Highlighting the Higher Ed Dropout Factories

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by James A. Bacon

The affordability crisis for American four-year colleges and universities is in part a problem of high tuition and fees, but it’s also a problem of low graduation rates, contends a new study by Third Way, a centrist think tank.

“A typical four-year public college graduates only 48.3% of first-time, full-time students within six years of enrollment,” states the report, “What Free Won’t Fix: Too Many Public Colleges Are Dropout Factories.” “That means first-time, full-time students that enter the average public institution are more likely to NOT graduate than they are to graduate from the school where they first enrolled.”

Among other key findings, based upon the Department of Education’s College Scorecard data:

  • At the average four-year public college, nearly four in ten loan-holding students are unable to earn more than $25,000 (the expected earnings of a high school graduate) six years after enrollment.
  • At the average four-year public college, 22.2% of students who had taken out loans were unable to begin paying down their loans three years after leaving school. By comparison, the mortgage delinquency rate peaked around 10% during the height of the 2010 housing crisis.
  • Price has little relationship to outcomes. Low-performing schools actually charged higher net tuition than schools with superior outcomes.
  • The worst-performing schools tend to have higher concentration of Pell grant recipients.

Third Way compiled a “mobility metric” for 535 public, four-year institutions incorporating a variety of factors: net price (the amount paid after financial aid has been factored in) for students from families making less than $48,000 a year; the percentage of students who receive Pell grants (typically from families earning less than $50,000 a year); completion rates within six years; percentage of students receiving financial aid earning $25,000 annually six years after enrollment; and the repayment rate on federal loans three years after students leave school.

“With outcomes like these,” concludes the report, “it is clear that simply addressing the rising cost of college isn’t sufficient to ensure students are being equipped with the degrees and skills they need to succeed.”

Bacon’s bottom line: I highlighted the Virginia public institutions in the table above. Overall, Virginia’s public college system fares well by this set of metrics, with the University of Virginia the No. 3 performer in the country. Eight of 15 institutions rank in the top quintile. However, two rank near the bottom, and several others have nothing to brag about.

I have criticized the University of Virginia for its aggressive tuition increases, but Mr. Jefferson’s university does deserve credit for making tuition more affordable for poor students and ensuring that its students graduate on time.

By contrast, the track record for Norfolk State University and Virginia State University, two historically black universities, is abysmal. The completion rate is low, post-graduation salaries are low, and the loan repayment rate is low. On the one hand, NSU and VSU provide an educational option for students from poor black families seeking to better their condition through higher education. On the other hand these institutions are hobbling thousands of students who fail to graduate, or fail to earn good jobs even if they do graduate, with thousands of dollars in debt that will haunt them for years.

We should ask whether these two institutions, as well as some for-profit “career schools” not listed here, do more harm than good. We should ask whether the federal government should be encouraging students to borrow heavily to attend four-year colleges when many would be better off earning community college degrees or not attending college at all. We should ask whether handing out lots of free money (Pell grants) and easy money (college loans) is alleviating poverty or making it worse. Finally, we should ask whose interests are being served — the higher ed establishment’s or the student’s — by perpetuating this massive wealth transfer.

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14 responses to “Highlighting the Higher Ed Dropout Factories”

  1. LarrytheG Avatar

    isn’t it a little ironic that you’d have NONE of this data if not for the government -the very same govt you impugn for Pell grants and loans?

    I wonder if the free market “for profit” colleges would be so inclined to offer their data for analyses also?

    I’d be fine if ALL of them were required to provide that data so that prospective college attendees could easily do such comparisons for themselves and if the free market colleges provided better value for the money -fantastic!

    I’d also be fine with the pell grants and loans “adjusted” according to the college rating.. so that lower rated colleges got less pell grants and loans and higher rated .. more….

    but the essential thing here is that – you have to have govt to mandate that the data be provided by each institution.. or cut them off entirely… all of them – public, private, for-profit, … all of them.

    then let the data stand for itself.

    1. TooManyTaxes Avatar

      I agree that, to the extent private, for profit colleges take federal dollars, their data needs to be available as well.

  2. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    “The cost of a college degree has increased by 1,125% since 1978―four times the rate of inflation. Total student debt has surpassed $1.3 trillion. Nearly two thirds of all college students must borrow to study, and the average student graduates with more than $30,000 in debt. Many college graduates under twenty-five years old are unemployed or underemployed. And professors―remember them?―rarely teach undergraduates at many major universities, instead handing off their lecture halls to cheaper teaching assistants.

    So, is it worth it?

    (Why not explore) .. the staggering costs of a college education, the sharp decline in tenured faculty and teaching loads, the explosion of administrative jobs, the grandiose building plans, and the utter lack of preparedness for the real world that many now graduates face.

    (Why not get) … a different vision of higher education; one that is affordable, more productive, and better-suited to meet the needs of a diverse range of students―and one that will actually be useful in their future careers and lives.”

    This is the opening blurb found on the Amazon page for the new book out called:”Fail U.: The False Promise of Higher Education written by Charles Sykes and published by St. Marin’s Press (Aug. 9, 2016).

    The book is well worth the read.

  3. LarrytheG Avatar

    well no matter how one feels about the unemployment rate – the disparity between education levels is striking:


  4. LarrytheG Avatar

    For-profit college ITT shuts down: Tens of thousands of students in the lurch


    Last week, the Department of Education barred the school from allowing any new students to use federal loans to pay for ITT — and the school promptly stopped new enrollment.

