College overtime

Last weekend, while researching an article on college choice for the online site helium.com, I came across a study of college graduation rates published by the American Enterprise Institute. This study put into concrete numbers something I’ve long suspected – that America’s colleges and universities are doing a lousy job of graduating students on time.

According to the AEI study, only 53 percent of the 1.2 million freshmen who started college in 2001 graduated within six years. Indeed, a handful of schools graduated as few as 8 percent in six years!

If you’re inclined to question statistics from the very conservative AEI, please note that the raw data came from the schools themselves – 1,300 of them – which are required to report six-year graduation rates for publication by the National Center for Education Statistics. In addition, the AEI report had no obvious political agenda other than one that I hope even the most liberal readers would share – that of saving taxpayers’ money.

Because this must be said: Spending on education is a two-sided coin.

When we spend public funds to prepare young people for responsible citizenship, or to equip people of any age to participate as responsible, self-sufficient members of our economic, social and political life, that spending is a true investment.

On the other hand, when we spend public funds for “education” that has no such result, it’s the purest kind of waste.

Education is one of the most expensive things that we do as a society. When a student goes to college, every one of us pays for it. The student’s family usually pays the lion’s share, but there are all sorts of federal and state tuition assistance programs, including one usually ignored, the subsidy state governments pay for every student attending a public college at “in-state” rates.

And there’s more to it than that. When students take out college loans, they compete in the capital markets with others seeking to borrow money – including small business owners, whose activities grow the economy. When excess capital is absorbed by educational programs that produce nothing, there’s a cost.

Likewise, when new graduates, burdened down by massive college loans, choose to work for a large corporation or the government when they would have preferred to start some new enterprise of their own, that costs us, too. If America has a bright future, small businesses and startup companies will lead us there. Every time a newly-minted college graduate takes a “dilbert job” to pay off college loans, instead of creating something new, that’s a loss to every one of us.

But the most shocking cost in the whole business of undergraduate education lies in the number of kids who take more than four years to graduate – or never graduate at all. In my helium.com article, I explored this issue in terms of the financial and opportunity costs to the individual student and her family, but there are social costs, as well.

In recent years, there has been a disturbing trend toward students taking five, or even six, years to earn an undergraduate degree. To be sure, there are times when an extra year of college can be justified, on a personal level. But when hundreds of thousands of students go into overtime every year, it starts getting expensive.

This problem has its roots in three facts:

First, it costs a college to provide the right courses, in the proper sequence, to enable students to graduate on time.

Second, it costs a college to provide effective guidance through the maze of requirements, regulations and deadlines that a student must navigate in order to graduate on time.

Third, it costs a college absolutely nothing – indeed, it produces revenue for the college – when a student sticks around for an extra year or two.

Of course, none of this takes into account the burden on families, or on the public treasury, when a student takes an extra year or more to graduate. Nor does it take into account the opportunity costs to the student of delaying the start of his career.

But colleges need not concern themselves with such things. Few applicants ask hard questions about a college’s four-year graduation rates. Few legislators question the waste of public money that results from providing tuition subsidies, grants and loans to students who go into overtime, especially at state colleges.

And the schools actually make money on the deal.

But, really, isn’t it time someone started asking questions here?

These are hard times, but, even when the economy improves, Americans will never get back to the prosperity of the 1960s. We’re a debtor nation, in a highly competitive world.

We must spend generously on education – as an investment – or we’ll farther and farther behind.

But when we waste money on “education” that produces no results, we’re just digging our own graves.

More of ‘Rick’s writings may be found at http://www.helium.com/users/590059.

Comments

Great post

"If America has a bright future, small businesses and startup companies will lead us there. Every time a newly-minted college graduate takes a “dilbert job” to pay off college loans, instead of creating something new, that’s a loss to every one of us." Thanks for the perspective and encouragement. Despite my college debt burden (and also as a result of it), I've been fortunate to have grown a startup company that strives to use technology to make the cost of college loans more clear. It's a great loss when students feel they don't have the freedom to create something new and their own, and hopefully the growth of startup activity will be a catalyst for positive change.

I'm one of those

Hi Rick! We attended Thomas Dale together. I went off to MIT and it took me 10 years to finally graduate. I was gainfully employed (not enrolled) during most of those off years and the skills I learned are essential to the research position I hold today.

The typical part of my story is that I was young. People that age are doing a lot of things that break up their education: going into the military, taking jobs, having kids, doing drugs, going to jail, crashing cars. Some of those are hard to predict and not necessarily something we'd want to prevent. Others may be highly correlated with the selection of college -- I'm guessing heavy drinking schools take their toll on graduation, for example.

I'd love to create a requirement for student aid that 10 years after college begins you submit an evaluation of your experience in the colleges you attended. Then we might have a real means to assess which ones are delivering life value.

I remember my friend Calvin Wilbourne saying to me, in a high school class, "School is getting in the way of my education." Sometimes it does. Which ones, for whom, and why?

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