Why Do Private Schools Have Higher Graduation Rates?

By Richard Vedder

It is well known that the graduation rates of students from private colleges and universities is significantly higher than is the case at public institutions. Of course, a huge part of the reason is that the private schools, on average, get better students --higher SAT scores, higher rank in their high school class, etc. Yet even when these factors are controlled for, usually researchers find that graduation rates are still higher at private institutions?

Why? My own hunch is that the differences between "public" and "private" universities with respect to the way they operate and do business are relatively small. I have not found a huge difference between the private schools with which I have been associated (as a student and parent, Northwestern, as a professor, Claremont McKenna College and Washington University in St. Louis) and the public ones (University of Illinois, University of Colorado, Ohio University), except in one vital respect --personal attention to student needs.

On average, in schools which are more tuition-intensive in terms of revenue sources, there is a sense that the student is indeed a paying customer who needs to be treated with respect, kindness, and even affection. I sense that, on average, advising students is taken a bit more seriously at private schools, especially liberal arts colleges. Many students get lost between the cracks, and some personal attention from a relatively senior faculty member can often get them back on track. I am working more closely than usual with a student who has failed to earn his degree, helping him through the hoops of completing his academic work in a satisfactory fashion. But it takes a bit of time and effort on my part, and many professors don't want to make the effort --publishing articles is much more rewarding in a pecuniary and career sense. When I visit a good liberal arts college (Kenyon College comes immediately to mind), I feel that the faculty have a greater sense that their duties include attentiveness to student needs, come of which extend beyond the narrow classroom experience.

Jonathan Leirer and I are playing around with statistical models trying to explain variations in graduation rates. We do find, other things equal, that student performance varies positively with tuition levels, consistent with the discussion above. Clearly, as Bowen, Chingos and McPherson argue at length in their new book, socioeconomic status matters also in any discussion of graduation rates --the more Pell Grant oriented a school is, the lower the graduation rate (especially the four year rate). But I have seen some results that hint that high amounts of research activity, other things equal, may lower graduation rates, as research activity crowds out the advising of students.

The incentive systems are all out of whack. Publication in obscure journals on topics of tangential interest to the human race that few even bother to read can reap significant rewards --worth thousands of dollars per article. Time spent helping a struggling undergraduate yields nothing in the way of rewards-- or even less, denial of tenure for example, if student concern leads to publication rates below the accepted minimum.

Here would be an interesting proposition, the kind Jeff Sandefer might enact at his Acton School of Business. Set up a large bonus pool that goes to faculty members in each department if, and only if, the department raises the three year moving average of the graduation rate over time upward, subject to the constraint that the department's accumulative grade point average cannot move up at all (indeed, a second bonus should be awarded if higher graduation rates are achieved with falling average grades). This, plus coupling salary increases more to teaching performance and less to research, could lead to improved student outcomes. Will it happen? Not without some fundamental change in the way the academic game is played in the U.S.