Determinants of persistence and the role of financial aid: lessons from Chile

Abstract

This article explores the determinants of persistence in the Chilean higher education system, considering academic and socio-demographic factors as well as the role of financial aid. The financial aid policy for students in Chile has undergone major changes over the last decade, which has allowed individuals from usually underrepresented income groups to enroll in higher education institutions. This analysis combines information from four public administrative agencies, obtaining a sample of over 75 % of all high school graduates for the period 2007–2010. Methods include descriptive statistics, logistic regression and propensity score matching (PSM). Both continuous persistence and reentry were studied at the system and at the institutional level for all four cohorts. Descriptive results show that short- and long-term dropout rates at the system level are high, and dropout rates are even higher at the level of institutions. Findings from the PSM show that the non-subsidized state loan is the instrument that displays the strongest correlation with persistence and it holds homogeneously across students from different socioeconomic groups. Among grants, we find consistently positive effects of need-based grants targeting low-income students attending technical institutions. We provide educational policy recommendations based on our findings.

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Notes

  1. 1.

    Authors’ analyses from annual budget laws (www.dipres.gob.cl).

  2. 2.

    Non-CRUCH members, IPs and CFTs do not receive direct public funding, but since 2006 their students can obtain publicly funded financial aid. Other public financial aid opportunities are exclusively available for students who attend CRUCH institutions: the BBIC is an example, which currently accounts for the biggest single fellowship expenditure (US$155 millions).

  3. 3.

    Until 2011, the CFS charged interest rates equivalent to a third of the interest rate charged by the CAE.

  4. 4.

    For more details about the Financial Aid System in Chile, see appendix 1 in (Horn et al. 2014), (Financial Aid Committee Report 2012; World Bank 2011; OECD 2009; Larrain and Zurita 2008).

  5. 5.

    Intelis and Verde (2012) is an exception.

  6. 6.

    The CAE loan became a subsidized system in 2012 but was unsubsidized for the period analyzed in this study.

  7. 7.

    Although Smith and Todd (2005) suggest trimming at 2 %, in our paper, we were conservative and trimmed only the top 1 % of the propensity score distribution in cases where there were few untreated observations.

  8. 8.

    A limitation of this approach is that there is no clear metric for the success of the matching procedure; however, a reduction in the average bias to below 5 % is considered successful in the literature (Caliendo and Kopeinig 2008).

  9. 9.

    A p value >0.05 indicates that the covariates are not jointly significant at the 5 % level and the matched sample is balanced, whereas lower p values indicate an unbalanced match.

  10. 10.

    This marginal effect is calculated by dividing the estimated coefficient by the average of the dependent variable. For P1, the persistence probability of women in the 2007 cohort is 0.151 higher than men’s, which is percentage increase of 0.151/0.881 × 100 = 17.1 %.

  11. 11.

    The control category regarding parents’ educational level is “no schooling/incomplete primary education.”

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Acknowledgments

This research was partially funded by the Ministry of Education of Chile through Project FONIDE No: F611103 and by Anillo Project SOC 1107 Statistics for Public Policy in Education from the Chilean Government.

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Correspondence to María Verónica Santelices.

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Santelices, M.V., Catalán, X., Kruger, D. et al. Determinants of persistence and the role of financial aid: lessons from Chile. High Educ 71, 323–342 (2016). https://doi.org/10.1007/s10734-015-9906-6

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Keywords

  • Dropout
  • Persistence
  • Financial aid
  • Education policy