• September 3, 2015

College Dropouts Cost Taxpayers Billions, Report Says

State and federal governments spent an estimated $9-billion between 2003 and 2008 on students who dropped out of college during their freshman year, according to a report scheduled for release on Monday.

While that sum may be a small portion of the overall amount that governments spent on higher education during that time, it's still a high cost for failing to keep students in college, said Mark S. Schneider, vice president for education, human development, and the work force at the American Institutes for Research, which compiled the data for the report.

And since the report considered only first-time, full-time freshmen at four-year colleges, the $9-billion total is also just a portion of the overall cost of dropouts, Mr. Schneider said on Thursday during a conference call with reporters.

Because the report is based on data from the U.S. Education Department, it does not take account of students who attend part time, who leave college in order to transfer to another institution, or who drop out but return later to receive their degrees. So the report's conclusions are incomplete.

The report makes no recommendations about how to better retain college students, but Mr. Schneider said that states should base a much larger percentage of their higher-education spending on the number of students who complete degrees, not the number enrolled, at a given institution.

In addition to the report, the institute is unveiling a new Web site that allows users to compare a variety of performance measures for more than 1,500 public and private colleges and universities and all 50 states, including the percentage of freshmen who drop out of college, the amount spent on those who drop out, and the amount spent on instruction and administration.

The Web site also wades into the controversial area of "gainful employment" by providing some data on the ratio of student-loan repayments to earnings for recent graduates at each of the 1,500 institutions. The U.S. Department of Education is formulating a new regulation that could disqualify some institutions, in particular for-profit colleges, from receiving federal financial aid if their students incur too much student-loan debt in comparison to their earnings.

The Web site is meant to provide accountability and openness for consumers and policy makers about how well a state or a particular institution is performing, said Larry Giammo, managing director of Matrix Knowledge Group, an international consulting company that works with nonprofit and government groups and that helped to create the new site.


1. tuxthepenguin - October 11, 2010 at 06:38 am

"it's still a high cost for failing to keep students in college"

It's a high cost for admitting students that are not prepared or interested in college.

"states should base a much larger percentage of their higher-education spending on the number of students who complete degrees, not the number enrolled, at a given institution."

Yes, it's much better to take steps to keep students who are not interested in college enrolled. That way the cost to taxpayers can jump to 40, 50, even 60 billion.

It's as if this article was written by someone who has never been within ten miles of a US college campus. Finding out that 18-year olds change their minds should not be shocking. Suggesting that they should stay in school once they decide against it (and at taxpayer expense!) is shocking.

2. wdabc - October 11, 2010 at 06:57 am

The retention objective is a false money generating scheme. We should return to the former objective of kicking them out. A university education was once limited to the intellectual elite. Today, it is a swamp of lazy, intellectually inferior deadbeats who never should have been admitted to the university.

Solution: Lower the cost of tuition and force students to pay up front or get a private loan from a real bank, not the taxpayer.

3. 11180037 - October 11, 2010 at 07:28 am

With sincere thanks to my predecessor commenters here, I would add two footnotes: (1) rampant grade inflation will be the ultimate solution to the drop-out "problem", which for centuries had been considered an obvious side effect of the filtering process of higher education; and (2) if financial aid eligibility requirements included a prorata refund (instead of the confiscatory two-week drop/add version favored by most colleges) a requirement of the 1992 HEA that was abandoned with the 1998 version when R2T4 was introduced to make sure at least some portion of the federal dollars were still returned, some of that student indebtedness beyond that source would be ameliorated.

4. duchess_of_malfi - October 11, 2010 at 10:24 am

Thank you for the article and the link. My university is doing much better than our administration would have us believe. I suspect the horrible-retention myth supported a particular ineffective but expensive pet project. Our numbers would look even better if they included students who left to complete college at another university.

5. senecan - October 11, 2010 at 11:13 am

If you read the technical appendix of this report, it becomes less clear that the author has documented anything as dire as its conclusions imply. The first-year attrition rate includes students who completed all of their first year, but didn't return for a second year. It includes students who transferred to other institutions. Students who transfer out are clearly not failures or a waste of public funds, and not all students who leave college after a semester or two are either. (I hope that people involved in higher education agree that it has value beyond the credentials conferred.) But, by all means, let's keep pushing to make colleges "accountable" for students' personal decisions.

6. jmkrieger - October 11, 2010 at 11:23 am

Something hidden here - the number of students who enroll in college simply to get a year of free money. I hate to be really negative about this, but it happens, particularly at community colleges. And it's a huge money drain. We've been watching it happen for the last few years - young people (in particular) who want to live a "college" lifestyle. It's very frustrating and does not get nearly enough attention.

