Grading Schools on Graduation and Millions Lost

National Report Card on Colleges and Their Graduation Rates and Revenue Losses from Attrition

Prepared by

N.Raisman & Associates

www.GreatServiceMatters.com

info@GreatServicematters.com

 Grading schools on graduation

If the 1700 four-year colleges and universities in this study were graded on their graduation rates for students who finally graduated a four year college for six years as professors grade students on an A through F scale with an A equal to a graduation rate of 90% or more; B 80-90%; C 70-80%;D60-70% and any graduation rate under 50% equal to an F the breakdown would be

  43 A’s

101 B’s

165 C’s

259 D’s and

1132 F’s.

Sixty-seven percent of four-year colleges and universities studied in the US would receive a failing grade on retention and graduation. Fifteen percent would just be scratching by with a grade of D. No wonder we are starting to fall behind other countries in the number of college graduates.  Only 309 colleges and universities receive a passing grade of C and above. Eighty-two percent of our four-year colleges and universities are failing in their job to graduate students. Even in six years. The same eighty-four percent are still getting government aid to such as Pell Grants to stay open and fail. These schools are wasting the dreams and resources of the students they attract as well as the money from the federal government.

As significant as the failure to graduate students is it is equally significant to note that that these colleges and universities lost over $6 billion in revenue from attrition. What is even more upsetting is the financial and emotional losses of students and their families from these failing schools. Keep in mind that the billions of dollars the colleges and universities lost from attrition came from students, their families and the federal government. It is the money invested in them from others that the colleges and universities are wasting. The billions that the families, students and the federal government invest in higher education is squandered when students fail to graduate.

In fact, colleges and universities graduating less than 20% of their classes in six-years cost the federal government $803,368,154 for the students who dropped out in 2009-10.¹  They cost their students and families much more financially as well as in their dreams and goals in life.

It seems amazing that schools that graduate an average of less than 40% of entering students can attract new enrollment at all. Moreover, it is hard to understand that four-year colleges and universities that graduate less than 20% of an entering class even over a span of six years can remain at all attractive to potential students and remain in business. But they seem to attract new students and can stay in business largely because, federal and for state assisted schools other public funds continue to support schools that cannot retain and graduate more than 20% of their students.

The public policy question raised then is should colleges that cannot retain and graduate less than 20% of their students receive public support at all? Should ones that cannot retain and graduate 30%, receive support? Forty percent?

It may be argued that the students not the schools receive support in the form of Pell Grants for example but if it were not for the certification of these schools to receive federal funds students could not receive the Grants at failing schools. If failing schools were denied public support, students would have to take their money elsewhere – to a college or university that has higher six-year graduation rate. Without federal funds, colleges with failing graduation rates would likely close or have to find ways to fund themselves. These would be private, public and for-profit schools. It is likely that we would all be better off if they did. Millions if not billions of dollars would be saved by the federal government that supported all the schools in the study. Public schools that could not survive could save states much needed money. And for-profits that closed would just penalize stock holders or owners who likely deserve to be penalized for supporting failing schools to make a profit off the system.

Some Immediate Observations

It is interesting to note that of the 43 schools that graduate 90% and more of an entering class, only three are public institutions:

University of Virginia

University of California – Los Angeles and

The College of William and Mary.

The other 40 are all private schools.

Of the top 43 institutions with an average 6-year graduation rate higher than 90%, most are “name brand schools” except for two small unbranded private colleges: Apex School of Theology (NC)  and Sinte Gleska University (SD).

Of the 43 lowest graduation schools, all with a graduation rate less than11%, 20 are private schools, 16 for-profit and 7 public institutions. One is a theologically-oriented school and one a tribal college.

No apparent patterns come out of the study related to explaining attrition such as size of school; public, private or for profit; costs; Carnegie level. What is apparent however is that every school in the study lost significant sums of money from attrition.  This is revenue that could have been captured in part to help during a time of fiscal uncertainty and contraction but was not.

Additional Consideration

An initial consideration of schools should be whether or not the students that they admit might actually realistically be successful in the institution. It needs to be assumed that schools accept only those students they believe have a strong likelihood of succeeding in their studies and the culture of the institution. To do otherwise would have to advance a cynical supposition that schools accept and enroll students they know may not succeed just for their tuition, fees and collateral revenue. If this were so, they are doing a poor job of it since so many students leave the schools.

Finally, the study raises concerns about the future financial well-being of those schools scoring a grade of D and certainly those scoring a grade of F. How they can maintain a budget that can produce academic viability and quality needs to be looked at.  When a college or university is losing 60 to 90% of its potential graduated and thus revenue, it needs to be a concern.

When schools are losing 80-90% of their student body every year, it should be questioned not just what they are doing wrong but if any students should ever enroll there? Considering that the odds of graduating at the average school is less than an even bet at 1401 of the four-year colleges and universities. Students and families are “flipping a coin” for the odds of getting to the diploma and the future the college has marketed.

