Why Are Graduation Rates So Low?

Of every 100 kids who enter American high schools, only about 20 obtain a bachelor’s degree within a decade. That is why the proportion of adult Americans with baccalaureate degrees is rising relatively slowly, and why the U.S. has fallen behind a number of other nations in the proportion of young adults with college degrees.
There are three points of attrition that keep new high school students from becoming college graduates. Some do not make it through high school. Some high school graduates never go to college. But the largest rate of attrition is seldom discussed: 40-50 percent of those who matriculate in colleges and universities do not obtain a degree within six years of entering college. And a majority of new freshman does not get a college degree in the four years that most of them expect to acquire it.
All of this must change, and radically, if President Obama’s goal of America regaining its leadership in the world in degree attainment is to be achieved. A lot of attention has gone into the second area of attrition -failure to continue on to college, but less attention has been paid at the college level to the third factor -college drop-outs.

Why do students drop out of college?
The evidence on college dropout rates is exhaustively examined in a recent American Enterprise Institute study Diplomas and Dropouts, done by some first-rate researchers (Rick Hess and Kevin Carey, among others). The study shows what veteran college professors like myself have long known, namely that students who come to college well qualified have a very high probability of graduating –the graduation rate at top Ivy League schools is well over 90 percent, while at schools with open admissions that take any high school graduate who can write a check, it is not uncommon for graduation rates to be well below 25 percent.
Two pillars of the Higher Education Establishment, William Bowen and Michael McPherson (former presidents of Princeton University and Macalester College, respectively) have teamed up with Matthew Chingos in their new book Crossing the Finishing Line to apparently argue, according to news accounts (I have not read the book yet) that a major problem is “under-matching”: talented students with lower incomes that fail to go to the best school available, choosing instead to go to schools with low graduation rates and mediocre quality instead of higher quality institutions with low dropout rates.
I would argue the number of unqualified students attending colleges with academic standards exceeding their capabilities or willingness to work is vastly greater than the group identified by Bowen, McPherson and Chingos. Underfunding of poor good students is a trivial problem compared with the overfunding of poor students of all income categories who attend what my American Enterprise Institute colleague Mark Schneider calls aptly calls “failure factories.” Given the rigid limits on acceptances, if every highly qualified low-income student applied to the best university plausible, it would likely impact graduation rates only marginally (partly because the more highly qualified low-income students attend the elite schools, the more other students will be forced to attend schools with lower graduation rates given rigid supply limits at elite schools.)
Apologists for universities, not to mention the athletics cartel (NCAA), argue that graduation rates tend to be understated because of transfers. A student enters University A and transfers to University B after, say, two years. Since she does not graduate from University A in six years, she is viewed as a drop out, when in fact she may have received a degree from University B.
Whatever the validity of this factor, it is more than offset by two other factors. First, the official statistics are based on six-year graduation rates, and the presumption of an entering freshman is that he will graduate in four years. If one uses four year graduation rates, the completion rate is dramatically lower, as the accompanying graph shows. Let’s look at a single university, the University of Texas (UT). At the UT flagship campus in Austin, they are proud of their 78 percent graduation rate after six years. What that does not reveal, however, is that fewer than half the students graduate in four years. Down the road at UT in San Antonio, the six-year graduation rate is a miserable 30 percent -while the four-year rate is in the single digits -7 percent. And it is even lower at UT El Paso. Looking at all public universities, whereas the six-year rate is around 55 percent, the four-year rate is under 30 percent -for every entering freshman who graduates in four years, there are more than two others that do not (the graph includes statistics for students at private schools).
Another reason why the already low graduation rates are perhaps an overstatement of the academic attainment of students is grade inflation. Very few persons flunk out of school these days. When I entered college over a half century ago, the average grade point average at American universities was around 2.5 -implying as many “C” grades were given as “B” grades. By the early 1990s, that average had risen to above 2.9, and today it is over 3.1 -more grades above “B” than below (according to gradeinflation.com) . Therefore, relatively few students today fail to meet minimal grade-point standards (usually around a 2.0 average).
