Using Peer Effects to Explain Retention Rates in a Private University

This study identifies factors associated with freshmen retention rates at a mid-size private university. A key finding from our analysis is that roommates' academic efforts, residing on an honours floor and membership in co-curricular groups increase retention. We also confirm many standard results in the literature regarding the impact on retention rates, such as student motivation and ability, and financial aid. We show that a timely housing application, closer proximity to home, a higher number of schools on a student's Free Application for Federal Student Aid and peer effects impact freshman retention. Our results suggest that a more sophisticated dormroom assignment algorithm matching students' abilities and interests could be considered to increase freshman retention rates among private institutions.