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February 18, 2013 5:21 PM How Much Do College Dropouts Cost?

By Daniel Luzer

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The Education Policy Institute recently performed a study of the cost of college attrition, how much colleges lose when each student drops out. It’s some $16 billion. But how much of this is real money?

According to the report, based on an analysis of 1669 U.S. college and universities:

Each student who walks out the door takes his or her tuition, fees, and other revenue the school might have been able to receive such as for housing, food, and bookstore purchases.
The 1,669 colleges and universities studied here collectively lost revenue due to attrition in an amount close to $16.5 billion ($16,451,945,426) with the largest single school losing $102,533,338, the smallest single loss being $10,584, and the average school losing $9,910,811. The publicly assisted colleges and universities averaged a $13,267,214 loss from attrition; [and] the average private college or university lost revenue of $8,331,593….

This is a good try, but the study is not terribly rigorous. This $16 billion is basically a made up number, albiet made up using a lot of math.

The main problem with this report is that colleges don’t really lose this money; they mostly account for attrition in their budgets.

The report does point out that “these are dollars which may have been calculated into the budgets of the schools but are still dollars not received as revenue. They remain as losses to revenue.” But this is a rhetorical device almost devoid of meaning (using a similar accounting method public high schools can be said to “gain revenue” when students drop out). Students aren’t just a revenue source; they also cost money. It particularly costs a lot of money to keep students around who are likely to drop out, because they’re the students who most need extra help.

Education Policy Institute notes, for instance, that Baker College of Flint has an 11 percent graduation rate, and loses some $15 million due to attrition. That 89 percent attrition rate is pretty terrible, but it if the school were to actually keep all those dropouts around that would dramatically impact the school’s capacity. Baker College wouldn’t just get another $15 million a year; it would also have to become a much, much bigger school.

If every student who dropped out actually stayed on to earn a degree it’s true they’d pay more in tuition, but colleges would also have to shell out a lot more to educate them. In most cases they couldn’t really continue to operate if every student who started actually finished; that would make classes much bigger and require them to hire more professors and build more facilities.

Part of the other problem with this study is that even if we’re willing to ignore for a moment the fact that a 100 percent graduation rate would require significant expense from the school, the cost is calculator is highly misleading.

The Education Policy Institute appears to have calculated money lost using published tuition. For Trinity Washington University, for instance, the report notes that the school has a six year attrition rate of 60 percent and, using its $19,000 tuition, calculates that the school loses some $4 million annually due to dropouts.

But most students pay nothing like $19,000. The annual net price of the school, what students actually pay, is more like $15,000. Over 1600 schools, these misleading tuition numbers really add up. [Image via]

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer