Recent studies on the value of a college education have focused almost primarily on its benefits for students. But new research suggests that finishing college can provide a much-needed boost to states as well. A report released today from the American Institutes for Research finds that students who do not complete college could cost states billions in lost income taxes, which could prove crucial as cash-strapped states are facing increasingly steep cutbacks.
AIR’s report, The High Cost of Low Graduation Rates: Taxpayers Lose Millions, points out that only slightly more than half of students who attend four-year universities graduate within six years. This could amount to an irrevocable loss in future earnings, say the authors.
The report found that one cohort of full-time students who started college in 2002 but didn’t graduate six years later would lose an estimated $3.8 billion in potential earnings.
“This is a permanent loss,” said Mark Schneider, a co-author of the report, in a conference call with reporters. “They don’t make this up. They lose this every year.”
Over a lifetime, the report says, the cumulative losses for students who do not complete college could amount to $158 billion.
For states, says Schneider, a far more salient statistic should be the report’s findings about estimated loss in revenue.
States spend an estimated $1 billion each year in appropriations for students who eventually drop out, Schneider said.
