Tuesday, September 15, 2015

The Costs of Attrition

Hardly a day goes by without a college announcing it is cutting jobs, programs or spending. You’d think with all the brainpower at our colleges and
universities they would be able to come up with better solutions than lopping off people, sections and services to students. But they don’t seem to.  Why not?

For organizations preparing students and society for the future, they are still stuck in the past. The churn and burn focus on continually bringing new students through the front door, and then just watching them go out the back door is killing college enrollments. As well as individual and collective futures. And as they leave, the budgets, employment, class sections, services and the ability to meet the educational mission go down as tuition and fees go up.

In Ohio for example, the average non-graduation rate for all colleges and universities is about 48% over six years.  That means the average Ohio college or university loses almost half of its population every year.  The average state assisted four-year school has a slightly higher 53% six-year attrition rate. These are four-year or more selective schools. They choose who can be accepted; who they believe is capable of succeeding. Two year community college attrition rates are higher but they are non-selective and cost both the students and public less. They accept any student who wishes to try to succeed and that is going to open them up to as many of much greater attrition.

The cost of attrition to students who leave (most drop out rather than flunk out by the way) is extremely high for them, our society and culture. Most leave feeling as if they failed in some way even though 72% usually leave because of what has been identified as weak to poor academic customer service. Their educational and personal needs as customers or clients of the schools were not met. Many of the dropouts have also used up much of their college savings, financial aid and ability to obtain a college loan. As a result, many will not go back to school and become part of the State’s employment problem.

When students drop out and do not graduate, the schools lose their ability to meet their educational mission as well as their chance to assist people and our state to meet career and intellectual goals. And they lose billions of dollars a year; something neither individuals not taxpayers can afford.. 

It costs an average of about $6,000 to recruit, enroll and process each new student to a college or university. So, every student who leaves takes at least $12,000 out the door with him or her from day one of coming on campus. The dropping student takes the $6,000 average financial investment the school made to recruit and enroll him or her initially.  The lost student must also be replaced so that will cost another $6,000 recruitment and enrollment cost. And since not every drop out is replaced immediately, tuition revenue is also lost equal to the number of dropouts times tuition cost.

To demonstrate what I am writing about I look to one of the largest and successful schools in the country, Ohio State University. OSU loses an average of over $6.9 million a year from attrition. So, if OSU were to increase retention/graduation rates they could easily save many millions of dollars each year. This is money it could use to fund programs, new faculty, additional course sections, and equipment; whatever it needed and without the cuts and freezes it is currently incurring. The taxpayers would save millions of dollars the State needs for other programs. Moreover, since the total attrition loss to the State supported schools calculates to $115,678,232, focusing more on helping students meet their goal of graduation would have significant positive results for the State of Ohio, its citizens and economy.  And this is true not only for Ohio but every state.

This is revenue that colleges need to survive in to many cases. OSU is an outlier because of its 83% graduation rate but still they lose millions on attrition. Imaging what your school is losing. Better still calculate it. Take the total enrollment and multiply it by the attrition rate (1005 minus the graduation rate. Taka that number of students lost and multiply it by the tuition and see how many millions you are losing.

After you gasp at the revenue being lost, do something about it. Increase the retention rate.

To learn how to increase retention contact us at Great Service Matters and get a copy of our new bestseller From Admissions to Graduation by Dr. Neal Raisman by clicking here.
  Dr. Neal Raisman is the leading researcher and consultant on academic customer service, a proven way to increase retention and graduation rates. 
Contact him at 413.219.6939 or email nealr@GreatServiceMatters.com