How does access to financial aid affect student retention and attrition rates in Spanish higher education? Theresa Martinez EDUC 520 April 30, 2010

Introduction Spain is currently in the midst of an economic crisis. The unemployment rate is hovering around 20%. In a country of approximately 46 million, over 9 million are out of work: 1 in 5 Spanish citizens are unemployed. In response to this growing problem the Ministerio de Educación (Spain’s Department of Education) is determined to close the gap between its citizens and the need for specialized skills in the labor market. The Ministerio has established a grant for unemployed bachelor degree holding Spanish citizens between the ages of who have been accepted into Master’s programs at any public Spanish university.

The Issue The Ministerio de Educación (Spanish Ministry of Education) assumes that, by eliminating cost as an obstacle in the pursuit of higher education, Spanish citizens will be motivated to complete their Master’s programs within 1- 2 years. The question of this presentation focuses on financial aid and how it affects retention and attrition rates in public Spanish universities.

Main Points The importance of a student’s socio-economic background in retention/attrition. How state/government financial aid contribute to student retention and attrition. The importance of Spanish higher education on local, state and national economies.

Socio-Economic Background Parental educational background has been one of the most important social factors to explain retention/attrition among students in higher education. Positive correlation between parents level of education and probability of university education attrition. Students from low income families are more sensitive to tuition increases than students from higher income families. Calero, J., 2008 Lassibille, G. & Navarro-Gómez M.L., 2009 Lopez, R.H., 2009

Government Grants and Attrition & Retention Rates The budget for grant system is small and outdated, as of 2004, Spain allocated only 7.8% of the higher education expenditure to go towards financial aid. Currently 40% of university students receive state grant support, based solely on test scores, not need. Of the grant recipients, 46% withdraw compared to 58% of students who do not receive state grants. Non-needs based aid has benefited more affluent rather than low income students. Calero, J., 2008 Haveman, R. & Smeeding, T., 2006 Lopez, M.R., 2009

Higher Education and the Economy Increased unemployment rates result in increased enrollment rates. Universities are important players in local and regional development by interacting with government agencies and private businesses as key members of economic growth. Universities/Colleges are estimated to impact 3 groups economically: Local businesses, local individuals & local administrations Economic effects produced by the university contribute to the growth of local economies by educating students in specialized areas/skills that are in demand by local public/private agencies/businesses Higher education attainment is of the most important determinants of labor market success and is crucial in reducing economic inequities. Gallo-Rivera, M.T., & Garrido-Yserte, R., 2008 Haveman, R. & Smeeding, T., 2006

Conclusions Low- middle income students tend to benefit from financial aid and government grants by reducing the cost of enrollment/tuition which allows for those students to have access to higher education by enrolling, continuing and completing their programs. Students who receive financial aid are less likely to withdraw/dropout from their academic programs. A student’s socio-economic background can have significant effects on their retention and attrition rates. Higher education directly benefits local, regional and national economies by providing educated/skilled workers into an competitive workforce that in fact, has a sufficient increase in demand for more qualified individuals in the current labor market.

Implications Increasing funding for financial aid for low to middle income students. A policy revision as to how grants and financial aid is distributed for Spanish students. Provide incentives for individuals to study in areas that are in high demand in current labor markets.

Sources Calero, J., (2008). What happens after compulsory education? Problems of continuity and possible policies in the case of Spain. The Social Science Journal, 45(3) doi: /j.soscij Gallo-Rivera, M.T., & Garrido-Yserte, R., (2008). The impact of the university on the local economy: Three methods to estimate demand-side effects. Annals of Regional Science, 44(1) doi: /s x Haveman, R. & Smeeding, T., (2006). The role of higher education in social mobility. The Future of Children, 16(2) doi: /foc Lassibille, G. & Navarro-Gómez, M.L., (2009). Tracking student progress through the Spanish university school sector. Journal of Higher Education, 58(6) doi: /s Lopez, M.R., (2009). Equality of opportunities in Spanish higher education. The International Journal of Higher Education and Educational Programming, 58(3)