U of I Study: Loan-Replacement Grants May Boost College Graduation Rates

A recent study suggests that low-income students who receive loan-replacement grants are more likely to graduate than those from similar economic backgrounds who don’t receive them.

The study examined graduation rates for a group of roughly 400 students who enrolled at the University of Illinois between 2007 and 2009. Half of the students received I-Promise assistance — that’s a loan-replacement grant program that guarantees the students will receive enough financial aid to cover the cost of tuition, housing and educational supplies for four years. The program was established in 2005.

Susan Gershenfeld led the study as part of her doctoral research at the U of I. She said the study is unique because it examines the impact of full financial support for low-income college students.

Gershenfeld said the students in the other group came from similar socioeconomic circumstances but did not meet all the criteria necessary to qualify for I-Promise assistance. She said the study controlled for other variables like race, gender, and whether or not the student was the first in their family to attend college.

Data from the study shows that about 76 percent of I-Promise recipients graduated within five years compared to about 67 percent students who did not receive loan-replacement grants. The overall five-year graduation rate for U of I students during the same time period stands at roughly 82 percent.

Gershenfeld said students who did not receive I-Promise assistance received other forms of financial assistance, but the data showed a larger gap between their financial aid awards and the full cost of college attendance.

Students without I-Promise assistance “have to hustle perhaps more. They might not be able to continually enroll,” Gershenfeld said.

She said the study also suggests that “when (students) come to school and they know they have this opportunity to attend if they meet these requirements… that their costs are taken care of, they’re going to live up to their part of the bargain and complete school.”

Gershenfeld said she hopes the study will encourage more colleges and universities to establish and expand similar loan-replacement grant programs.

“Universities I think can be assured with this evidence that not only does it meet their mission of providing access and opportunity for all, but it has a positive impact,” she said.

Gershenfeld said the results of the study can also be applied to an ongoing national conversation around college affordability. She said the data suggests covering all costs of college attendance matters, as compared to covering tuition and fees alone.

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