    For-profit schools tend to enroll students who rely heavily on federal student aid in the form of grants, loans and military benefits. Without that aid, many students wouldn’t be able to go.
    Before the DOE’s ban on federal aid at ITT last week, enrollment had already been slipping. In July, the company reported its new student enrollment dropped almost 22% from the same period the year before.
    It’s not the first for-profit college to run into trouble. The well-known University of Phoenix lost 50,000 students last year, and DeVry University has been sued by the Federal Trade Commission for misleading students about their chances of getting a job and increasing their income after graduation.

    Last year, Corinthian Colleges closed most of its schools after being slapped with a $30 million fine by the DOE for overstating job placement rates for graduates. The company eventually filed for bankruptcy.


    makes me wonder if these same rules apply to other institutions … public and private…

    I’d totally support the same approach …. if the institution is not delivering quality and value – cut the loans and pell grants.

    and yes… this is an example of that bad old govt regulation.. that “kills” jobs… indeed :

    ” ITT said it also eliminated the jobs of the “overwhelming majority” of more than 8,000 employees on Tuesday.”

    so there you have it – proof positive that govt regulation kills jobs!!!

  5. Interesting on ITT. It looks like the government is finally cracking down. If I recall correctly, the University of Phoenix once had loan default rates higher than graduation rates.

    While UVA, JMU, William and Mary, VMI etc. have high repayment rates, you have to keep in mind that they have comparatively few lower income students. UVA has only 12.1% of students getting Pell Grants, one of the lowest rates in the country. (William and Mary is even lower.) In comparison, 42% of UC San Diego students get Pell grants and they still manage an 86% graduation rate and a 92% repayment rate. In comparison, Virginia Tech has similar graduation and repayment rates, but only has 17.4% of students getting Pell Grants. So while some Virginia colleges may have good results, they do so by serving a different demographic

    Why is this? I suspect the UC System has more pressure to admit lower income (“disadvantaged”) students than the top schools in Virginia.

    I thought it seemed odd that William and Mary’s net price of $21,272 in 2013 is so much higher than the other schools since the William and Mary “Promise” is supposed to lower net tuition and loans for lower income students. When I looked at the data source, it appears to be an error. Average Net Price from the IPEDS site they used is $9,337 for incomes between $30,000 and $48,000 per year, and $6,223 for incomes below $30,000. The average would be somewhere in between, and the Average And Net Price actually went down significantly to $6,597 and $5,136 respectively for 2014.

  6. LarrytheG Avatar

    pretty good observations, Izzo and good catch on W&M… it did seem to stand out like a sore thumb.

  7. LarrytheG Avatar

    here’s one version of what employers say they want – and to me a good question is – do schools teach this – both k-12 and higher ed and how does an employer know that successful completion of higher ed – assure these qualities?


  8. Peter Galuszka Avatar
    Peter Galuszka

    Larry, great points on
    ITT and the rest. Jim does note something about these ripoff factories but, sadly, he continues with public school bashing. Public equals government equals bad

  9. Peter Galuszka Avatar
    Peter Galuszka

    On other aspects of this worth looking at. Just a few years ago, MOOCs were the rage and if you recall, they were a core flash point with Helen Dragas and her efforts to be rid of Teresa Sullivan at UVa. Somehow, that issue seems to have died.
    Meantime, if you look at all of these failed for-profit rip-off factories, they all have online learning as a common denominator. Jim of course, calls public universities “Drop Out Factories” which is truly hype.

    Whatever happened to online education?I thought it was supposed to be transformational.

    1. Cville Resident Avatar
      Cville Resident


      MOOCs have been a complete failure in higher ed. California’s tried just about everything imaginable to incorporate them in the UC and Cal State systems, and nothing works when you look at course completion, competencies attained, and course satisfaction surveys.

      Make no mistake that the for-profit rip offs were very online oriented. Cheap, completely ineffective, high profit margins.

      What an absolute joke.

      If you ever want to get a good idea of the limits of online ed, just talk to some local plumbers, electricians, and carpenters. There’s a lot of snark about online ed among those guys. So many “DIYers” watch a couple of YouTube videos (online ed) and think, “I can do that.” If you get to know them (and I know a local plumber), they’ll have you in stitches for hours talking about YouTubers and their foolishness.

    2. LarrytheG Avatar

      Well – if UVA had been smarter – when Dragas was doing Round 2 and complaining about the cost of tuition…

      UVA should have come out and said that Dragas was right in her first attack about MOOC and right in her second attack on cost

      and announced a guaranteed $10,000 a year degree program – all of it it …online…. and open to ANY student in Va !!!

      and asked Dragas to be in charge of it….


  10. LarrytheG Avatar

    well.. ya’ll might like this then:

    Liberty University hits 100,000 enrolled, ranks among nation’s top 5 online educators (2013)

    Liberty University has surpassed 100,000 in total enrollment, another milestone for the 42-year-old university as it continues to extend its influence as the seventh largest university in the nation and the world’s largest Christian university. Liberty remains the largest private, nonprofit four-year college in the country and the largest college in Virginia.


  11. LarrytheG Avatar

    Most Popular Online Colleges Based on Highest Enrollment


    In Lynchburg, Virginia sits the largest Evangelical Christian university on Earth. Liberty University’s bonafides don’t stop there as it is also the seventh largest four year university and the United States’ largest nonprofit private university. Though Liberty’s on-campus residential student population is relatively small with only around 13,000, Liberty brings in above 90,000 online-only students making it the largest university in the state.


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