The Relationship Between South Carolina's Merit-Based Financial Aid and College Completion

The decrease in financial support to higher education from state governments over time has necessitated changes to more targeted funding models, as has happened in states like South Carolina. These models are necessary to meet states’ increased fiscal demands, such as support for K-12 education and healthcare, while continuing to optimally serve the citizenry. For nearly two decades, merit-based aid has been a politically popular solution to curbing monetary shortfalls, while simultaneously incentivizing academic achievement. However, such incentive may not always yield increased access and equity. This study seeks to examine the relationship between merit-based aid and academic program completion, and identify other factors likely to impact student graduation rates in South Carolina.

This quantitative analysis is conducted using year-specific regression models to analyze student-level data from 2002-2012 from the South Carolina Commission of Higher Education (SCCHE) and a logistic regression to examine the 2012-2013 freshman cohort at a mid-sized public university. Through this work, I studied the correlation between college completion and my primary indicator of interest, receipt of one of South Carolina’s three merit-based aid awards, to determine if being a merit-based aid award recipient has a positive association with completion. I establish through multinomial logit regressions that there is a significant and positive relationship between completion and merit aid. Positive relationships among other factors on completion, such as institution type, gender, race, and socioeconomic group, are not uniformly seen.