College dropout rate puts financial strain on governments

“The nation will have a difficult time reaching the administration’s policy goals if we continue to spend so much money on students who don’t even finish the first lap, let alone fail to cross the finish line,” the report notes.

Most students attend public colleges or universities, which are subsidized by taxpayers through state appropriations and grants to students. Nationwide, these subsidies average nearly $10,000 per student, per year.

With a high college dropout rate comes high losses in state funds. Thirteen states posted more than $200 million of state funds lost to students dropping out before the second year of college. These states include California ($467 million), Texas ($441 million), New York ($403 million), and Illinois ($290 million). The average state spent $120.5 million in state subsidies to first-year dropouts over the five-year period.

“As state colleges and universities struggle in a difficult budget environment, what is most disturbing is how much direct state support has been lost to college dropouts,” Schneider said.

The study did not examine the costs to taxpayers when students drop out sometime after their sophomore year. Nationally, only about 60 percent of students graduate from four-year colleges and universities within six years.

Schneider noted that IPEDS data only accounts for 48 percent of all undergraduate students enrolled in four-year public institutions and 32 percent of those enrolled in two-year public institutions. The IPEDS college graduation rate does not account for part-time students, who represent 37 percent of all college students and 61 percent of public two-year college students, nor does it account for transfer students. Thirty-seven percent of students who earned a bachelor’s degree attended more than one institution.

One survey limit, he said, is the difficulty presented by out-of-date data systems that are limited in what they can track—such as the number of students who leave one institution after the first year but do go on to graduate from another institution.

Over the same five-year period, the cost of state appropriations just for these first-year dropouts increased by 15 percent. Expenditures on student aid grants increased by 30 percent from the states and 40 percent from the federal government for students who never returned as sophomores.

Laura Ascione