7. 11132507 - October 11, 2010 at 11:48 am

jmkrieger - the fact that students can enroll in a college and get some money after their tuition and fees and textbooks (and in some cases, transportation, child care, etc) are all paid for does not serve as evidence that these students are specifically motivated to do this and that's why they enroll. First of all, many students, especially those at community colleges, make enrollment decisions with no idea how much aid they qualify for. And the amount of money is not life-changing. It's hard for me to imagine that people would rearrange their entire lives to get a thousand or two in excess aid refunded to them as a credit balance after their tuition is paid. In the same amount of time they could make several times that much working for minimum wage.

All studies that show what 1st time, full-time students do ignore the fact that the old model of going to college full-time at the age of 18 right after HS and remaining enrolled full-time for 4 years and earning a Bachelor's degree is no longer the most valid way to measure college success. Might make for good scary attention-grabbing headlines, but they don't tell us anything useful.

8. physicsprof - October 11, 2010 at 11:57 am

#2: "A university education was once limited to the intellectual elite. Today, it is a swamp of lazy, intellectually inferior deadbeats who never should have been admitted to the university."

Except for the word "elite" which I dislike, well said.

9. 153584ods - October 11, 2010 at 12:29 pm

Ouch - "lazy, intellectually inferior deadbeats"...if such students are on the university campus, then they must not be complete "intellectually inferior deadbeats" or they wouldn't have qualified for admission in the first place - unless, of course, this "university" has "open admission"! Are we to assume #2 is one of the "intellectually elite"? Of course there are those students who go to "college" to get out of the house and out from under parental thumbs, and of course, there are students who are here just to play a sport, and yes, there are those who just take the money and party, but, I'd really like to see some hard data on the percentage of the total post-secondary educational system such students represent. I work with far more committed students, than not. And, BTW, #2, I was a student who partied and fiddled around on my first go 'round in college - I suppose you would place me in that "intellectually inferior" group - in reality, however, I have an IQ equal to a normal sized person's weight and have a slew of post graduate credentials after my name - perhaps you should be a little less judgemental about college students. I do agree, however, that most kiddos fresh out of high school would do well to spend a year in non-combat military or organized community service. Would do anyone a world of good to step out of the comfort zone and do some good once in a while......

10. duchess_of_malfi - October 11, 2010 at 12:50 pm

Many universities have become more intellectually elite over time as the very top universities admit more international students and the big state schools admit more students who are priced out of other places.

I teach intro and upper-level courses at a middling public university with an attrition rate at about the national average. There is a big difference in student quality after Year 1. Some of the students who drop out were pushed by their parents to "at least give college a try." Some go on to schools that are better academically or more convenient for their schedules.

But generalizations about "a swamp of lazy, intellectually inferior deadbeats" do not accurately represent the students I work with who flunk out. Most of my struggling students have lives and backgrounds that are different from the typical 18-24-year-old college student's. They are intellectually inferior because of bad secondary schools rather than lack of intellectual potential. They aren't lazy; they aren't prepared and they have more conflicts in their lives than other students. Part of my school's mission is to expand educational opportunity for residents of the state. But we admit students without committing to do what it takes to help them go the distance. You can argue that we should either not admit them or do more to support them, but characterizing them as dropping out because they are lazy ignores the reality of the place.

11. ellenhunt - October 11, 2010 at 01:04 pm

Question: Which university contributes more dropouts than any other?

Answer: University of Phoenix.

Prescription: Cut them off and sue the SOBs for the billions they have conned out of the taxpayers in Pell Grants.

12. 11132507 - October 11, 2010 at 02:04 pm

physicsprof disliking the word "elite" sounds like someone who's 7'2" disliking the word "tall." You are what you are.

The message from physicsprof and wdabc is let's return to the days when only those who already had every advantage in the world were permitted to set foot on academia's hallowed grounds. The others who weren't born into wealth can collect trash or drive buses or something. How many more countries you want to see pass us up?

13. la_profesora - October 11, 2010 at 03:54 pm

But...isn't it better for a person to be exposed to college for one year, than not at all? Quite aside for the issue that someone might have to attend college for a year to realize it's not for them, all the studies I have seen indicated that people with "Some college" earn more money than people with only a high school education.

14. fizmath - October 11, 2010 at 04:41 pm

What is the cost to the economy by having these students out of the workforce? They had 13 years to "try out" school and see if that is their cup of tea. No one ever suggests that students try out law school, medicine, or graduate studies in the arts and sciences.

15. physicsprof - October 11, 2010 at 07:11 pm

#12: "The message from physicsprof and wdabc is let's return to the days when only those who already had every advantage in the world were permitted to set foot on academia's hallowed grounds. The others who weren't born into wealth can collect trash or drive buses or something. How many more countries you want to see pass us up?"

