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Dropping Out of College Costs the Economy Billions of Dollars

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We all know that higher education isn’t the right path for everyone. After all, we’ve heard the stories about college dropouts like Steve Jobs and Mark Zuckerberg who went on to become billionaires. If you’re currently asking yourself “Should I drop out of college?” you might be surprised to know that the consequences involve much more than making your parents angry.

Study Shows that Dropping Out of College is Costly in More Ways than One

The media commonly mentions college dropouts and student loans in the same news reports, often implying that these former college students are costing the government money by defaulting on their student loans.

Not all students that quit school fail to make their loan payments, but a new study reveals that dropping out of college equates to billions of dollars in lost earnings for the students who do it and millions of dollars in lost tax revenue for the government.

The American Institutes for Research took a closer look at the escalating problem of students not graduating from college. Authors Mark Schneider and Lu (Michelle) Yin tried to answer the question “How Much Does Dropping Out of College Really Cost?” in their new report The High Cost of Low Graduation Rates. AIR is one of the largest behavioral and social science research organizations in the world.

The AIR researchers looked at more than 1.1 million full-time students who started college in 2002 with the goal of earning a bachelor’s degree. According to an AIR press release issued on August 22, 2011 nearly 500,000 of those students failed to graduate within six years, which means that just slightly more than half of them ever graduated.

It was also calculated that the students who dropped out of college lost a total of roughly $3.8 billion in income in 2010 alone; earnings which would have generated over $500 million in federal income tax revenue and more than $160 million in state income taxes.

The Cost of Low College Graduation Rates Accumulate Each Year

“These findings represent just one year and one graduating class. Therefore, the overall costs of low graduation rates are much higher since these losses accumulate year after year,” stressed Schneider, who is also a vice president at AIR.

GOOD Education pointed out that college dropouts are more likely to need government-provided services like food stamps because they won’t earn as much as their counterparts with degrees.

An interactive map of the United States shows how losses are felt at the state level as well as the income gap between college graduates and college dropouts was developed by College Measures.org, which presents key performance measures for four-year colleges and universities in the U.S.


Melissa Rhone+

Melissa Rhone earned her Bachelor of Music in Education from the University of Tampa. She resides in the Tampa Bay area and enjoys writing about college, pop culture, and epilepsy awareness.

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