The Prevalence of High Drop Out Rates in American Colleges and Universities

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This is a problem identification paper.

Submitted: November 01, 2011

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Submitted: November 01, 2011

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The Prevalence of High Drop Out Rates in American Colleges and Universities

 

Many industries experience difficulties in retaining customers.  Some customers leave in response to dissatisfaction with the product or service, some are forced to leave since they no longer are able to afford the product or service, and some begin doing business with a company’s competitor(s).  Typically, the result of these changes are simply lower levels of revenue for the company; however, when the industry is higher education, schools not only lose money, but the country also experiences decrease in its percentage of educated labor force among other things.

 

College students drop out for a variety of reasons.  According to a study conducted by the Bill and Melinda Gates foundation, about 71 percent claim that their decision to leave school was in some way impacted by their inability to balance their jobs and classes.  31 percent admitted to no longer being able to afford the tuition.  Meanwhile, 21 percent just felt they needed a break from the classroom.  Other studies have shown that students also drop out of school as a result of homesickness, an inability to find a social fit and make social connections, and their inability to handle the challenging coursework, perhaps due to academic unpreparedness.  Yet other students attribute their absence to personal or family issues, lack of discipline or guidance that translates into excessive partying and/or drug use, and lastly, being academically disqualified.

 

The problem with so many students dropping out has also proven to be a costly one.  States lose hundreds of thousands of dollars each year in grants to students that do not return for their sophomore year.  For instance, in 2010, the state of Pennsylvania lost $232,900,000, which was the eleventh highest of the 50 states.  $56,000,000 of that amount is lost on the dropout of freshmen alone.In addition, According to the American Institute for research, college dropouts cost America $4.5 billion in lost earnings and lost federal and state taxes.  Furthermore, high levels of dropouts also result in thousands of college-aged students with significant loan debts and inadequate job skills to strive in today’s workplace.

 

This issue is a pressing issue in the United States.  It is so important, that President Barack Obama has begun contemplating how to increase the U.S. college graduation rate in hopes that the United States will eventually be the world’s leader in education.  In 2009, he announced his $12 billion plan that he hopes would result in millions of additional college grads.  Though the problem is pressing in both community colleges and four-year colleges, the problem is more widespread among community colleges.  Nevertheless, four-year colleges still reveal alarming graduation numbers perhaps due to the imbalance in the amount of energy that is allocated to recruiting as opposed to retaining students.  

 

One study has found that approximately thirty percent of college and university students drop out during or after their freshman year.  Another has found that half of all incoming freshmen do not graduate, and of those that do, few graduate in the traditional 4 years.  Even more disturbing is the fact that these statistics have held true for several decades.

 

One statistic appears to truly portray how sever this problem is.  It states that out of 100 kids that enter American high schools, only about 20 will complete a bachelor’s degree within a decade.  Italy is the only developed country that is worse than the United States in its percentage of college students that do not graduate.  Of course some schools are worse than others.  Typically, Ivy League schools have significantly higher levels of retention.  On the other hand, there are numerous schools such as The University of New Mexico, where up to 44 percent of students do not graduate.  For institutions whose purpose is to educate students, it is evident that they are struggling in achieving their mission.

 

Stakeholders

 

This issue is important to a number of people.  On a micro level, it is important to the students who are enrolling in these places of higher learning and for whatever reason choosing to withdraw prior to graduation.  By doing so, these individuals are likely to earn significantly less than their classmates who do complete their college education.  In addition, the families of these dropouts often make investments, both financial and nonfinancial, that are lost if the student does not choose to stay in school.  Therefore, both parents and students care about this issue.

 

In addition, this problem is important to universities.  Tuition and fees are the primary revenue stream of colleges and universities.  Their purpose of existing is to educate and produce qualified individuals.  With dropouts being so prevalent, these institutions are failing to receive their highest level of revenues.  Dropouts leave the school with inefficiencies, as its classrooms are left unfilled, dorm rooms left vacant, and teachers underutilized.

