Money Matters

Students are more likely to graduate from colleges that cost more and spend more than others, study finds.

July 12, 2017
 

Students are more likely to graduate from colleges that are more expensive and have larger budgets, a new study out of Oregon State University shows.

Researchers examined the demographic and graduation data of more than 400 four-year colleges and universities from both the 2007-08 and 2014-15 academic years, relying on the federal Integrated Postsecondary Education Data System.

The focus was on institutions that generally accepted a large majority of their applicants -- 80 percent -- known as broadly accessible institutions. These colleges tend to enroll a higher number of Latino students in particular, some of whom come from impoverished and inadequate educational backgrounds. Thus, it is unsurprising that their graduation rates would already be lower, the study states.

The average six-year graduation rate at these institutions hovers around 40 percent, compared to 56 percent at more selective colleges.

Gloria Crisp, an associate professor in the Oregon State College of Education; Erin Doran of Iowa State University; and Nicole Alia Salis Reyes from the University of Hawaii at Mānoa helped write the report, recently published in the journal Research in Higher Education.

The professors found that when institutions charged higher tuition rates and academic-related fees than other institutions, and their instructional and student-related expenses were larger than those at other institutions, students had a better chance of graduating.

“There are a lot of variables that factor into whether a student will graduate, but many of them are economic,” Crisp said in a statement. “That tells us that the way to raise graduation rates is through support, both of the student and to the institution.”

The study criticizes the funding mechanisms set up in many states -- at least 32 of them -- where money hinges on a college's completion numbers. This is measured by graduation rates, student retention levels or the number of credit hours completed.

“Present findings highlight the importance of properly accounting for enrollment intensity, socioeconomic status and the racial/ethnic composition of an institution’s student body in considering performance-based funding policies for postsecondary institutions. We expect that the current direction of state policies that are increasingly attaching funding to graduation rates and related measures will have unintended consequences … such as encouraging institutions to increase their admissions requirements, effectively reducing college access for underserved groups,” the study reads.

Other findings:

  • As more women enrolled, the graduation rate went up, but this was a trend only more recently, in the 2014-15 data.
  • More of the broadly accessible institutions than other colleges served minority students, black students and Latino students.
  • Where an institution was located -- whether it be urban, suburban or rural -- did not influence graduation rates.

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