Finding 2. At the Average School, Loan-Holding Students Experience Poor Wage Outcomes

Finding 2. At the Average School, Loan-Holding Students Experience Poor Wage Outcomes

  • Only 80 public institutions graduate more than two-thirds of the first-time, full time students who enter their school.

One of the more astounding findings in this dataset is the reality that only 80 out of 535 four-year public institutions-or 15.0% of these schools-graduate more than two-thirds of their first-time, full-time students each year. That means that if the remaining 455 schools were a part of our country’s K-12 system, they would be considered “dropout factories” under the recent reauthorization of the Elementary and Secondary Education Act. 18 Specifically, the federal government has recognized that if a high school fails to graduate more than two-thirds of their students (a status which describes approximately 5% of all high schools in the U.S.) they are required to put in place some sort of support plan to improve their outcomes or face possible closure. 19 However, no such comparable scrutiny or intervention exists for any of our colleges and universities, no matter how inadequate their outcomes, allowing students to take out loans and receive federally-subsidized grants to attend schools with consistently puny graduation rates year after year.

And while low graduation rates are a problem on their own, what is even more disconcerting is the fact that a number of these institutions have particularly damaging outcomes for students coming from low- and moderate-income families. Specifically, there are 106 dropout factories that take both an above-average share of Pell students (more than 38.2%) and charge students coming from families earning $0-$48,000/year more than the average net price ($10,482). Far too many Pell students are attending these institutions with help from taxpayers but are leaving with more debt to pay and no diploma to show for it.

There are notable exceptions.

It should be noted that there are a handful of public institutions that manage to graduate large proportions of their students, even when serving a high proportion of Pell recipients on campus. Specifically, there are five schools-the majority of which are notably within the University of California system-that have a Pell population greater than the average (38.2%) and still manage to graduate more than two-thirds of their first-time, full-time students (i.e. non-dropout factories), dispelling the myth that it is impossible to achieve high outcomes with a student population that may require more support.

Given the increased focus on the rising costs of college and ballooning student debt, another important indicator of value is what percentage of an institution’s student body is able to earn a decent salary and make payments on their loans post-enrollment. This is particularly important given the evidence that most students are choosing to go to college first and foremost to better their economic prospects by gaining expanded employment opportunities and access to higher wages. 20 Luckily, the College Scorecard for the first time allows students to take post-college wage factors into consideration when selecting a school.

At the average four-year public institution, many students aren’t earning more than a high school graduate six years after enrollment.

The anticipated annual earnings for the average high school graduate is $25,000-making it a worthwhile metric to analyze whether a college has improved the earning potential of its student body, especially those who took out student loans as an investment in what they hoped would be higher future wages. 21 The College Scorecard measures what percentage of an institution’s students who received Title IV financial aid to finance their education are earning more than $25,000 six years after enrollment.

  • At the average four-year public college and university, only online payday OH 63.5% of students who took out loans earned in excess of $25,000 six years after enrolling. This figure omits those who are enrolled in graduate school as full-time students.

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