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College Dropouts Cost Taxpayers Billions, Report Says


October 12, 2010 16:33

By Eric Kelderman (Chronicle of Higher Education)

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State and federal governments spent an estimated $9-billion between 2003 and 2008 on students who dropped out of college during their freshman year, according to a report scheduled for release on Monday.

While that sum may be a small portion of the overall amount that governments spent on higher education during that time, it's still a high cost for failing to keep students in college, said Mark S. Schneider, vice president for education, human development, and the work force at the American Institutes for Research, which compiled the data for the report.

And since the report considered only first-time, full-time freshmen at four-year colleges, the $9-billion total is also just a portion of the overall cost of dropouts, Mr. Schneider said on Thursday during a conference call with reporters.

Because the report is based on data from the U.S. Education Department, it does not take account of students who attend part time, who leave college in order to transfer to another institution, or who drop out but return later to receive their degrees. So the report's conclusions are incomplete.

The report makes no recommendations about how to better retain college students, but Mr. Schneider said that states should base a much larger percentage of their higher-education spending on the number of students who complete degrees, not the number enrolled, at a given institution.

In addition to the report, the institute is unveiling a new Web site that allows users to compare a variety of performance measures for more than 1,500 public and private colleges and universities and all 50 states, including the percentage of freshmen who drop out of college, the amount spent on those who drop out, and the amount spent on instruction and administration.

The Web site also wades into the controversial area of "gainful employment" by providing some data on the ratio of student-loan repayments to earnings for recent graduates at each of the 1,500 institutions. The U.S. Department of Education is formulating a new regulation that could disqualify some institutions, in particular for-profit colleges, from receiving federal financial aid if their students incur too much student-loan debt in comparison to their earnings.

The Web site is meant to provide accountability and openness for consumers and policy makers about how well a state or a particular institution is performing, said Larry Giammo, managing director of Matrix Knowledge Group, an international consulting company that works with nonprofit and government groups and that helped to create the new site.

California ranks 1st in spending on first-year college students who drop out, study says


October 12, 2010 16:27

by Carla Rivera (Los Angeles Times)

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At a time when California’s institutions of public higher education are battling to maintain state funding, a new report has found that over a five-year period, the state spent nearly half a billion dollars to educate first-year college students who dropped out before their sophomore year.

The report, "Finishing the First Lap: The Cost of First Year Student Attrition in America’s Four Year Colleges and Universities," found that California ranked first in the nation in the amount of taxpayer funds -- $467 million -- spent on students at four-year colleges who failed to return for a second year. Texas, at $441 million, and New York, at $403 million, ranked second and third, respectively, the report showed.

The study by the Washington-based American Institutes for Research, for release Monday, analyzed federal data on retention rates at hundreds of four-year colleges and universities and calculations of state education funding between 2003 and 2008.

Nationally, about 30% of first-year students fail to return to campus for a second year.
Overall, states spent $6.2 billion in general funds and $1.4 billion in grants to colleges and universities for first-year students who did not return, according to the study. Additionally, the federal government issued $1.5 billion in grants to these students.

The federal data do not track students who transfer or go on to complete their studies at other institutions, acknowledged study author Mark Schneider, a vice president at the nonprofit institute. But other federal measures indicate that most students who leave do not return to complete a degree.

“There are taxpayer dollars, large amounts of money going out the door to students who are not coming back the next year,” Schneider said in an interview. “In the K-12 world, we are saying schools are responsible for the success of students. In higher education, we haven’t done that yet and we need to do that.”

The study does not look at reasons for student attrition nor seek to blame them for their lack of success. It also is not a call for disinvestment in higher education but rather a challenge to state governments to demand institutions do a better job, Schneider said.

"We need to start thinking about students as clients and start asking what do they need and how do we satisfy their needs," Schneider said. "It’s a question of productivity and efficiency and how school get better at what they’re doing."

In California, non-returning first-year students at public colleges accounted for about $425 million in state appropriations and $41.7 million in state grants to students in the five years studied, according to the report. Federal grants for the students totaled almost $61 million.

For more information on the report, go to www.CollegeMeasures.org.

Report: College dropouts cost taxpayers billions


October 11, 2010 12:00

By ERIC GORSKI (AP)

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Dropping out of college after a year can mean lost time, burdensome debt and an uncertain future for students.

Now there's an estimate of what it costs taxpayers. And it runs in the billions.

States appropriated almost $6.2 billion for four-year colleges and universities between 2003 and 2008 to help pay for the education of students who did not return for year two, a report released Monday says.

In addition, the federal government spent $1.5 billion and states spent $1.4 billion on grants for students who didn't start their sophomore years, according to "Finishing the First Lap: The Cost of First-Year Student Attrition in America's Four-Year Colleges and Universities."

The dollar figures, based on government data and gathered by the nonprofit American Institutes for Research, are meant to put an economic exclamation point on the argument that college completion rates need improvement.

But the findings also could give ammunition to critics who say too many students are attending four-year schools — and that pushing them to finish wastes even more taxpayer money.

The Obama administration, private foundations and others are driving a shift from focusing mostly on making college more accessible to getting more students through with a diploma or certificate.

Mark Schneider, a vice president at the American Institutes for Research and former commissioner of the Education Department's National Center for Education Statistics, said the report's goal is to spotlight the costs of losing students after year one, the most common exit door in college.

"We're all about college completion right now, and I agree 100 percent with the college completion agenda and we need a better-educated adult population and workforce," Schneider said.

The report takes into account spending on average per-student state appropriations, state grants and federal grants, such as Pell grants for low-income students, then reaches its cost conclusions based on student retention rates.

The cost of educating students who drop out after one year account for between 2 to 8 percent of states' total higher education appropriations, Schneider said. He said the report emphasizes state spending because states provide most higher education money and hold the most regulatory sway over institutions and can drive change.

Ohio, for example, has moved toward using course and degree completion rates in determining how much money goes to its public colleges and universities instead of solely using enrollment figures.

"We recognize an institution is not going to be perfect on graduation and completion rates," said Eric Fingerhut, chancellor of the Ohio Board of Regents. "But at the same time, we know they can do better than they're doing. And if you place the financial rewards around completion, then you will motivate that."

The AIR report draws from Department of Education data, which Schneider concedes does not provide a full picture.

The figures track whether new full-time students at 1,521 public and private colleges and universities return for year two at the same institution. It doesn't include part-timers, transfers or students who come back later and graduate.

The actual cost to taxpayers may run two to three times higher given those factors and others, including the societal cost of income lost during dropouts' year in college, said Richard Vedder, an Ohio University economics professor. And tying state appropriations to student performance could just cause colleges to lower their standards, he said.

Robert Lerman, an American University economics professor who, like Vedder, questions promoting college for all, said the report fleshes out the reality of high dropout rates. But he said it could just as easily be used to argue that less-prepared, less-motivated students are better off not going to college.

"Getting them to go a second year might waste even more money," Lerman said. "Who knows?"