Institution Type, Selectivity, and Financial Aid: An Examination of Institutional Factors Influencing First-Time Students Retention in Public Universities

Abstract

First-time student retention has become of greatest priority to higher education administrators seeking to increase revenue from tuition and completion rates. The statistics show that only 40% of first-time students persist from the start of institution to graduation. While decades of research have been conducted to investigate the factors influencing student retention, most of these researches have focused on students' attributes, pre-college characteristics, and socioeconomic. There is significantly limited information on how institutional characteristics contribute to first-time students' retention, yet institutional behavior and environment are key determinants of students' retention and success. Also, institutional administrators and students are increasingly becoming interested in knowing how their institutional characteristics influence student retention. This study examines the effects of institutional type, selectivity and institutional financial aid on retention rates at 4-year public research universities. Using a two-way analysis of variance (ANOVA), the study also examines the interaction effect of institutional selectivity and the percentage of students with financial aid on retention across institution types. The study found institution type to significantly associate with the retention rates in both low and high-selective institutions. High-selective institutions have high retention rates on average. The results of the analysis also showed that the effect of the percentage level of students with financial aid on retention rate does not depend on the institution selectivity level. The study presents significant practical implications for institution leaders, policymakers and students in enhancing student retention and in decision-making process.