Earning a college degree can be a pathway to higher wages and better employment opportunities, but for those who fail to graduate, those prospects quickly fade. And at a time when a majority of students finance their education with loans, dropping out of school comes with greater risks.
Yet a series of studies by Third Way, a think tank, show that many colleges and universities are leaving students with no better than a 50/50 chance of graduating or finding work that pays more than what someone with a high-school diploma can expect to earn. The findings build on a body of research advocating for greater focus on college completion, rather than just access to and affordability of higher education.
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Sign up“We think policymakers need to shift their conversation to focus not just on sticker price but on the value an institution is providing the students they are supposed to serve,” said Lanae Erickson Hatalsky, co-author of the report and vice president for social policy and politics at Third Way.
In the latest report, released Thursday, Erickson Hatalsky and her co-author Tamara Hiler looked at the performance of students at 535 four-year public colleges using data from the Department of Education’s College Scorecard. They found that just 48 percent of first-time, full-time students graduate within six years at the average public institution. Just 80 schools had graduation rates above 66 percent.
An earlier report from the think tank about private nonprofit schools found that 55 percent of similarly situated students earn a degree within six years. Among the 1,027 private colleges the group examined, 761 had graduation rates lower than 67 percent.
Both private and public colleges with some of the highest graduation rates admit the fewest number of students eligible for Pell grants, a form of federal financial aid for families typically earning less than $60,000 a year, according to Third Way. Yet some schools that graduate more than three quarters of their students, like the majority of those within the University of California system, take in a high percentage of Pell students, proving that students with few resources stand a good chance of succeeding with the right support, according to the new study.
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In many ways, completion, access and affordability go hand in hand. While there are many reasons why students drop out of college, research has shown that money is a primary factor. Some colleges have responded by pouring a lot of their resources into students who demonstrate the most need or providing short-term grants to prevent students from leaving. Too many schools, however, expect the neediest families to cover an outsized portion of the cost of attendance, an unsustainable practice that could lead students to drop out.
Thursday’s report notes that colleges, unlike high schools, are not held to any graduation standard that could trigger federal sanctions. High schools that fail to put diplomas in the hands of more than 67 percent of their students are flagged for federal intervention. If the same were true for colleges, 74 percent of private nonprofit schools and 85 percent of public colleges would face the same fate.
“Federal law doesn’t currently incentivize good outcomes for students, or even give students the information they need to pick schools where they are more likely to succeed,” Erickson Hatalsky said. “That has to change if we are going to truly deliver on the promise of college as a ticket to economic mobility in this country.”
[Three graduation rates for one college? The baffling government policy that could confuse students.]
There are limitations to the government’s data, which tracks graduation rates for first-time, full-time students who complete degrees where they started school, excluding those who transfer from one school to another. The data also fails to include students who take longer than six years to graduate.
“Federal graduation data are markedly incomplete, which often leads to misleading conclusions about student progress and success,” said Christine Keller, Vice President for Research and Policy at the Association of Public and Land-grant Universities, a trade group.
She pointed out that data from the National Student Clearinghouse Research Center show that 57 percent of first-time, full-time students at public four-year institutions graduate in six years at their original school, 10 percent transfer and graduate elsewhere, and 11 percent are still enrolled. Keller said the Student Achievement Measure, a database created by universities, is able to capture the progress of all students.
[New college data give fuller picture of graduation rates — and show challenges]
The information that is available through the federal government still paints a dismal picture of the economic mobility of many students who borrow to attend public and private universities. Thirty-six percent of students at the average four-year public college and 37 percent at the typical private school are unable to earn more than $25,000 six years after enrollment, according to Third Way.
Approximately 22 percent of students who take out loans at public colleges were unable to begin paying down their debt three years after leaving school. The same is true for 19 percent of students at private institutions. The people having the most difficult time repaying their loans are those who never earned a degree, which makes it difficult to find work that pays enough to cover the debt.
