Earning a college degree can be a pathway to higher wages and better employment opportunities, but for those who fail to graduate, those prospects quickly fade. And at a time when a majority of students finance their education with loans, dropping out of school comes with greater risks.
“We think policymakers need to shift their conversation to focus not just on sticker price but on the value an institution is providing the students they are supposed to serve,” said Lanae Erickson Hatalsky, co-author of the report and vice president for social policy and politics at Third Way.
In the latest report, released Thursday, Erickson Hatalsky and her co-author Tamara Hiler looked at the performance of students at 535 four-year public colleges using data from the Department of Education’s College Scorecard. They found that just 48 percent of first-time, full-time students graduate within six years at the average public institution. Just 80 schools had graduation rates above 66 percent.
An earlier report from the think tank about private nonprofit schools found that 55 percent of similarly situated students earn a degree within six years. Among the 1,027 private colleges the group examined, 761 had graduation rates lower than 67 percent.
Both private and public colleges with some of the highest graduation rates admit the fewest number of students eligible for Pell grants, a form of federal financial aid for families typically earning less than $60,000 a year, according to Third Way. Yet some schools that graduate more than three quarters of their students, like the majority of those within the University of California system, take in a high percentage of Pell students, proving that students with few resources stand a good chance of succeeding with the right support, according to the new study.
In many ways, completion, access and affordability go hand in hand. While there are many reasons why students drop out of college, research has shown that money is a primary factor. Some colleges have responded by pouring a lot of their resources into students who demonstrate the most need or providing short-term grants to prevent students from leaving. Too many schools, however, expect the neediest families to cover an outsized portion of the cost of attendance, an unsustainable practice that could lead students to drop out.
Thursday’s report notes that colleges, unlike high schools, are not held to any graduation standard that could trigger federal sanctions. High schools that fail to put diplomas in the hands of more than 67 percent of their students are flagged for federal intervention. If the same were true for colleges, 74 percent of private nonprofit schools and 85 percent of public colleges would face the same fate.
“Federal law doesn’t currently incentivize good outcomes for students, or even give students the information they need to pick schools where they are more likely to succeed,” Erickson Hatalsky said. “That has to change if we are going to truly deliver on the promise of college as a ticket to economic mobility in this country.”
There are limitations to the government’s data, which tracks graduation rates for first-time, full-time students who complete degrees where they started school, excluding those who transfer from one school to another. The data also fails to include students who take longer than six years to graduate.
“Federal graduation data are markedly incomplete, which often leads to misleading conclusions about student progress and success,” said Christine Keller, Vice President for Research and Policy at the Association of Public and Land-grant Universities, a trade group.
She pointed out that data from the National Student Clearinghouse Research Center show that 57 percent of first-time, full-time students at public four-year institutions graduate in six years at their original school, 10 percent transfer and graduate elsewhere, and 11 percent are still enrolled. Keller said the Student Achievement Measure, a database created by universities, is able to capture the progress of all students.
The information that is available through the federal government still paints a dismal picture of the economic mobility of many students who borrow to attend public and private universities. Thirty-six percent of students at the average four-year public college and 37 percent at the typical private school are unable to earn more than $25,000 six years after enrollment, according to Third Way.
Approximately 22 percent of students who take out loans at public colleges were unable to begin paying down their debt three years after leaving school. The same is true for 19 percent of students at private institutions. The people having the most difficult time repaying their loans are those who never earned a degree, which makes it difficult to find work that pays enough to cover the debt.
Student loan defaults are concentrated among people with less than $10,000 in debt, mainly because these borrowers are less likely to have completed their degrees. Small-dollar loans account for nearly two-thirds of all defaults, according to the White House.
Authors of the Third Way report say the pending reauthorization of the Higher Education Act offers an opportunity for Congress to hold colleges accountable to students and taxpayers.
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