Experts Link Skyrocketing Tuition to Drop-Out Rates

Although a recent report published by the MDRC, a social issues think tank, suggests that tying financial aid to scholastic performance does not increase the chances of collegiate success, higher education experts continue to describe education as “an economic issue.” A group of key influencers in the field of higher education, including college and university presidents and civil rights leaders, met under the banner and sponsorship of the Bill and Melinda Gates Foundation — the 500 lb. gorilla of education non-profits — to address what they called “dropout crisis” in higher education.

According to a report issued by the group, entitled “The American Dream 2.0: How Financial Aid Can Help Improve College Access, Affordability and Completion,” more than 45 percent of students who enroll in American colleges and universities fail to finish within six years. Even more troubling, nearly 65 percent of African American students who enroll do not finish their college educations in a six year time period. Meanwhile, almost a quarter of a trillion — not a typo, TRILLION — dollars flows into the financial aid system each year. With nearly half of all U.S. students failing to earn a degree during their most the years for which they are most eligible to receive such aid, something is clearly wrong. The “American Dream 2.0″ report points its finger at the existing financial aid system.

Part of the problem is that many states have reduced the amount of money they contribute to their higher education systems. Over the past several years — due largely, of course, to the recession — states have been quick to slash budgets to colleges as tax revenues dwindled. This, in turn, forced up college tuition at rates that far outpaced inflation.

The last 10 years have seen students increase educational borrowing from $56 billion annually to more than $113 billion per year in inflation adjusted dollars. With an increase in borrowing volume has come a commensurate rise in defaults across the board; and such defaults are often paired with dropouts. The coalition’s report sees all such factors making college more and more inaccessible, which, in turn, erodes “the American Dream and [weakens] our nation’s ability to compete.”

What the report recognizes that the current financial aid system fails to is that an increasing number of students today are “non-traditional,” attending school on an ad-hoc or part time basis as they can afford it. Based on these observations and data collected from sampling and interviews, the report’s authors suggest that financial aid  awards should be customized to better fit such nontraditional students’ educational plans and goals. The idea behind this is that tailoring financial aid to the student, rather than cramming the student into preconceived concepts of what school should look like in order to qualify for financial aid, will lead to better educational outcomes for more students. As examples, the report cites some states, like Washington, Indiana, Tennessee, Pennsylvania and Ohio, which have passed laws and regulations that “fund colleges with expectations for more student success,” rather than simply enrollment levels.

Such recommendations may sound familiar, as this was the basis of recent attacks by the Obama administration, along with several states on for-profit colleges. Such schools tend to be more expensive than public colleges, receive financial aid, and yet do little to make sure that their graduates — of whom there are few compared to initial enrollment — receive some sort of benefit, such as increased employment potential, as a result of their education. Lack of accreditation and career counseling were among the major reasons for such poor results among for-profit colleges and their graduates.

Ultimately, however, the attempt to tie financial aid to for-profit college graduates becoming gainfully employed as a result of their educations was largely diluted by lobbying and legal challenges. Clearly, though, we can’t continue to just hurl a couple hundred billion dollars into the open maws of colleges — whose students are dropping out at such precipitous rates — every year.

The MDRC study I mentioned earlier clearly shows that tying financial aid to student performance does little to help educational success. Perhaps holding the institutions accountable for the well-being and success of the students they choose to accept, and claim financial aid funds for, is the better way to go. At least, in that way we’d actually be affecting the parties who have real financial gain at stake, as the students seem unlikely to get jobs, anyhow.



  1. Though many state governments have cut funding, the feds have increased support rather dramatically. For instance, the Jan 2 tax bill included $92 billion of support for college students and higher ed (over 10 years). Unless and until the colleges and universities do a better job of controlling their costs, this problem will not be resolved. If they don’t, the up and coming online alternatives will gain a foothold and capture substantial market share.

  2. As a former community college learning specialist who witnessed overwhelming failure among students with disabilities, I couldn’t agree more with this article. As students with LD waited in line to pay their tuition, I knew they were throwing their money away, simply because the college was unwilling to provide the support needed for them to succeed. These students and/or their parents were being robbed–they just didn’t know it.

    Given that community colleges are open admission, they attract a large percentage of students with poor high school records looking for a second chance–MANY of them students with LD. With 2/3 of the tuition for community college coming from taxpayers, isn’t it reasonable to expect them to put programs into place that give those students who WANT TO SUCCEED an opportunity to do so?

    Why is the failure rate in community colleges is so high? That’s easy! CCs get reimbursed based on full-time enrollment, so they seduce students (MANY with disabilities) with hopes of success, especially in poor economic times. Then they hang them out to dry with severely under-staffed disability service offices and little or no tutoring resources specifically for this population. Of course the students fail–they never had a chance from day one. The travesty is that no one holds the schools accountable for this lack of support.

  3. Current financial aid process (FASFA) also doesn’t recognize the impact to middle income families who have had to use retirement and saving assets which inflates income.

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