College persistence and student attitudes toward financial success

College Student Journal, June, 2005 by Karen Leppel

Student attitudes regarding the importance of future financial success can also influence persistence in higher education. Two students who highly value financial success may behave in opposite ways concerning college persistence. The desire to achieve future financial success may motivate one student to remain in school in order to obtain a higher paying job upon graduation. For the other student, the desire for financial success may be so strong that he/she lacks the patience to complete college before beginning full-time employment with its corresponding full-time earnings. Similarly, other students with less regard for financial success may also behave in different ways. Thus, it is apparent that while the importance placed on financial success influences persistence behavior, it does so by interacting with other factors such as the relative value of current and future income. This interaction and the resulting effect of student attitudes toward future financial success on college persistence have not been explored in the literature.

Students can persist in college in different ways. They can continue at a given university or they can transfer from one university to another, but continue in the educational system. A broad definition of persistence includes students who demonstrate either of these types of behavior. Many of the studies on retention are based on data from a single institution. (See, for example, Allen (1999), Attinasi (1989), Elkins, Braxton, and James (2000), Grosset (1991), Hernandez (2000), Kahn and Nauta (2001), Okun, Benin, & Brandt-Williams (1996), Pascarella and Terenzini (1980), and Robst, Keil, & Russo (1998).) To get a broader view of persistence behavior, a national-level data set is needed. Using such a data set, this study is able to differentiate between (1) students who remain at the same institution, (2) students who transfer from one school to another, and (3) students who drop out of college entirely. This study examines persistence in the educational system from the freshman year to the following year. A utility-maximization framework is combined with the psychological factor of attitude toward future financial success. Furthermore, this analysis includes both males and females, and therefore is able to examine how the relationship differs for men and women.

II. Theory.

It is assumed that students decide to attend or persist at college by examining the present discounted value of the utility of present and future benefits and costs. Students who attend college generally expect to obtain better jobs than they would obtain without attending college. Better jobs have nonpecuniary benefits and higher salaries, which enable a person to afford more amenities. After a student decides to attend college, a particular institution and major field of study are selected. The student may choose the institution either before or after choosing a major. The major may be selected before the institution and then changed after enrollment.