shaping college affordability for all students but especially low-income students. However, extant research does not offer clear evidence of how state-supported financial aid affects student outcomes in Texas, particularly for offsetting college costs. As a result, policy debates over the value of state-supported financial aid at the state capitol are missing key empirical evidence.

Using statewide administrative data from the Texas Education Research Center and applied longitudinal data analytic methods, this study investigates how state-supported financial aid impacts baccalaureate degree completion and whether the effects vary across income status and race. Conceptualizing that the chances of graduation heavily depend on financial support as well as individual ability to pay for college and assuming that the impact of student aid on degree completion is not uniform but varies across different groups of students by income status and race, this study seeks to answer two research questions: (1) How does state-supported financial aid, broken down by programs of financial aid, impact baccalaureate degree completion? (2) How do the effects of state-supported financial aid on baccalaureate degree completion vary across income status and race?

Results from various analyses on the sample of first-time, resident students who began in Texas’ public four-year institutions in 2011-2012 bolster support for the student responsiveness literature emphasizing the role state-supported financial aid can play in promoting students’ baccalaureate degree completion. Findings also show variation in the effects of state-supported financial aid on baccalaureate degree completion across programs and student characteristics such as income status and race. The findings suggest that it is necessary to explore effective strategies to increase student outcomes and reduce the inequality in educational opportunity across students by utilizing financial aid where in theory the chances of graduation heavily depend on financial resources to pay for college. Ultimately, the role of state-supported financial aid coupled with other financial resources is vital to ensure college affordability and student success in an era of rising costs of higher education in Texas.