What Causes High U.S. College Dropout Rates?: Implications for Higher Education Reform

Education is the single largest important factor for an individual's economic well-being. Certainly in the context of the United States, it is important enough where it has become a societal expectation to acquire a four-year college degree. It is ingrained that a four-year college is the key to success because more education generally means more productivity and higher wages. As I discussed in November 2014, those who earn a college degree generally fare better than those who do not attend college. This key to economic success assumes completion of college. What is seldom mentioned is the sheer number of those who do not complete college and are subsequently straddled with debt while having nothing to show for it. Also, that time they spent in college could have been used developing workforce experience, but not that time is foregone.

In conjunction with Third Way, the American Enterprise Institute released a report last week illustrating the prevalence of the dropout rate. How bad is it? In 2016, 49.1 percent of full-time, first-time students completed their degree program within six years. That is about the same probability as flipping a coin. For two-year institutions, the figure is an even lower 39.8 percent, and is still low even when factoring those who transfer from a two-year institution and graduate at a four-year institution. Given how expensive tuition has increased in recent years (see below), it is no wonder that this outcome creates economic hardship for millions of Americans. With that in mind, I would like to answer two questions today. One, why is it that the college completion rate is so low? Two, what could be done to increase those rates?

What Is Driving the Dropout Rate?
It should not surprise us that there are multiple factors into what contributes to the dropout rate. After all, the individual's college story is unique and variable. Nevertheless, we can narrow down to the few primary contributors.

Affordability and Work-School-Life Balance. Working while in college has become the new norm. According to the National Center for Education Statistics, 43 percent of full-time undergraduate students and 78 percent of part-time undergraduate students are employed. A 2015 study from Georgetown University went as far as saying that over the past 30 years, about 70 to 80 percent of [undergraduate and graduate] students have taken at least some time from their college schedule to work. 25 percent of full-time students are also working full-time, not to mention that 19 percent of full-time students have children. The Georgetown study also points out that while it is better to work in college while going straight to work after high school, it is nigh impossible to "work your way through college" (i.e., income doesn't cover costs like it did in the past) or afford college without taking out considerable loans.

As mentioned above, the cost of college has increased at a faster rate than overall inflation. A 2017 survey from Financial Advisor cited finances as a major reason to drop out. It found that 51 percent of women and 41 percent of men drop out because of financial reasons. A 2015 Ohio State University study also found that 70 percent of college students are stressed about finances.

Cost is not just about tuition, but housing, books, materials, and transportation. Even if some of these costs could be avoided by taking out loans, many college students work. A 2018 LEND EDU study found that only 45 percent of students could finance their education on their own. If these students' income cannot cover these non-tuition costs, the financial pressure causes them to drop out.

Academic Preparation in High School. In his May 2018 report on the topic, Urban Institute education expert Matthew Chingos found such a high correlation between high school grades and college degree attainment that he called high school academic preparation one of the strongest indicators of college completion. Research from the American Institutes for Research (AIR) comes to similar conclusions regarding academic preparation in high school (Velez, 2014). This finding makes intuitive sense. If you developed the soft skills of showing up to class, turning in homework on time, and studying for exams, there is a good chance that those skills will stay through college. Having these skills are important because college is typically the first moment of independence from parents, which means that parents are probably not there nagging about completing homework or going to class. If those soft skills were not there in high school or they were there with considerable reinforcement from parents, it is no surprise that research shows that it is difficult for lackluster students to remain focus in college.

Inferior Quality of Education. Believing that the quality of higher institutions of learning was inferior in the United States was initially hard for me to believe because many U.S. colleges are ranked on lists of top colleges in the world (see here, here, here). However, Third Way has some interesting analysis on college quality (see here and here). If colleges were regulated the same way high schools are, 85 percent of four-year public colleges would be flagged as dropout factories and would be mandated to improve their completion rates. It is not simply the dropout rates that are perturbing in the Third Way analysis. It is the subpar wage outcomes, lack of correlation between price and quality, and difficulty paying loans back because the lack of job skill development at these colleges.

What to Do?
Between skyrocketing college costs, lack of academic preparation, and college quality issues, it is no wonder that the college dropout rate is as high as it is. There are multiple solutions, depending on which symptom that one would like to target. One common solution is to provide more subsidies towards college tuition. The problem is that federal college subsidies are the single largest contributor to why college tuition has increased in the past thirty years. Doing more of the same would only exacerbate the situation.

Along with the report mentioned at the beginning about the prevalence of the dropout rate, the American Enterprise Institute and Third Way released additional reports on solutions to the issue (see here and here; also see 2010 Third Way report here). The solutions range from federal accountability to expanding dual enrollment, a college tuition tax credit, and better financial, academic, and mental health support. I would like to add a push for changing the societal norm that everyone should go to a four-year college. These dropout rates show that four-year college is not for everyone. Unlike other developed countries, the United States does not have an established alternative to the four-year college, largely due to this societal expectation. As the AIR research suggests (Velez, 2014), students who started off at a two-year college had a better chance of succeeding overall.

Considering how adversely impactful dropping out is towards an increasingly large number of Americans, finding solutions to this problem becomes more paramount. However, the American people as a society has to recognize the problem before delving into solutions. I hope that this recognition takes place before the problem gets much worse.