By Audrey Williams June

The United States must make it a national priority to improve graduate education and attract more students to pursue—and complete—graduate degrees, to keep the country from losing its competitive edge in a global economy, a new report from education groups says.

The report, "The Path Forward: The Future of Graduate Education in the United States," offers several recommendations, including a proposal that the federal government bankroll a doctoral traineeship program, eventually costing $10-billion a year, that would cover the key costs of pursuing a Ph.D. for some students. The report also says that universities have a responsibility to ensure that students not only start degree programs but finish them.

However, in an economy still struggling to rebound, a federally financed traineeship might be slow to materialize.

"It would be foolish to think it would be fully funded in the first year, but I'm reasonably optimistic that it can be built over time into a fully funded program," says Suzanne Ortega, provost at the University of New Mexico and vice chair of the Commission on the Future of Graduate Education in the United States, which produced the report. The group was created with support from the Council of Graduate Schools and the Educational Testing Service.

"Lack of financial support is one of the main reasons graduate students drift," says another commission member, Gene Block, chancellor of the University of California at Los Angeles. "If you're well supported financially as a graduate student, you can make it," Mr. Block says.

Under the competitive program, students pursuing an area of "national need," as identified by the federal government, could receive a $30,000 annual stipend and have tuition and other educational costs covered for up to five years, at a total cost of $80,000 a year for each student. The commission says the proposed six-year program would initially cover 25,000 students at a cost of $2-billion for the forthcoming fiscal year and then expand to a $10-billion program covering 125,000 students in the 2016 fiscal year. The traineeship is billed as a natural extension of the America Competes Act, which was passed in 2007 to beef up the nation's investment in the sciences and is currently up for reauthorization.

Says Debra W. Stewart, president of the Council of Graduate Schools, "No matter how bad the economy is right now, we need to make progress on this as best as we can."

Keeping Students on Track

The 64-page commission report, to be released Thursday during a forum at the U.S. Capitol, doesn't just hold the federal government accountable for fixing what ails graduate education. It also makes recommendations for universities and industry.

Universities, for instance, need to keep pushing to improve the completion rates of graduate students—which hover around 50 percent in most fields at the doctoral level and are unknown at the master's level, the report says. In fact, the report calls that task "the single most important thing that universities can do at both the undergraduate and graduate levels." One thing that might increase degree completion, the report says, is for graduate schools to help graduate students "recognize the rewards of earning a degree."

Colleges can also do more to to "alert graduate students early on in their Ph.D. education of all their career opportunities," says William B. Russel, chair of the commission and dean of the graduate school at Princeton University.

Meanwhile, corporations are urged to better communicate what skills are needed for the jobs of the future, among other things. For companies, the payoff for doing that is simple: According to the report, the number of jobs requiring a graduate degree is estimated to grow by 2.5 million by 2018.

"Corporations have a great stake in doing what we can to improve graduate education because we're looking to hire the brightest and the best," says Stanley S. Litow, a member of the commission and vice president for corporate citizenship and corporate affairs at IBM.

The report also expressed concerns about retaining top-notch international students. Although graduate programs in the United States have been the leading choice of international students, other countries, such as China and India, are rapidly investing in graduate education and offering career incentives for their students to come back home and work if they do study abroad. In addition, the report notes that the share of international students enrolled in American graduate institutions has declined between 2000 and 2006 and continues to do so.

But Philip G. Altbach, a professor of higher education at Boston College, says that despite new options for international students in their home countries, "in the short run and the medium run, international students will continue to be attracted to U.S. schools. In my view, we will be better than the top universities that are emerging in China, Korea, Taiwan, and other places for a long time."

Still, Mr. Block, of the commission, called the report "a wake-up call."