College dropout rate puts financial strain on governments

First-year college completion is crucial to earning a diploma.
First-year college completion is crucial to earning a diploma.

State and federal governments spend billions of dollars in college financial aid to support students at four-year colleges and universities who leave school before their sophomore year, according to a new report from the American Institutes for Research (AIR) that provides yet another financial incentive for policy makers to focus on boosting college graduation rates.

“When students enroll in a college or university and drop out before the second year, they have invested time and money only to see their hopes and dreams of a college degree dashed,” said Mark Schneider, an AIR vice president and former commissioner of the National Center for Education Statistics. “These costs can be heartbreaking for students and families, but the financial costs to states are enormous.”

“Finishing the First Lap: The Cost of First-Year Student Attrition in America’s Four-Year Colleges and Universities” examines 2004-09 data from the federal Integrated Postsecondary Education Data System (IPEDS) and found that the 30 percent of first-year college students who failed to return to campus for a second year accounted for $6.2 billion in state appropriations for colleges and universities during that period and more than $1.4 billion in student grants from the states.

Additionally, the federal government provided $1.5 billion in grants to these students. The study did not examine community colleges, where the first-year college dropout rate is even higher.

“The [college] completion agenda is becoming one of our nation’s highest priorities when it comes to higher education,” Schneider said. “We’ve all begun to realize that just getting students into college is not enough, and that we have to get them through it.”

First-year student retention is roughly 70 percent, Schneider said, but “first-year retention is an absolutely critical step in terms of getting students to completion.”

The findings come at a time when states are struggling to find money for all kinds of programs and services, and when President Obama and the country’s leaders are pursuing a “college completion agenda” and are seeking to have the highest percentage of college graduates in the world by 2020.

Laura Ascione
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