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Applying to College? Check the Graduation Rate First

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College-bound high school students are juggling an enormous amount of data as they narrow down their list of colleges and make their final pick for their Bachelor’s Degree.

There’s the cost factor, the number of available scholarships, loans, and financial aid, as well as the location, the degree programs, the average student debt, the demographics of the student population, the amenities in the dorms. But there’s one other major factor that first-time students should be considering— the percentage of college students that graduate from a particular school within the normal time of four years.

A four-year college’s graduation rate for full-time students is an important indicator for student success that often flies under the radar of students, parents, and even high school guidance counselors, according to Rachelle Wolosoff, founder of College Search Expert, LLC.

“I don’t think completion rate is focused on enough. Period,” she said. “But the information is available out there.”

Students and parents should also be asking about graduation rates during tours of the campus, just as they would ask about how many graduates get jobs in their degree field, or what financial aid packages are available.

Wolosoff recommended all parents and students ask college representatives, “Why is your graduation rate what it is?”

“They should have a cohesive, logical answer,” she said, “and if it’s not, those, to me, are red flags.” 

High graduation rates often indicate more selective schools and a good infrastructure to support enrolled students during their college careers. Lower graduation rates can signal less funding and less individualized student attention.

“It’s very significant because you have opportunity costs if you stay in school longer. You could be earning money if you get out in four years,” Wolosoff said. “Those two years of staying in school, year five and year six, is costing you money, not only in tuition but also in the lost salary.”

Here’s what you should know about graduation rates.

Schools are Required to Report College Completion Rates

According to the the statistics, research, and evaluation arm of the US Department of Education, The National Center for Education Statistics (NCES), “the 1990 Student Right-to-Know Act requires postsecondary institutions to report the percentage of students who complete their program within 150% of the normal time for completion (e.g., within 6 years for students seeking a bachelor’s degree).”

Transfer students who leave without completing a degree are counted as non-completers in the calculation of these rates, regardless of whether students graduate at another institution. 

To find the six-year graduation rate for undergraduate students of a school you are considering, look at the financial aid website. There isn’t a set standard for where this information is, just that it is publically available for students to find, so you might have to do a little digging. 

Graduation Rates Often Differ Between Public and Private Schools

The schools with the highest graduation rates are typically private universities rather than state universities. 

Private institutions average a four-year graduation rate of 51% compared to public universities which average just 30%, according to The College Board citing data from the NCES. 21 percentage points isn’t a minor difference.

High school graduates may lean toward state schools for higher education because the tuition is less expensive, but it doesn’t always turn out to be the lowest cost option if they take longer than four years to graduate.

“State schools are under a lot of budget pressure,” Wolosoff said. “They don’t have enough courses or the courses fill up quickly. And in addition to that if you have a student who’s not very organized and doesn’t register at the right time, registers late for example, then they can be closed out very easily from a course because it’s filled up.”

Schools with High Graduation Rates Invest in Their Students

What’s the difference between a school with a very high graduation rate and a very low graduation rate? Often, the amount of money and time undergraduates get from their school. 

“They have the funding to hire those counselors and advisors who really make it a point of meeting with students, getting to know them, and advising them properly as to when to take courses, what path the students should take based upon their interests and needs, and to really be very hands-on with the students,” Wolosoff said. “I think that has to play a big, big role because then students won’t fall through the cracks.”

Sometimes, Graduation Rates Are Lower with Good Reason

Wolosoff always recommends asking a school about a lower graduation rate because the university may have a logical explanation, including longer degree programs or successful co-op programs that encourage students to spend a semester as a part-time student and work in their field. College graduates often cite the lack of real world experience in school as the biggest flaw in their higher education. 

Northeastern University in Boston, Massachusetts is widely considered to be a top university in the region. It’s retention rate—the number of freshman students who stick around for their sophomore year—is 97%. Their average salary for grads is nearly $110,000.

But their four-year graduation rate is 0%. That’s because Northeastern has one of the best experiential learning programs in the U.S. Students finish their degrees in five or six years all while working in their chosen field throughout, through the university’s top-notch co-op program that places them with employers around the world.

Northeastern boasts a job placement rate of 95%, with graduates earning a median salary of $54,400 two years post-graduation, significantly more than the national median of $26,913 per year.

Graduation Rates Are Just One Piece of the Research Puzzle

Just like the cost of tuition, the location of the school, the transfer rate, and college degree programs offered, graduation and dropout rates are just one factor to consider.

“Without the proper guidance, students end up going to four-year institutions that they maybe don’t belong in,” Wolosoff said. 

And while high school guidance counselors do what they can with limited time, the onus is on parents and students to do the work.

“There’s so much to look at when you are deciding a school to apply to,” she said. “It’s hard to know it all.”

Disclaimer: The opinions expressed by the interview subjects are not necessarily those of Earnest.

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Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.