Abstract:

Obtaining a higher education diploma is an important way to advance professionally and climb the social ladder in Brazil, and while the number of people holding this type of degree has increased, the share of the population that makes it to college is still very small: less than 11%.

Because of the growing number of high school graduates, the demand for higher education programs saw a significant increase in recent decades. However, this movement was accompanied by a series of challenges, namely: to increase the supply of slots, to provide quality education while expanding private institutions, to provide funding, to facilitate access for lower-income students, and to retain students and boost graduation rates, just to name a few.

The dropouts from higher education have become one of the biggest challenge for the Brazilian education and represent, among other things, a waste of public and private resources in times of government budget constraint and struggling economic situation. The main objective of this study is to investigate whether FIES contributes to decrease college dropout rates in Brazil.

Overall, the number of students in post-secondary programs increased 57% from 2009 to 2015. During the same period, the percentage of people that officially withdrew the courses rose from 5,0% to 11,2% in public universities and, from 8,3% to 15,2% in private one. If you take into account students in temporary interruption (leave of absence), the dropout rate rose from 9,4% to 18,1% in public universities and from 15% to 28,2% in private ones.

The Tinto’s Model is held in high regard in the field of academic student retention literature and argues that the decision to drop out arises from a combination of student characteristics (pre-entry attributes) and the extent of their academic, environmental and social integration in an institution. There is also a growing body of literature investigating the influence of receiving financial aid on retention. Most found a positive correlation between them.

In this paper, we will analyze the relationship between financial aid program (Financing Fund the Higher Education Student - FIES) and dropouts from private universities. FIES is a program in which the Brazilian federal government provides loans to students at a subsided rate. The program was established at the end of the 90s, but stood out only after 2010, when the program was relaunched with lower interest rates and longer grace period.

The study is based on a longitudinal data from Census of Higher Education conducted by National Institute for Educational Studies and Research ‘Anísio Teixeira’ (INEP) that contains information about student situation, loan and other variables about students, faculty and institutions and in which is possible to follow a specific cohort in time, with available data from 2009 to 2015.

In order to investigate the contribution of FIES to reduce dropouts, this paper uses a Duration Model. The model also shows what factors influence the decision of leaving the course.

The Cox regression results show that the probability of dropout is lower for students that get FIES in comparison to those who do not, which is an evidence of the importance of government financial aid programs. Additionally, it was found that participation in extra-curricular activities decreases attrition. Variables as gender, race and age are statistically significant, but with small effect size.

Keywords:

Higher education, dropout, financial aid, Brazil, duration model, cox model.