High-achieving students are more likely to drop out of college if they lose even small amounts of financial aid (iStock).

Some of the brightest students on the path to graduation are more likely to drop out of college if they lose even small amounts of financial aid, according to a study released Tuesday by EAB, an education consulting firm.

Researchers analyzed more than 40,000 students and found that those with grade-point averages above 3.0 who lost $1,000 to $1,500 in grant money are 2.5 percentage points more likely to quit school than those with little or no change in aid. All students who have a GPA between 2.0 and 4.0 are more at risk of leaving school when they lose financial aid. And the more money students lose, the greater their chance of quitting school.

According to the analysis, students who lose $1,500 to $2,000 in aid are three percentage points more likely to drop out than their classmates. Students who lose $4,000 in aid are as much as eight percentage points more likely to leave school, and students who lose more than $10,000 are as high as 28 percentage points more likely to drop out.

Nearly half of college students fail to finish their degrees. They are often left with student loans and poor prospects of earning enough to repay their debt. Dropouts run a high risk of defaulting on student loans, which could damage their credit. And for colleges, every student who leaves means losing tuition revenue that has become critical amid declining enrollment and meager state investment.

Colleges and universities have been using big data and predictive analytics to track academic performance and increased retention rates. Ed Venit, senior director at EAB, said schools could apply the same technology to monitor fluctuations in financial aid and use emergency funding to prevent students from falling through the cracks. School enrollment managers, he said, use sophisticated modeling to determine how much aid is needed to recruit a student, and those same algorithms could be applied to retention.

“A small amount of money could really incentivize positive behavior,” Venit said. “If you’ve got a student who is going through a bit of a rough spot, and they’ve lost a bit of aid, schools might be able to close that gap in some way with the amount of resources they have available.”

It is not uncommon for students to lose scholarships or grant money. Students who rely on need-based aid could see their awards shrink if a parent’s income increases. Those who are on an merit-based scholarships could lose the assistance if their grades slip.

Students with a GPA between 2.0 and 3.0, what EAB refers to as the “murky middle,” account for 45 percent of total dropouts. When these students lose $2,000 to $4,000 in aid, they are three percentage points less likely to persist than their classmates, according to the study. The gap increases to almost eight percentage points, if they lose $4,000 to $6,000 in aid.

But as little as $1,500 to $2,000 in additional aid to low-performing students raises their chances of graduating by eight percentage points, while the same amount of money increases the persistence of middle- and high-achieving students by three percentage points, according to the study.

“For schools that are trying to improve persistence by 2 percent or 4 percent … you’re looking at a population of students that you might actually be able to marshal the funds to do something about,” Venit said. “It’s a pretty large group, so you could go after those students.”

Two years ago, Seattle University picked up on a pattern of hard-working students who were dropping out in their second or third year. Although the private school boasts a retention rate in the high 80 percent range, administrators thought more could be done to prevent students from leaving.

“We have students who are food insecure, even housing insecure, so affordability is our biggest retention challenge,” said Josh Krawczyk, director of university retention initiatives at Seattle University. “As I kept hearing these stories, I became aware that we have a population that is really struggling once they get here to make ends meet.”

In response, the university rolled out Challenge Grants, a program that rewards students with high financial need for strong academic performance. Students who achieve at least a 3.0 GPA in the fall will have $1,000 added to their financial-aid package for the winter and spring semesters. And if those students close out the year with a high enough GPA, the money is permanently added to their package.

The university connects students to resources on campus to help them keep their grades up. And if students are teetering on the edge of losing a scholarship, the school will contact them and work with advisers to develop a plan to avoid the loss of aid.

Krawczyk estimates that about 180 students at Seattle University, which has about 7,400 students, have received grants to date. The school, he said, has spent a few hundred thousand dollars a year on the grant program, a small amount compared with its overall $50 million financial-aid budget but an expense Krawczyk said can add up.

“A couple thousand dollars here and there can add up pretty quick … but this is a worthy endeavor,” he said.

Want to read more about paying for college? Check out these stories:

College costs rising faster than financial aid, report says

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What to do when you haven’t saved much for your kid’s college education