Study: College Graduation Failure Leads to Lost Billions

Monday, 22 Aug 2011 09:47 AM

By T.M. Golub

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More than 40 percent of incoming college freshmen will not graduate within six years, costing billions of dollars in lost earnings as well as millions of dollars in lost tax revenue, according to a new study from the American Institutes for Research (AIR).
The study was conducted on more than 1.1 million full-time students entering college in 2002 seeking bachelor degrees. Of this total, close to 500,000 did not graduate within six years thereby costing a combined $4.5 billion in lost earnings and tax revenue never collected.
In itemizing, the 493,000 students starting their studies in 2002 and not graduating within six years lost roughly $3.8 billion in income in 2010 alone, which accounts for $566 million not collected by the federal government in tax revenue on that combined income figure.
“These findings represent just one year and one graduating class. Therefore, the overall costs of low graduation rates are much higher since these losses accumulate year after year,” said Mark Schneider, a vice president at AIR who co-authored the report, “The High Cost of Low Graduation Rates: Taxpayers Lose Millions.”

While the Obama administration has been actively encouraging more students to seek college degrees in order to build up a highly skilled workforce to compete in a global economy, the study uncovers the potential financial implications of this policy.
“Students who start college and don’t graduate incur large personal expenses. They have paid tuition, they have taken out loans, they have changed their lives and they have failed in one of the biggest goals they have ever set for themselves,” said Schneider. “Taxpayers have paid billions of dollars in subsidies to support these students as they pursue degrees they will never earn, and as a nation, we incur billions in lost earnings and lost income taxes each year.”


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