The future of higher education is bound up with questions of costs and benefits. This paper will take an economic perspective on student retention in higher education and will argue that, as students have to contribute more financially to their education, and participation in higher education is broadened to a larger proportion of the age cohort, then student attitudes will be increasingly driven by the likely financial return they will get for their investment. They will consequently also need to take into account the risk to that investment in the form of student attrition rates. Equally as institutions compete for students and funding they will also be forced to look at the financial consequences of their retention practices. Finally governments will also take student retention increasingly seriously when looking at the overall benefits of higher education and will increasingly relate institutional funding to student retention. \ud The paper will argue that the financial consequences of student dropout are substantial with very large sums of money at stake for students, institutions and governments. The paper will also attempt to show that there are retention activities which can make a ‘profit’ to the\ud institutions undertaking them. These activities are mostly ‘proactive’ contact with individual students and will involve actions more usually described as ‘student support’ rather than teaching
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