[Excerpt] Few studies have examined whether financial aid affects college retention. This paper models the decision to enroll and re-enroll in college, which yields a bivariate probit model that is estimated using detailed individual data from a large public university. The analysis uses the unique detail of institution-specific data to examine the effect of financial aid on the re-enrollment decision, and exploits the sequential college completion process to condition the re-enrollment probabilities for college selection such that the implications are broader than is typical of a single-institution study. Overall, the results indicate that some types of need-based aid improve retention, but that merit-based aid has the largest retention effects and particularly for well-to-do enrollees.