 

On the macro level, this issue affects entire countries.  The vastness of this problem has a dire impact on a country’s future.  Lower numbers of educated individuals have a negative impact on the pool of available help.  Therefore, companies are forced to outsource or recruit individuals from other countries since they are unable to find qualified help in their own country.  This also may lead to high levels of unemployment if there are an abundance of uneducated, unemployed people yet few jobs with which they are qualified for.  Oftentimes, many of the jobs that do open up during these times of high unemployment require applicants to possess a degree.  Lastly, when this occurs, countries have many individuals working at minimum wage, on welfare, and the like.  Consequently, consumer spending is reduced along with a country’s GDP, of which consumer spending is a component.

It is critical that this problem be solved as quickly as possible.  In solving this problem, it is irrational to believe that there will no longer be students who drop out of college.  However, the percentage of dropouts should certainly be significantly less than half of all entrants.  The stakeholders in this problem also stand to benefit greatly from resolving this issue.  Obviously, solving this problem would result in higher graduation rates.  This would increase the revenues of colleges and universities by ensuring that students stayed enrolled in school longer, allowing the institutions to collect tuition and other fees.  In addition, increasing the percentage of students that “walk across the stage” would begin a domino effect.  It would first provide a larger pool of educated, skilled labor, which will allow American employers to expand their operations without the need to recruit abroad.  The economy would then benefit from the higher levels of consumer spending that would result from the increase in the salaries of many Americans, who under current circumstances, would have felt the need to drop out of college.  Furthermore, the government would be able to collect additional tax dollars without an increase in the tax rate.  The increase in the incomes of these individuals would be significant as would the tax revenues of the U.S., which could then be utilized to lower the deficit or invested into various other things.

 

On the other hand, if this problem is allowed to persist, the future may only become worse.  It has already been revealed that the government must become increasingly cautious in how it invests its money considering the billions of dollars of debt that it has accrued.  Considering this, learning how to invest wisely and increase its revenues is critical.  However, if a solution is not found pertaining to how to lower the number of college dropouts, thereby increasing the number of college graduates, then the country would continue to provide grants to students whom may or may not even make it to their sophomore year.  In addition, they would be forgoing billions in revenue despite their dire need for money.  This may then cause for lower levels of government spending in college education, which will then result in fewer students being able to afford college, and thus, lower numbers of graduates.  This lower level of assistance for paying for college would come during a terrible time, for as the level of assistance is decreasing, the cost of education is and will be continually increasing.  Therefore, scholarships and grants are likely to be even more important in the future.

 

If colleges and universities do not find a solution for their retention problem, they stand to lose out on millions in revenue.  In addition, they risk these drop out rates increasing if they do not take preventative action.  Traditional colleges and universities also risk further suffering if online colleges become more popular and respected, which may attract a portion of their students. On the other end of the spectrum, employers, which are the customers of college’s products, educated college graduates, will be forced to continue to recruit from a smaller labor force of talented and educated individuals.  Moreover, it is possible that they may have to settle for less ideal candidates if the number of employers grows faster than the availability of educated labor.

 

Lastly, if this problem is not addressed, students who will become dropouts will continue to waste money, incur debt, and forgo years of revenue by starting an education that they will not be able to complete.  While some may be challenged and learn from their brief stay in college, others will have essentially wasted their time and investments doing something that, due to the lack of time and/or effort, will reap them no benefits.  Likewise, the parents of these students would continue to lose out on their investments. 

 

 

 

 

 

 

 

 


 

References

 

http://www.fastweb.com/financial-aid/articles/1965-why-do-students-drop-out-of-college

http://www.duck9.com/College-Student-Drop-Out-Rates.htm

http://blog.gocollege.com/2007/11/23/reasons-why-college-dropouts-exist/

http://www.nytimes.com/2009/09/09/business/economy/09leonhardt.html

http://www.mindingthecampus.com/originals/2009/09/why_are_graduation_rates_so_lo.html

http://www.dailyfinance.com/2011/08/22/college-dropouts-cost-america-billions-in-lost-earnings-researc/

http://www.air.org/files/AIR_Schneider_Finishing_the_First_Lap_Oct10.pdf


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