While I am not necessarily against social justice, let me point out a logical fallacy of your argument. Clearly, the US education and science were much more dominant during the old days of injustice, so the statement that "many more countries will pass us up" as a result is simply not sound. The US education started to deteriorate exactly when we began to entertain the notion that colleges are for everybody irrespective of their intellectual capabilities, and when we began to waste resources by reaching out to those who benefit little from higher education. Don't mix justice with efficiency, they are not the same.

16. raymond_j_ritchie - October 11, 2010 at 07:28 pm

It is very hard to predict how students will fare in a university. It is so different from school.

There are many who look great on paper that turn out to be duds. Those wretched "gifted children" of the aspirational middle class whose giftedness seems to evaporate when they have to do things for themselves come to mind. But you must not smirk or make cynical remarks when your colleagues earnestly tell you about their "gifted" sibblings.

There are those who do not look promising when they start university but steadily improve from year to year. The system is not geared to accomodate them very well at all. In particular, it works against those who have difficulty getting into university because of socio-economic disadvantage.

Then there is the burn-out phenomenon; kids that "peak in highschool" or undergraduate university and then it is downhill all the way. PhD programs, Law and Medical Schools have too many of them. For me the "past-their-peak" are the most depressing students to deal with because you cannot readily recognise them. Often it is just a bad feeling you get when you talk to them.

I went through Sydney University when it was still relatively easy to get in but hard to graduate. My aged and widowed mother was poor. The standard failure rate in 1st year was 30-40%. I am inclined to favour the principle that university should have reasonable entry standards but basically anyone who thinks they would benefit from higher education should have the right to fail. And please no refund.

I am not in favour of making it absurdly difficult to get into university. Articles like Keldeman's encourages such ideas. Harking on the cost of students failing in universities encourages making the entry gate so high that students do nothing once they are let in. It also selects for the book-smart type who have never and will never have an idea of their own.

17. sefl_librarian - October 12, 2010 at 09:20 am

I was witness to this even back in the 90's as a college student. I did well in high school and came from a middle class family, but unfortunately my parents chose not to help me pay for my education. I was still required to include their income on my FAFSA every year and never received any aid from the government except for guaranteed student loans (which barely paid for my tuition). So I worked two jobs over the summers and all through each semester (I had to pay for rent and food on my own too), working and studying, all the while watching other "less-priviledged" students come in for a semester free-ride and drop out *wasting* money that I could have used. I am admit I was bitter about it.

I graduated with honors but struggled to pay back my massive student debt for years, which doubled with graduate school, a necessary move, since my only marketable skills as an honors graduate with a history degree seemed to be secretarial. I was never a good "consumer" as the government would like me to have been, because I struggled with what amounted to a second mortgage payment each month to my student loans (paying back the government that which I should I have merited from the get-go). I have recently paid off my last 50K in student loans with the equity in the house I had to sell to relocate to South Florida. I rent now, but I am finally debt free.

I am seriously considering moving to Europe, where my young daughter will be educated based on her abilities with nominal contribution on my part. See, I am considered middle class here in the U.S., and I have no idea how I will pay for college for her knowing how astronomical tuition will be when she is ready for higher education. Whatever money I put into a 529 now won't put much of a dent into the projected tuition prices of 2028.

My other options include working with her toward a scholarship to a private high school where for some reason more priviledged children seem to receive more money from ivy league colleges directly (I witnessed this a graduate student in a ivy league institution). Or taking away her childhood and driving her hard in sports, like many parents do, in hopes that she gets a sports scholarship somewhere nice (and hope she doesn't get injured along the way and destroy that opportunity).

Of course, if she wants to be a hair-dresser or construction worker, then that's just fine too. They make more money than I do and don't have the educational loan burden that I had to endure for so long. Education is an investment in our future, right?

18. trendisnotdestiny - October 12, 2010 at 09:21 am

Even the tone of this title puts me off: "College Dropouts Cost Taxpayers Billions, Report Says."

The marketing of this idea is obscene (blame the individual dropouts of the system or their professors on the way). When you financialize outcomes, it becomes so much easier to point at one section than the entire system. The neoliberals guide to change:

1) starve the entity in which you are battling of resources
2) foster division and new narratives about assessment outcomes
3) avoid-buy off resistance; financializing profitable segments
4) plug in a managerial class to buffer internal resistance
5) wait for poor outcomes and celebrate calls of innovative change
6) blame individual students and teachers for systemic problems
7) create national goals (race to the top 2020; incentives)
8) reconfigure labor cheaply to meet the needs of capital
9) sell higher education as a product where the new privatized markets of profitability coincide with the broken promises of jobs
10) when things do not go well blame individuals using Social Darwinistic rhetoric which will be used to further discipline the professorate.....

11) create a double bind for the consumer using huge student loan debt, greater income inequality, less social mobility and more vulnerability in the global marketplace for employment (malleability).

