In an effort to improve student retention and graduation rates, University of Kentucky officials have announced plans to shift the majority of the university’s institutional financial aid from merit-based to need-based awards.
The shift, which will begin with first-year students entering UK in the fall of 2017, will not change the scholarships already awarded to current students, said UK provost Tim Tracy, who added that any financial information that has been posted on the UK website will be honored for the fall semester of 2017. But the realignment of future financial aid aims primarily at achieving two of the aggressive goals outlined in the university’s 2015-2020 Strategic Plan: raising its six-year graduation rate to 70 percent and its first-to-second year retention rate to 90 percent in the next four years.
UK’s current six-year graduation rate, at 63.4 percent, is at a record-high for the university, and its retention rate stands at roughly 82 percent.
“We want to help more students graduate by addressing one of the major factors that impedes their success, and that’s unmet financial need,” Tracy said.
In analyzing its student retention data, Tracy said the university has found strong correlations between the level of unmet financial need, which is the difference between the cost of a student’s education and what he or she can afford to pay, and the likelihood of continuing and completing a degree.
“A third of the students who did not return this fall had over a 3.0 GPA,” Tracy said. “They were more than qualified academically, but when we looked at their unmet need as compared to students who did return, there was about a $7,000 difference between those two groups.”
In 2015, roughly 90 percent of the university’s $25 million in scholarships and institutional financial aid for first-year students, which amounted to about $22 million, was awarded based on merit. Under the new plan, named UK LEADS, or Leveraging Economic Affordability for Developing Success, more than $17 million would be applied based solely on financial need, with the remaining $8 million would be awarded based on academic merit and other factors.
The new shift does not include Pell grants, which are government-funded grants awarded to students, Tracy said.
The focus on addressing unmet financial need is one of three major directives that will be implemented as part of UK’s overall enrollment management program under the Strategic Plan. In addition to the shift to more need-based aid, the university also plans to raise its threshold for admission slightly, while also adopting an adjusted formula for evaluating student readiness that places more emphasis on a student’s high school GPA and somewhat less on ACT scores.
High school GPAs are seen as a better measure of a student’s grit and persistence, Tracy said, because it evaluates how a student performs in his or her environment, and it does not penalize those who are not as skilled or well prepared in taking standardized tests.
“We believe it produces a much greater prediction [of student success] and it doesn’t disadvantage some students like other predictors do,” Tracy said.
The third directive in UK’s enrollment management plan calls for the university to address the potential revenue impact of its changing strategies by reaching out to attract more international and transfer students, in addition to seeking out any previously untapped sources of potential first-time, full-time students.
Tracy said that strategy is necessary, in part because demographic data indicate that there will be fewer students from Kentucky to admit over the coming decade.
“Our doors continue to remain widest open for Kentuckians,” Tracy said. “We do not turn away any qualified Kentuckians — have not and will not — but there’s a demographic shift going on. The number of Kentucky high school graduates is declining and will continue to decline until 2022.”
In recent years, the university has taken early steps to help some students bridge the financial gaps that impede them from continuing their educations. In 2014-15, the university implemented its Provost Persistence Grants, through which more than $1 million in aid has been distributed to date to over 300 students with unexpected, short-term shortfalls in their educational funding. Roughly half of that aid has gone to underrepresented minorities, Tracy said, and those grants will continue under the new strategy.
“Of the students we awarded the grants, well over 90 percent of them did come back,” Tracy said. “We believe that if we get our scholarships [arranged] the way we have planned, we will have fewer of those one-time events as well.”
The change in financial aid strategy comes at a time when UK’s enrollment is growing, along with its minority student population. UK’s most recent first-year class included 5,100 students, with its highest-ever percentage of underrepresented minorities, at 18 percent.
Tracy said the university’s shift to more need-based financial aid is expected not only to attract more underrepresented minorities to the school, but perhaps even more significantly, to improve the retention and graduation rate for those groups after they are enrolled.
“When you think of underrepresented minorities, we believe that this will have the greatest positive impact on them, and more of them will graduate from the University of Kentucky,” Tracy said.
The most recent first-year class at UK also included more than 100 National Merit finalists, a number which Tracy said may decrease under the new aid policies. But some of those students may qualify for need-based aid under the new plan, and Tracy added that the university’s new Lewis Honors College also will be an attractive option for top students in the future.
While top academic talent may opt for other institutions that award them more merit-based support, Tracy said the university’s focus on boosting retention and graduation rates will bring its own significant benefits for Kentucky’s economy and its businesses. Historically, approximately 70 percent of the university’s resident students and 40 percent of non-resident students remain in Kentucky to work after they graduate, he added.
“We may have fewer of those students with the 34, 35 and 36 ACT, but those are relatively small numbers of students already,” Tracy said. “We would like to think that we will attract many more students with the 26-32 ACT. ... Those are still outstanding students, and by graduating more of those students, we are actually helping the Kentucky workforce.”