At its core, higher education seems linear. Colleges and universities work hard to recruit students. They study for four years before they graduate with their degree and join the workforce. But everyone working in the field knows: reality is not nearly that simple. High college attrition rates disrupt this linear process.
According to the National Student Clearinghouse Research Center, only 54% of the 2 million students who start college each fall actually graduate with their degrees. Worse, nearly 25% of first-year students drop out during or after their first year.
This attrition can hurt higher education institutions in a wide range of ways. Costs are both direct and indirect. But all of them have a direct impact on the current and future health of the institution. Let’s explore the true costs of high college attrition rates. We’ll look at how to begin prioritizing processes that offer solutions.
The Direct Costs of High College Attrition Rates
Let’s begin with the most obvious cost associated with high attrition rates. That is the loss of revenue incurred by the institution as a result of students dropping out. According to a report by the Educational Policy Institute, student dropouts cost colleges more than $16 billion in lost revenue every year. And, as the authors of the report point out, it’s not just the immediate tuition revenue that needs to be considered:
“Each student who walks out the door takes his or her tuition, fees, and other revenue the school might have been able to receive such as for housing, food, and bookstore purchases… Every student equates to a lifetime value for a school that is equal to the amount of money in immediate revenue (tuition etc. being brought in during the current semester) as well as potential future revenue in the form of future tuition fees plus potential alumni-related giving.”
Other reports estimate that colleges and universities spend up to one-third of their institutional costs on students who will never graduate from the institution. A student leaving your institution without receiving that degree does not just represent a failure in the college mission. It also disrupts the necessary revenue this student would provide the institution to educate others like them.
Overestimating Enrollment to Meet Recruitment Targets
The trickle-down effect of low retention and persistence is also worth mentioning in this scenario. University budget offices already don’t tend to estimate the full incoming class to stay on even for their second year. However, the effects of dropouts are underestimated.
For example, the national retention average is 25%. This may cause recruitment goals to admit 25% more students than needed for a full class. However, 6-year graduation rates for public colleges and universities are actually only hovering around 64%. This means another significant amount of students will drop out before graduation, causing revenue losses.
Current studies estimate a cost of just under $2,800 to recruit a college student. For example, consider a college with an average incoming class of around 1,000 students. They have an increase of 25% in recruitment. The school aims for another 250 registered students in its budget. Or, in dollar amounts, that’s $700,000 in additional recruitment costs. But once further attrition beyond the first year is calculated, those costs can rise even higher.
Of course, this math changes significantly depending on the individual institution and situation. But the general truth remains: high attrition rates mean more pressure to recruit bigger student classes. This includes all the associated marketing and admissions costs that come with that necessary goal.
Indirect Long-Term Costs of Attrition
Finally, don’t underestimate the indirect costs and negative effects that a high attrition rate can have on your institution’s long-term tangible and intangible value. Some of these examples include:
- A loss in academic reputation. Per the U.S. Department of Education, all accredited colleges and universities have to report and publish their retention and persistence numbers. High attrition rates will appear on Google searches for the institution, and push it down rankings like U.S. News and World Report.
- Wasted campus resources. Low enrollment can make it impossible for universities to forecast the necessary physical on-campus resources. These include housing or academic resources. Maintaining these resources can lead to additional costs without the associated revenue they typically bring.
- Added work for university staff. High attrition rates require extra work from almost all departments. This includes the faculty advisers providing additional help all the way to the exit interviews. Often, that work is done in addition to already existing work. The result is overworked and unmotivated employees.
Of course, these are just a few examples of how high attrition rates can hurt any institution. Finding strategic solutions, in turn, becomes vital to maintaining long-term financial and reputational health.
How To Start Solving the High College Attrition Rate Conundrum
Make no mistake: attrition is one of the core challenges higher education has to face today. Above all, that means prioritizing processes and solutions that can improve retention and persistence. This is vital from the moment students first step on campus for their postsecondary educational journey.
That begins with a thorough analysis of understanding why your retention and persistence rates are low, to begin with. The answers can vary widely, from the high cost of higher education to the lack of resources available to students struggling with the transition from high school.
However, the nuances can go far beyond these general reasons. For example, students may simply not be aware of all the options they have to finance their degree. Or they may not know about all the tutoring and academic resources available to them. Additionally, staff resources are likely limited. This results in long wait times that frustrate students before they can get the help they need.
AI-Enabled Technology Plays a Key Role
Technology like digital assistants is by no means the magic solution to all attrition problems. But it can play a significant role in that solution. AI-enabled digital assistants help students find resources and answers to their questions quickly and efficiently.
Of course, finding new solutions requires an initial resource and time investment. But, given the extensive direct and indirect costs of attrition, that investment has the potential to pay off multifold. With the right help solution in place for students, they can feel more supported. They stay supported and engaged from the moment they step on campus to the moment they step across the stage with their diploma during commencement. Talk to the team at AtlasRTX to learn more about how digital assistants can help your institution.
