Colleges as 'Failure Factories'

November 3, 2008

The reality that only about 7 in 10 students earn degrees after four years in high school has been widely deplored, and it helped drive the Bush administration and Congress to embrace the No Child Left Behind law earlier this decade. But if that situation is seen as such a crisis, why aren't more people upset about the fact that graduation rates in higher education are quite a bit worse?

That's the fundamental question underlying a new paper by Mark S. Schneider, vice president for new educational initiatives at the American Institutes for Research who was, until a few weeks ago, commissioner of education statistics in the Bush administration's Department of Education.

The paper, "The Costs of Failure Factories in American Higher Education," posits that American colleges and universities have thus far largely gotten a free pass from politicians and policy makers despite the fact that "the low high school graduation rates that have long been decried as a failure of America's education system are mirrored in even lower college graduation rates," writes Schneider, a distinguished professor of political science at the State University of New York at Stony Brook.

Comparing American higher education unfavorably to its peers internationally as well as to U.S. high schools, he zeroes in, particularly, on about 408 four-year institutions that graduate fewer than one third of their students, and calculates the cost of those "failure factories," as he calls them, at about $770 million in federal grant aid and lost tuition payments, to the government and families. How much longer, he asks, can the country abide such poor performance?

A former colleague of Schneider's at the Education Department, Cliff Adelman, now a senior researcher at the Institute for Higher Education Policy, challenges his analysis on multiple fronts. Many of them revolve around the much-discussed flaws in the federal government's method of calculating graduation rates, which (unlike some foreign countries to which the U.S. appears to compare unfavorably) does not exclude students who start full time but switch to part time and does not include students who transferred to and graduated from another degree-granting university.

"Mark Schneider’s core case against U.S. higher education is that we don’t pass out enough pieces of paper to justify the money we spend as a proportion of GDP, and that, however miserable our high school graduation rates (let alone academic performance), our college graduation rates are worse -- certainly in comparison to those of other OECD countries," Adelman said in an e-mail response. "There are lots of people on both sides of the ideological aisle who love this take: some from their predilection for national self-flagellation, others from their predilection of hostility to the existing order. Mark falls in the latter group."

Schneider was not actively involved, in any public way, in the work of Margaret Spellings’s Commission on the Future of Higher Education, but some of his paper’s rhetoric and findings suggest that he is simpatico with many of its findings. Although “American higher education is held in high regard around the world,” Schneider writes, “all is not well.”

Even though the U.S. spends more of its gross domestic product on higher education than do other countries, and contains many of the world’s best universities, the country’s performance on measures of postsecondary attainment for its citizens, particularly young ones, is declining compared to other countries. Graduation rates provide further proof that “American higher education as a whole is failing to live up to its reputation as the world’s best,” he writes.

Schneider compares the median four-year graduation rates of American high schools (which, he acknowledges, have mandatory attendance policies that do not apply to colleges) with the six-year graduation rates at four-year colleges, and shows that across the board -- at selected percentiles, by races, and across differing types of institutions (public, private, for-profit) -- postsecondary institutions lag high schools.

He focuses particularly on those institutions with particularly low rates. Eighty-one colleges (24 for-profit, 55 private nonprofit, and two public) showed graduation rates of zero. More broadly, 9 percent of all full-time undergraduates are enrolled in colleges and universities that graduate fewer than a third of their students, and the figures are much higher for black students (nearly a third) and Hispanic students (about a quarter).

To assess the “cost” of these “failure factories” to society, Schneider calculates the amount of federal financial aid received by the 158,000 students who enrolled in a given year in the 408 institutions that graduated fewer than a third of their students. About 44 percent of those enrollees received federal grants averaging $2,405, and the average graduation rate at the institutions was 18 percent. He determines the total federal grants given to non-graduates from those institutions to be $120 million, and drops that figure to $90 million by assuming that 25 percent of them “eventually graduated from other institutions.” The report calculates the “lost tuition” paid by those students to be another $650 million.

Schneider acknowledges, in his conclusion and in footnotes to the report, that the low graduation rates of some colleges may be explained, if not justified, by the fact that colleges "let many students begin who do not have the skills and talent needed to graduate with the expectation that even if many fail, an open access system gives students opportunities to grow and succeed." Throw in evidence that college attendance, "even absent a degree, can lead to higher wages," Schneider writes, and "the risks of attending a college at which [students] have a low probability of success may be worthwhile."

But at the very least, he argues, students need to be much better informed about their chances of graduating, "so that students and their families can choose colleges at which they will have a higher likelihood of success."

Echoing the Spellings Commission's call for increased accountability for colleges, Schneider writes: "While recognizing the differences between high school and college graduation, if the failure of American high schools to graduate no more than three-quarters of their students is enough to warrant national attention in NCLB, is not the failure of America's postsecondary schools to graduate only half of their students worth equal attention? Is not the consistently low success rate of private for-profit schools worth even more attention?" He also holds out a warning in the form of a potential solution: "If a college has such a low graduation rate -- and, in the extreme, graduates not one student after six years -- should it continue to receive federal [student aid] money?"

Adelman, asked for comment on Schneider's paper, dissects it from several angles. He notes that the United States is faring increasingly poorly on international measures of postsecondary attainment, in large part, because it has been virtually alone among the countries to which it is frequently compared in seeing its college-age population increase, "fueled a good deal by immigrants who previously were schooled in other countries.... One doesn’t need more than 4th grade math to figure out what happens to a percentage when the denominator grows faster than the numerator." The international comparisons are also suspect, Adelman says, because different countries use different measures of what makes a graduate (including only those who graduate from the same institution, or those who transfer and then ultimately graduate from a comparable institution, etc.).

Perhaps more importantly, he says, "the way U.S. data are reported makes no distinction by age at the point of entrance to higher education.... It’s a common sense issue when judging institutional performance: Age at entrance is far more significant than race/ethnicity or SES because there are constitutive life conditions and behaviors associated with age that influence progress toward degrees. That cannot be said for other standard demographics."

Lastly, he notes (as he has argued elsewhere), the six-year timeline for college graduation rates makes little sense, given the frequency with which students -- especially those who are historically underrepresented but increasingly becoming the norm -- move in and out of college. "The 8.5 year graduation rate (from any institution) for [those who entered college in the 1990s, per a national study] was 68 percent. Call it two-out-of-three. That’s not as good as we should be doing (and the gaps by race/ethnicity and -- more so by socioeconomic status -- are notable), but how far does anyone think we can push that rate without passing out cheap degrees -- an issue neither Mark nor many others who bemoan 'low' graduation rates address at all?

"I estimate that, in a time of limited resources such as that we now face, we might get to the 75-76 percent range at the new 8-year marker. That increase translates into about 125,000 more degrees per year than we now grant. It’s doable, but will take a more sophisticated and positive-tone analysis than Mark offered to show us how."



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