Student loan defaults are concentrated among people with less than $10,000 in debt, mainly because these borrowers are less likely to have completed their degrees. Small-dollar loans account for nearly two-thirds of all defaults, according to the White House.
Authors of the Third Way report say the pending reauthorization of the Higher Education Act offers an opportunity for Congress to hold colleges accountable to students and taxpayers
As college-bound students prepare for a new school year, they should be aware of a new date that’s important for future financial aid: Oct. 1.
That’s the new, earlier date after which students can file the Fafsa, or Free Application for Federal Student Aid. The infamous form is used to calculate how much students and their families must contribute to the cost of college, and how much help they will get in the form of grants, scholarships and loans. Students seeking financial aid must file the form, used by most states and colleges as the gateway to financial aid, each year.
In the past, students had to wait until Jan. 1 to file the form. But in an effort to align the financial aid process with the typical college admissions cycle, the federal Education Department moved the initial filing date three months earlier.
The department also changed the rules to allow students to complete the form using older financial information. Previously, the form that was available on Jan. 1 used income from the tax year that had just ended. Students filing the form early this year, for instance, had to use 2015 income tax data. Financial advisers often urged students and families to file as soon as possible after Jan. 1, to maximize their chances of getting state grants, because some states have early financial aid deadlines.
That presented a problem, however, because most people do not have the necessary information, like wage statements, to file their tax returns in early January. Instead, they had to file Fafsa forms using estimated income data, and remember to revise the form later, after they filed their tax return. That often meant the form was selected for “verification,” which requires submitting extra documents, said Mark Kantrowitz, a financial-aid expert.
The alternative was simply to file much later, he said, and risk missing out on aid.
The new rules have Fafsa filers use tax information from a year earlier — known, awkwardly, as “prior prior” year returns. (Students filing for the 2017-18 academic year, then, will use 2015 tax data.)
The main benefit of that change is that many more students can use the Internal Revenue Service’s Data Retrieval Tool, which automatically fills in the online Fafsa form with the necessary tax information, said Lauren Asher, president of the Institute for College Access and Success. “This really does simplify the aid process,” she said.
Interactive Graphic | Student Loan Calculator A guide to student loans at various universities, and what it takes after graduation to repay that debt.
Colleges are taking steps to notify students of the new date. Thomas M. Ratliff, associate vice president at Indiana Wesleyan University in Marion, Ind., said the university was sending emails to students who had indicated interest in attending, making them aware of the Oct. 1 date. And the state’s association of financial aid professionals will hold a workshop in September for high school counselors, he said, to make them aware of the change.
One question is whether colleges will change their own financial aid application deadlines. Some — particularly institutions with rolling admissions — are reportedly moving up their “priority” financial aid application deadlines to November or December. That could put students in a time crunch in the fall, said Carrie Warick, director of partnerships and policy at the National College Access Network, which promotes college education for low-income students.
“At some institutions, if you miss a the priority deadline, there may be little to no aid after,” Ms. Warick said.
The network, she said, is urging colleges to set their aid application deadlines no earlier than Feb. 1.
Still, the Education Department is advising financial aid counselors to tell families to double-check their state and school financial aid deadlines. Parents, the department notes on its website, should “make sure that your child’s school and state deadlines have not changed, and plan accordingly.”
Here are questions and answers about the new Fafsa date:
Does the change mean I must file the Fafsa form by Oct. 1?
No. The form becomes available on Oct. 1, and you can file when you’re ready — although it’s still wise to file as soon as you can, Mr. Kantrowitz said.
I already filed a Fafsa form this spring. Should I file it again after Oct. 1?
Yes, if you’re seeking aid for the 2017-18 academic year. Because of the filing date change, students may actually file two separate Fafsa forms this calendar year — one that they already completed, for 2016-17, and a second one, which can be filed starting in October, for the following academic year.
How do I use the I.R.S. Data Retrieval Tool?
The online Fafsa form has a link that will allow you to use the tool.