Dropping out of college has a cost — mostly to the students whose careers might be in jeopardy but also to taxpayers who help fund college education.
Eight four-year colleges in the Rochester region are estimated to have $93 million in public dollars invested in almost 5,000 students who did not return to their college after their first year, according to a new study that looked at the five-year period ending with the 2007-08 school year.
Nationwide, in the same period, about $9 billion in taxpayer money was spent on students who didn’t return to a four-year college after the first year, the report estimates.
“ This is really an issue of return on investment. The state is expecting the students who go to college to pay taxes on the income they earn,” said Patrick Riccards, executive director of the American Institutes for Research, or AIR , which prepared the study.
One of the first reports of its kind, the study looks at a problem — college dropouts — that has become a growing concern and tries to measure the cost of the withdrawals as a loss of public dollars invested in the students’ education.
Prior to the recession, a typical college graduate earned as much as $800,000 more over a lifetime than someone with a high school diploma, although the downturn in the economy cut into job prospects and earning potential.
On top of the loss of taxable income, the Rochester-area economy suffers because it draws from local college graduates for its work force. When students drop out, businesses end up with a smaller pool of potential employees with the needed skills.
“ We might lose revenue in terms of them staying in the area. We are also losing the opportunity to gain from their talent, particularly in an economy where we are not necessarily a magnet for new people coming in,” said Sandy Parker, president and CEO of the Rochester Business Alliance.
AIR , which is based in Washington, D.C., looked at how much state funding goes to a college along with state and federal grants to students, and then estimated how much each school lost when students didn’t return after the first year.
Some of the students might never continue their education. Others transfer to different colleges. Still others might one day return to college.
The effect of what the report calls student attrition varies by college.
Part of the loss can be measured in real dollars — grants awarded to students to help pay for tuition but which no longer go to the college because the student has left.
When students transfer to another college, the grants follow. But Riccards said the national graduation rate — just 57 percent of freshmen graduate from four-year colleges within six years, according to the latest U.S. Department of Education statistics — suggests that most students who leave after their first year don’t transfer.
In the report, state appropriations to colleges are considered to be pegged to enrollment, with more money going to colleges with large enrollments.
The funding formula for four-year colleges in the State University of New York system partly depends on enrollment, while enrollment is not necessarily the basis for the nonresearch state funds earmarked for private colleges that AIR included in its study.
Most of the state funds to private colleges in the study appear to be grants for student tuition, which in New York are Tuition Assistance Program grants based on financial need. Nonresearch public funds that go for private college programs tend to be for economically and educationally disadvantaged students.
But whether the loss from attrition registers on a school’s balance sheet or merely represents the toll when people do not reach their educational potential, the report is a telling reminder that dropping out is not just a problem for high schools.
In less than 50 years, the college population in the United States has more than tripled — from about six million in 1965 to about 20 million. National graduation rates, however, have remained stagnant in recent years. By this yardstick, local four-year colleges have a higher graduation rate than the national average.
Riccards urges that an incentive system be created for colleges so that those with higher graduation rates are financially rewarded — a no college left behind approach.
Local colleges say they already put a priority on the graduation rate.
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