Higher Education

College graduation rates should concern policymakers

May 13, 2014

Brandon Dutcher

In a recent interview on National Public Radio, Mike Neal, president of the Tulsa Chamber of Commerce, remarked that Oklahoma wastes “outrageous amounts of money on remediation for students that come out of high school with good grades but they’re not ready for higher education.”

Indeed, many students truly are not ready for higher education, and many will never graduate — though colleges are happy to take their money (and the taxpayers’ money) nonetheless. But is this a wise use of limited taxpayer resources?

Invoking a “commitment to transparency,” last year Oklahoma higher education chancellor Glen D. Johnson encouraged Oklahomans to learn more about colleges and universities by visiting College Results Online (CRO). “CRO is an interactive web tool designed to provide parents, students, counselors, and policymakers information about college graduation rates for nearly any four-year institution in the country,” said a press release from the state system of higher education.

Unfortunately, those graduation rates are nothing to celebrate:

Though the K-12 system certainly needs to do a better job preparing students for higher education, Oklahoma’s poor graduation rates are also “evidence of universities’ failures to adequately educate and engage their students,” OCPA noted in 2011.

Using econometric models, we have strong statistical evidence that additional state investment in higher education does not yield additional economic growth. … These findings are due in part to rampant inefficiencies and little in the way of results from how universities spend their money. Students are only modestly engaged, learn little, and frequently do not graduate. Economic benefits are difficult to realize when universities are not succeeding in widely enhancing human capital. … Our findings indicate that public fears and outcries over cuts in state appropriations for higher education are unfounded. State investment in higher education is not an engine for economic growth as conventional wisdom holds. Rather than continuing to blindly pass money from taxpayers to university bureaucracies, Oklahoma would be well suited to rethink its long-term economic growth strategy.

May is the month for college graduation ceremonies, and also the month for writing a state budget. Policymakers should ponder these graduation rates and ask themselves: Why are we continuing to subsidize some of these institutions? Perhaps funding “should be based on the number of graduates rather the number of attendees,” as economist Richard Vedder has suggested. Or perhaps “implicit state instructional subsidies should be sharply reduced for fifth- and sixth-year students.”

Disruptive innovation is all around us. The $10,000 bachelor’s degree is here to stay, for example. Harvard business professor Clayton Christensen says “15 years from now more than half of the universities will be in bankruptcy, including the state schools.” It’s time for Oklahoma’s political leaders to reconsider some things.