Graduation Rates: The Telltale Sign Of Success Or Indicator Of Failure?

For millions of students, attending college is a means to a better life: more job prospects, and higher earnings over a lifetime. While students who enroll and graduate from an institution of higher learning often reach those goals — despite graduating with thousands of dollars in loan debt – millions of others never graduate and face mounting financial obstacles.

The report from Third Way, a Washington, D.C. think tank – suggests that hundreds of private, non-profit universities have failed to assist students in reaching their goals of graduating and moving forward in the real world.

According to the report, which analyzed data from the Department of Education’s College Scorecard, nearly half of the full-time, loan-holding students aren’t graduating, while those that do graduate aren’t earning sufficient incomes even years after completion, and far too many are unable to repay their loans.

When it comes to students of low and moderate incomes, the report found “abysmal” achievement levels that called into question the quality of higher education at many institutions.

In fact, of the 1,027 private colleges studied, 761 have graduation rates of less than 67%, and only 55% of students who attended a private, non-profit college graduate within six years.

The Third Way suggests that these findings show a need for higher standards and oversight of private, nonprofit schools.

“This degree of institutional failure goes well beyond the current discussion about rising tuition costs to the very essence of what colleges spend billions of dollars purporting to do: provide an education worthy of the time and cost associated with it,” the report states. “And this analysis begs the question, what can be done about the quality crisis in our nation’s colleges?”

The Third Way points out that high schools that fail to graduate more than a third of students on time receive special attention by federal standards. If held to those same standards, 74% of the private nonprofit colleges and 83% of public colleges in the report would fail.

Currently, a college can have a graduation rate as low as 2% and still preserve its accreditation.

The new report also shows a disconnect between the graduation rates between private and public nonprofit colleges and the types of students they enroll.

For example, colleges that have high graduation rates tend to be more selective and tend to have students who are more affluent and more academically prepared, while those with lower graduation rates often admit a higher percentage of students with Pell grants — government funds that typically are awarded to lower-income students.

This in itself could be one reason that colleges with more Pell grants were found to have lower graduation rates, the report states.

Among the 214 schools in which at least half the student body received Pell grants, the report found only four were high ranking when it came to the mobility of graduates — earning higher wages and able to repay their student loans.

Additionally, of the so-called “dropout factories” — those that would not meet the high school graduation standards — Third Way found that 60% of the 761 schools have an above average number of students with Pell grants.

While the discussion of graduation and success of students has largely focused on cost, the Third Way contends that addressing the low graduation rates hinges on the quality of colleges receiving federal funds.

“The data presented in our mobility metric brings into focus the startling truth that many colleges are simply not fulfilling their end of this bargain,” the report states, recommending that colleges would have “skin in the game” when large numbers of students fail to graduation, gain employment, or pay back loans. “The discussion on cost is important, but a discussion on quality and outcomes is also urgently needed.”

Schools with a graduation rate of less than 67% should be required to develop and implement a plan to improve student completion.

Additionally, there should be an incentive for high-performing but low Pell grant schools to enroll more low- and middle-income students.