Yeah, all these systems are working so perfectly at present; let's blame individual dropouts instead of the rotting social-cultural structures that neoliberalism erodes. Let's really discipline those ignorant bastards for using our money (sarcasm). Any parent will tell you, its up to those who have the power to create systems that work for the students versus the lusting after self-interested profit statements dressed up as higher education. There are some conclusions here that need to be reached, but whole groups of people miss how this has been constructed.

19. sefl_librarian - October 12, 2010 at 09:23 am

"basically anyone who thinks they would benefit from higher education should have the right to fail."

They should have the right to fail then on their own dime, not mine.

20. hamilton1982 - October 12, 2010 at 10:28 am

Just as well then that one single college drop out (Bill Gates) has in his lifetime contributed many billions of dollars to US government coffers then. I could add Mark Zuckerberg - though we'll see what kind of shelf-life he enjoys.

21. cbcheyer - October 12, 2010 at 10:33 am

"dropouts cost taxpayers billions"? Aside from the blame-loaded term "dropout" and the implication that this "cost" is an unwarranted expenditure, this article fails to acknowledge the research on the benefits of each addition year of education to the individual and to society. Financially speaking, MIT economist David Autor clarifies the picture in a Brookings report, April 2010.
Basically, the 13th year of education alone will place an individual in a higher salary position with lower unemployment rates, longer work hours in a year, and better benefits. Consider the implications of paying higher taxes and costing society less in social services over a 40 year career and preparing better for a self-sustaining retirement. On a cost-benefit scale, "states" may be better off for even that single year of college.

22. physicsprof - October 12, 2010 at 10:59 am

#20: "Just as well then that one single college drop out (Bill Gates) has in his lifetime contributed many billions of dollars to US government coffers then."

Just as well then a thoughful program to promote dropouts should be initiated then.

23. 11142568 - October 12, 2010 at 11:00 am

Using the National Student Clearinghouse, my office regularly tracks full time first time students who attrit after the first or second semester . Our freshman classes run around 450. The vast majority of those who leave us enroll in other colleges. Many of these enroll in publics (we are private) so that money seems to be a factor. About 9 percent do not enroll anywhere at least within a year or so of leaving (which is when we conduct our studies). So even taking into account that Schneider leaves out those who are not first time full time, by ignoring the transfer factor he is erecting a huge argument on very dubious data.

I am a little shocked to see in the reactions so many elitist comments. Yes, we have built a huge higher education industry in this country. Many more people go to college than was the case when I went in the late 1950's. I believe that Clifford Adelman's study for the Department of Education from a few years back showed that about 2/3 of those who start finish though not necessarily at the college where they started. That seems like a pretty good outcome. This huge industry that we have built, that probably does include a few unwashed students as well as many washed, provides lots and lots of jobs. I wonder if those of elite points of view imagine they would have jobs if we went back to a higher education only for the creme de la creme.

From the late 1960's until the mid 1990's American higher education did reach out to many populations that did not earlier have a chance for higher education. Undoubtedly not all of the outreach worked, but the net result was that you had a whole load of people from populations who historically had little place at the table coming into the middle class. One must remember too that vis a vis learning when class barriers are being broken down, education is to some extent a matter of generations. Griselda may get a degree but there may be gaps in her knowledge and understanding. Her daughter growing up now in a middle class home may gain more from her higher education experience. In the the 60's through 90's I taught many students who came from backgrounds with large educational deficits. Some of my students succeeded very well, others less. But I was very proud to be part of great historical movement in American higher education.

Peter H. Baker

24. archman - October 12, 2010 at 03:43 pm

I remember my colleagues and I discussing a study that tracked numbers of americans with college degrees over decadal scales. As I hazily recall (it was a few years ago), it was somewhere around 24% in the middle 20th century, and went up to a whoppping (or lack thereof) 29% at the end of the 20th century.

So basically this huge push to make college more accessible to everyone resulted in a 5% greater number of college graduates.

Does anyone else remember this study and can find the original article for it?

25. rambo - October 12, 2010 at 03:55 pm

I bet 80% of the dropouts are men....

26. mainiac - October 12, 2010 at 08:54 pm

At the CC here students flashmob to get FA for meth, crack, pregnancies and breast augmentation. After attending for a few weeks, they grab the money and go on cruises, vacations, and buy items normally out of economic reach. They are really fun the short while they are in class, too!

27. tomta - October 12, 2010 at 09:38 pm

Well, how about if taxpayers stop underwriting peoples' education? That way the taxpayers don't lose anything when someone can't or won't do the work necessary to succeed. Additionally, if students have their own money invested they're much more likely to take their studies seriously.

28. don_heller - October 19, 2010 at 08:31 am

There are some serious problems with the website's calculation of student loan repayment rates. See my blog post on the topic at:

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