Why do some schools graduate more students than others?

By Richard Vedder and Matthew Denhart

We have been looking at variations in the four year graduation rate of well over 500 schools, trying to explain variations between them. Why do some schools graduate 80 percent of their students or more in four years --while others graduate just 30 percent? As in many other things, conventional wisdom is often just plain wrong.

MORE GENEROUS FINANCIAL AID INCREASES GRADUATION RATES

Conventional wisdom is that economic worries are a big cause of college dropping out, and when schools up financial aid to students, it should improve the prospects of graduation. Our results show the opposite --increases in financial aid are negatively related to graduation rates --in a statistically significant way. More financial aid means lower costs to students, incentivizing them to stick around college longer. So much for conventional wisdom. To be sure, there are some measurement and other issues, so the findings are not absolutely iron-clad, but they are still revealing.

SAT SCORES ARE NOT NEEDED, BECAUSE THEY ARE A POOR INDICATOR OF COLLEGE PERFORMANCE

Total balderdash. The relationship between SAT scores and graduation rates is extremely strong --a 100 point rise in the composite SAT (verbal and math) increases the portion getting their degree by nearly 10 percentage points --say from 40 to 50 percent. Which makes us shake our heads as we hear about schools dropping the SAT exam as a requirement for admission.

PRIVATE SCHOOLS HAVE HIGHER GRADUATION RATES BECAUSE THEY GET BETTER STUDENTS

While private schools do get better students (as measured by SAT scores), and that does improve graduation rates, they also have graduation rates even higher than one would predict after controlling for SAT scores, the racial composition of the student body, the percentage of students receiving financial aid, the proportion of faculty with tenure, and other factors. Why? We are not certain but the public-private differential, even after controlling for these other factors, is still huge. It is worthy of further investigation.

HAVING MORE TENURE TRACK FACULTY MEANS BETTER GRADUATION RATES

Here is one where we get statistical results consistent with conventional wisdom. A large portion of adjunct, non-tenured faculty is correlated with lower graduation rates, other factors equal. Having more people with a long term institutional commitment does seem to make a difference in terms of student outcomes, consistent with several other studies.

HISTORICALLY BLACK COLLEGES HAVE LOW GRADUATION RATES

After controlling for other factors (e.g., SAT scores, financial aid), we find graduation rates are much HIGHER in historically black institutions. There are multiple interpretations that can be placed on that. A negative one is that historically black schools have lower standards of rigor and some students who would drop out of other schools persist in the black institutions. A positive interpretation is that African-American students have fewer frustrations, face less discrimination, and feel less neglected at the black institutions, stimulating performance (by the same token, students grouped by religious affiliation might also be expected to do well, although we have not tested that hypothesis).

Our work is not the last word, but it is based on vast data and a reasonable statistical model. It does make us urge caution in accepting everything you have been told about the determinants of dropping out.

Richard Vedder directs the Center for College Affordability and Productivity, is a Visiting Scholar at the American Enterprise Institute and teaches at Ohio University. Matthew Denhart is an honors political science student at Ohio University.