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College Dropouts are Costing Taxpayers Billions of Dollars

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Dropping out of college can leave students with a trail of debt and little to show for it, but a rather disturbing report released on October 11, 2010 has informed the general public that their state and federal governments have been spending billions on college students who dropped out during their freshman year.

Over $9 Billion Spent by Government on College Dropouts

Research has shown that only 60 percent of students actually graduate from four-year colleges and universities within six years, yet the American Institutes for Research (AIR) found that over $9 billion was spent by state and federal governments on college students that left school prior to their sophomore year between 2003 and 2008.

Using 2003-2008 data from the federal Integrated Postsecondary Education Data System, AIR researchers found that the 30 percent of first-year college students who did not return to campus for a second year accounted for $6.2 billion in state appropriations for colleges and universities and more than $1.4 billion in student grants from the states. The federal government also provided $1.5 in grants to these students.

The study, titled Finishing the First Lap: The Cost of First-Year Student Attrition in America’s Four-Year Colleges and Universities, did not examine community colleges, which have even higher freshmen dropout rates than four-year schools.

Study Already Has Critics

North Dakota’s Inforum news reporter Amy Dalrymple pointed out that the report doesn’t account for students who transferred to another college after the first year and successfully completed college, which overestimates figures—particularly in North Dakota, where vice chancellor of the North Dakota University System Michael Hillman says the colleges and universities have developed seamless transfer processes for students.

The statistics available also do not include part-time students, but Mark Schneider, a vice president at the American Institutes for Research and former commissioner of the Education Department’s National Center for Education Statistics, feels there’s no other standardized way to measure retention and completion rates.

Critique of the report also comes from Clifford Adelman, a research associate at the Institute for Higher Education Policy and a former colleague of Schneider’s at the U.S. Education Department. Adelman feels that Schneider’s data was too narrow and, thus, inaccurate.

“You get only first-time, full-time students who enrolled in the fall semester (not winter or spring) who showed up at the same school (not somewhere else) as full-time students (not part-time) in the next fall semester (not winter or spring). This data story, already distant from the realities of student attendance patterns by three galaxies, is further compounded by a state level analysis which pretends that students never, never cross state lines to attend a second school,” Adelman said in an Inside Higher Ed piece.

Goal is to Spotlight Costs of Losing Students after their First Year

Regardless, the report’s troubling findings have arrived at a time when states are scrambling for enough funds to meet their higher education budgets, coinciding with President Barack Obama’s quest for the United States to have the most college graduates in the world by the year 2010.

Schneider explains 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,” he said in an Associated Press article.

Thirteen States Lost Over $200 Million in Funds

The average state spent $120.5 million in state subsidies to first-year drop-outs between 2003 and 2008, yet thirteen states posted more than $200 million of state funds lost to students dropping out before the second year of college. California ranked first in the nation in the amount of spent on students at four-year colleges who failed to return for a second year— with $467 million.

The Los Angeles Times reported that California Superintendent of Public Instruction Jack O’Connell agreed that colleges and universities could operate more efficiently in moving students toward graduation, but he feels state-imposed budget cuts that have slashed classes, increased student fees and reduced staff are more of a hindrance.

“My impression is that we need to make a greater investment in higher education” he said. “Too many students are being forced to take on a second or third job. The lack of adequate college funding has led to fewer classes being offered, which extends the number of years it takes to finish.”

Interestingly, a 2009 report by the Bill and Melinda Gates foundation did find that the number one reason many young adults drop out of college is an inability to juggle school and work.

States Which Lost Over $200 Million in State Funds to College Dropouts between 2003-2008

  • California, $467 million
  • Texas, $441 million
  • New York, $403 million
  • Illinois, $290 million
  • North Carolina, $285 million
  • Ohio, $277 million
  • Florida, $275 million
  • Indiana, $268 million
  • Michigan, $239 million
  • Georgia, $237 million
  • Louisiana, $213 million
  • Tennessee, $205 million
  • Kentucky, $201 million
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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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