An argument is sometimes raised that the rising cost of college has imposed a huge financial burden on students, forcing more and more of them to drop out. Those on the left typically argue that the solution to the problem is more federal student financial aid. Yet this does not accord with the evidence. Statistics do show that students from low-income families fail to graduate from college more than ones from more affluent families, but low-income kids also have lower SAT scores, less adequate training for college courses, etc. Since 1970, federal financial aid has soared, growing even as a percentage of tuition fees (which have risen enormously), yet graduation rates have not moved upward despite the effect that grade inflation has had on reducing dropouts. In 1972, 52.7 percent of 25-29 year olds attending a baccalaureate college had completed a four-year degree, compared with 51.3 percent in 2007.
As the proportion of Americans seeking degrees has grown, inevitably we are receiving applications from more and more students with modest levels of cognitive skills, and lower levels of motivation and self discipline. As Charles Murray has argued (and Harvard President James Bryant Conant in the 1940s), more and more Americans simply lack the intellectual equipment to master complex and often abstract forms of learning.
One perspective is that low graduation rates are a national tragedy, meaning much human capital is not being formed that could be, imperiling our national economic supremacy. A different twist is the view that resources are being squandered in failing to achieve educational attainment goals. A still different perspective is that many college dropouts are led down a primrose path, incurring huge student loan debts without obtaining the paper certifying academic competence that would help them obtain the good paying job that would help pay off those debts.
Beyond that, more and more college graduates are entering jobs after graduation requiring nowhere near the education levels that they acquired. One out of every eight U.S. Postal Service mail carriers, for example, has a college degree. Is that necessary? Over 15,000 persons in the hair-dressing business have advanced degrees. I had a tree removed recently by two men, one with less than a high school education and the second with a master’s degree. I doubt the more educated person was much better of a tree cutter. I am not against persons obtaining an education for non-vocational reasons, but is promoting that a wise use of public funds? The notion that greater human capital investment is needed to enhance economic growth is, in my judgment, dubious at best. Indeed, statistical analysis suggests increased state government public higher education spending is not positively associated with economic growth, as is so often asserted.
U.S. Bureau of Labor Statistics (BLS) projections on job growth to 2016 reveal that a majority of, say, the top 25 jobs in terms of absolute growth are ones requiring no college education. The number of students attending college exceeds the projected number of new jobs needing collegiate level skills, meaning the phenomenon of the over-educated tree-cutter will continue to grow.
If this latter perspective is correct, one can argue that low graduation rates actually serve a useful function. They help us weed out large numbers of relatively unqualified students attending college. But efficiency could be enhanced and needless heartbreak could be avoided in many cases by not admitting students in the first place. Perhaps students that high school grades and entrance tests suggest are unlikely to succeed should be given opportunities to attend two-year community colleges and if, and only if, they demonstrate academic proficiency, should they be admitted to four-year schools.
Let us spend less time worrying about college access for those not attending a postsecondary educational institution, and more about the scandal associated with the vast resources seemingly wasted on unsuccessful efforts to educate millions of students who fail to complete successfully the course work needed for a degree.


  • Richard Vedder

    Richard Vedder is Distinguished Professor of Economics Emeritus at Ohio University, a Senior Fellow at the Independent Institute, and a board member of the National Association of Scholars.

    View all posts

One thought on “Why Are Graduation Rates So Low?”

  1. You also need to factor in the national disgrace by asking:
    why does a student have to pay for major portions of college education that he/she should have already have had in High School?
    Why not increase our expectations of students in High School? Would we leave people behind? Um, yes, but clearly, they would be left behind anyway. Increase demands on students and prepare for College – We should not just assume paying (and with more public funds, mind you) for more College for more students will actually provide more educated adults. Only wiht higher expectations and standards can we prepare our young people for their own futures.

Leave a Reply

Your email address will not be published. Required fields are marked *