College dropouts costing U.S. billions

College dropouts are costing U.S. taxpayers billions of dollars at a time when states are struggling with huge budget shortfalls and the nation's leaders are pursuing a "college completion agenda," according to a new report to be released today.

The analysis from the Washington, D.C.-based American Institutes for Research says college students who did not make it to their sophomore year caused taxpayers more than $9 billion in direct subsidies from the state and federal government. Between 2003 and 2008, the latest data available in the analysis, states appropriated nearly $6.2 billion for colleges and universities to help pay for the education of students who did not return for a second year, according to the report. In grants, states gave more than $1.4 billion and the federal government more than $1.5 billion to nonreturning students.

The Institutes for Research, a nonpartisan not-for-profit organization that conducts behavioral and social science analysis, found Missouri allocated $142.5 million over the period to help pay for dropouts.

The report comes as the Obama administration pushes an initiative to raise the United States' status as the nation with the highest concentration of college-educated adults in the world.

"In recent years, we have failed to live up to our opportunity legacy, especially in higher education," President Barack Obama recently said. "In just a decade, we've fallen from first to ninth in the proportion of young people with college degrees. That not only represents a huge waste of potential; in the global marketplace it represents a threat to our position as the world's leading economy."

In a news release on its report, the Institutes for Research said, "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 rate of first-time, full-time undergraduates who completed the first academic year has risen in Missouri's higher education system in recent years, according to the Missouri Department of Higher Education. From fall 2007 to fall 2008, the rate was 75 percent for the state's four-year public institutions and 48 percent for two-year institutions.

"We're quite concerned about the dropout rate," said Kathryn Love, spokeswoman for the Department of Higher Education. "For a long time it seemed like the emphasis was on enrolling. Now we realize you can get them into college but there's a tremendous attrition rate when they get there."

Love said higher education must focus on retention, which requires keeping students in school and moving toward graduation.

"In an economic downturn, that puts a lot more pressure on students, a lot of whom are working two, three jobs supporting families," she said. "That makes it difficult to stay in school."

Southeast Missouri State University's most recent graduation rate (students graduating within six years) was 52 percent.

Nationally, it is anticipated 30 percent of students who start college this fall will not return to that college next year. About 60 percent of students graduate from four-year institutions within six years.

"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," the Institutes for Research report said. "These costs can be heartbreaking for students and their families, but the financial costs to states are enormous."

The report finds subsidies approach $10,000 per student per year.

Holt said the research must be placed in context, that there is a lot of churning in college enrollment and just because a student may drop out doesn't men the student won't complete the degree years down the road. He does admit the cost to universities in lost future revenue can add up when calculating the effect of dropouts.

"But you have to calculate the off-setting cost of not offering those [educational] opportunities," he said. "What would you do, shut it down? Then what would happen?"

The report doesn't get into answers. American Institutes of Research, which also markets educational materials, assessments and other products, provides the data; it's up to policymakers to do something with it, a company official said.


Pertinent address:

One University Plaza, Cape Girardeau, MO