Substitution, Complementarity, or Both?: Institutional Financial Support and College Persistence in the United States

• In Event: Sociology of Education Section Roundtables
  In Refereed Roundtable (60 minute): Table 9. Higher Education Financial Policy

Abstract

Despite much research on the impact of financial aid on college success, little is known about the role of institutional financial support in the broader context of various funding sources that college students may utilize. This study proposes two different models to specify the mechanism through which institutional financial support exerts its effects by simultaneously considering the availability of financial support from students’ families. The substitution model holds that institutional financial support plays a compensatory role in cases where there is no familial financial transfer. The complementarity model, meanwhile, contends that the odds of college success are higher among students receiving both familial and institutional financial supports due to their synergistic boosting effects. To assess the validity of these models, we compare three groups of students: (1) receiving only institutional financial support; (2) receiving only familial financial transfer; and (3) receiving both familial and institutional financial supports. Propensity score weighting models using NLSY97 cohorts show that 4-year college students who receive both types of financial support have higher persistence and graduation rates, while students who rely on either financial source have similar outcomes to each other. These results suggest a paradoxical role of institutional financial support for college students in America as it helps low-income students by subsidizing the costs of college attendance and, at the same time, sustains the advantages of middle- and high-income students by allowing them to utilize both types of financial support.

Authors

• Sarah Song, University of Texas at Austin

• Dohoon Lee, Seoul National University