Over the past three centuries, American higher education evolved from less than 10 colleges preparing wealthy men for public service to over four thousand institutions serving diverse users meeting a myriad of student and community needs. Increases in the number and type of students entering higher education and seeking financial assistance led to the creation and/or overhaul of various state and federal programs. As more students used financial aid to fund their education expenses, stakeholders demanded accountability from university administrators and needed to determine if allocations positively impacted student persistence. However, there is a paucity of literature that specifically examines the breadth and effectiveness of financial aid and for students in community colleges. Therefore, this study seeks to contribute to the gap in the literature by critically examining the limited studies available and offering comments on areas for future research. For cost-sensitive community college students, the effect of financial aid on persistence becomes even more crucial and in need of much more study and discussion. The critical literature review technique allows the researcher to synthesize knowledge through findings from previously conducted studies during a specific period of time and topical area (Feldman, 1971). This deductive process uses articles as observations to draw conclusions and evaluate findings to offer a comprehensive analysis of research conducted in an academic discipline (Levit, 1968). A summary of the articles reviewed revealed mixed findings on the effect of financial aid on community college student persistence. In a review of all pertinent articles from 1986 through 2009, none of the studies compared persistence rates by type of financial aid. Few studies disaggregated the data by demographic characteristics such as gender or race nor compared persistence rates based on timing of financial aid awards. Researchers also presented mixed outcomes in these areas (Nora, 1990; Spencer, 1993). However, larger financial aid awards, grants, and work-study positively impacted persistence and part-time students were less likely to remain enrolled based on financial aid allocations. The results of this study set the foundation to map a research agenda and recommendations to improve conditions for community college students.