It may be argued by some that even exposure to college education is a plus and thus students who do not graduate have bettered themselves through their attendance. This is a self-serving and fallacious argument. Students enroll and attend college in search of the degree that will open the doors to a job and better life. Leaving college without a degree is in most every case not a gain but a failure of the school and student. The student has lost an opportunity and the money paid to attend college while the school loses future revenue and the opportunity to complete its mission for that student.

And as this study shows, the loss of revenue from attrition for schools is significant and hurtful to the financial well-being of colleges and universities. The financial and personal losses to the students are equally significant.

Calculations

The formula used for calculating projected attrition loss was taken from Customer Service Factors and the Cost of Attrition: Revised and Expanded.⁴  92010) The formula is expressed as [(P x A ® SL) x T)]/2 with P representing a school’s Fall FTE population; A is the six-year annual attrition rate. So P x A yields SL, students lost then multiplied by T tuition. This is divided by 2 to account for the justifiable assumption that students drop after the first day and tuition is collected for the first semester from them but not the next. The formula does not account for uncollected tuition which will vary from school to school and add to the total loss.

Population in each school was reduced by 7% prior to the calculation for total revenue lost to take into account the findings of the IES report Persistence and Attainment of 2003-04 Beginning Postsecondary Students After 6 Years (2010)⁵

The attrition rate is a calculated annual average for the years 2003-4 through 2008-9. Using a 150% time to graduation rate provides the most accurate way of projecting each school’s losses from attrition for two reasons. First, it allows for a lenient calculation of graduation rates by not holding four-year colleges to a four year standard. This is in keeping with the accepted recognition that the average time to graduation is 6-plus years nationally. Second, the average provides for a more consistent attrition rate since the variation in rates from year to year for most all schools exists in a very small range of variance (+/- 2.36%). Thus what was the attrition rate from one year will be very close to the next and the use of a six year average mitigates variations.

It may be that in some schools the average graduation time is actually more than six years such as might be argued by some of the on-line schools such as the University of Phoenix On-Line but that information is internal and not reflected in the public numbers. Further, the calculations already incorporate a seven percent persistence rate as discussed earlier in the report.

Transfers Out

The issue of the number of students that transfer out of a particular school is not significant to this study since the objective is to look at the total number of students lost. If they are lost through transferring to another school, dropping out or even “stepping out with intentions to return at some date, they are still losses which in turn yield revenue losses to the university or college. 

Summary Conclusion and Offer

This is the introduction to a report on the graduation rates and how much the individual schools lose in attrition dollars as well. The amount of money lost to attrition is astounding and makes one wonder how any of the schools can ignore improving retention.  The total loss is over $16 BILLION in 2010 with average school losing $19.7 million.

If you want a complete copy of the study and report just ask for it at NealR@GreatServiceMatters.com. It is still in final draft form so any and all comments are welcome.

1.       Average Federal Pell Grant $3,646 times the number of students who dropped out in 2009-10.

2.       Jean Johnson and Jon Rochkind with Amber N. Ott and Samantha Dupont “With Their Whole Lives Ahead of Them, 2008, Public Agenda; Frederick M. Hess, Mark Scheider, Kevin Carey and Andrew P. Kelly “Diplomas and Dropouts: Which Colleges Actually Graduate Their Students (and Which Don’t) 2009, American Enterprise Institute; William G. Bowen, Matthew M. Chingos and Michael S. McPherson Crossing the Finish Line: Completing College at America’s Public Universities 2009, Princeton University Press; Alexandria Walton Radford, Lutz Berkner, Sara C. Wheeless and Bryan Shepherd, “Persistence and Attainment of 2003-04 beginning Postsecondary Students: After 6 Years”. 2010; IES/NCES.

3.       Neal Raisman, Customer Service Factors and the Power of Attrition: Revised and Updated, 2010; The Administrators Bookshelf.

4.       N. Raisman in The Business of Higher Education Volme 3: Markeitng and Consumer Issues by John C. Knapp and David J. Siegel, 2009;Praeger.

5.       Neal Raisman, Customer Service Factors and the Power of Attrition: Revised and Updated, 2010; The Administrators Bookshelf.

6.       Alexandria Walton Radford, Lutz Berkner, Sara C. Wheeless and Bryan Shepherd, “Persistence and Attainment of 2003-04 beginning Postsecondary Students: After 6 Years”. 2010; IES/NCES.

            Tables Available

1.     Colleges and Universities Alphabetically

2.     Colleges and Universities by Graduation Rates

3.     Colleges and Universities by Attrition Rates

4.     Colleges and Universities by Revenue Lost (most to least)

5.     Private Colleges by Revenue Lost (most to least)

6.     Public Colleges by Revenue lost (most to least)

7.     For-Profit Colleges and Universities (most to least)

8.     Colleges and Universities Graded


Get a DVD copy of a recent 90 minute  webinar Dr. Raisman did for the State of Arkansas Department of Higher Education on Academic Customer Service and How to Improve Retention Starting Tomorrow for only $250 at info@GreatServiceMattersMatters.com