This study compared the relative effectiveness of grants and loans in helping low-income students stay in college until graduation. The study analyzed two student-level databases. One database contained data on a national sample of high school seniors who began full-time study at four-year colleges and traced them through college. The other database contained data on a group of relatively low-income freshmen from a large public four-year university that "frontloaded" some of its institutional grant dollars as part of a program to improve these student's dropout rates. In addition the study sought the views of financial aid directors and 51 students from 12 colleges and universities. Results found that grant aid lowers the probability that low-income students will drop out, while loans have no statically significant impact on such students' drop-out rates. In addition, for low-income students, grant aid is relatively more effective during the first school year than in subsequent years. Results from a university that frontloaded grants for some students as well as providing them with academic and administrative support reinforced these findings. Appendixes contain detailed information on study methodology. Ten tables and seven figures illustrate the report. (JB)