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The Status of College Dropouts: Struggling With Debt and No Degree

Topics: Data & Research

College is often touted as a requirement for a high-paying job, or a ticket to the middle class, especially for low-income students. However, college is also growing increasingly unaffordable for everyone but the most well-to-do families.

College student emptying piggy bank

(Photo Credit: flashdriveinc/Flickr)

With students of all backgrounds unable to afford the rising cost of college on their own, the government is eager to assist by loaning them tens of thousands of dollars in order to pursue their degree.

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The problem? Many of these students don’t graduate college, and when they drop out they are often burdened with debt that could be difficult for them to repay.

Less than half of college students graduate within four years, with about a quarter of first-time degree seekers not finishing their degree within six years. Not measured in these graduation rates are part-time students, transfers, and adult students, who make up a large chunk of the student population and who also often take out loans to help with tuition costs.

Ironically one of the contributing factors to dropping out is debt. While one study found that a moderate amount of debt can actually help a student complete a degree, too much causes them to drop out. And apparently the threshold of too much debt is higher for women than for men, which is why men are more likely to drop out of college.

“While college debt was associated with higher rates of graduation, there came a point when adding more debt no longer increased the probability of graduation.

For men, debt started having diminishing returns on the probability of graduation at a lower level ($12,711) than for women ($14,682).”

Another risk factor for dropout is attending a for-profit university, which have higher dropout rates as well as higher numbers of students who default on their loans. As reported in The Washington Post:

“A study by the Education Sector found that more than half of students who take out loans to enroll in four-year for-profit colleges never finish. At traditional nonprofit and public schools, the percentage of students with loans who started college in 2003 and dropped out within six years is about 20 percent.”

What happens to college dropouts? One recent study surprisingly notes that even college dropouts can benefit from their educational experiences, earning on average $8,000 more per year than high school graduates. However their return on investment is considerably lower than those who achieve a bachelor’s degree and lower still than those who successfully achieve an associate degree.

The study did not dive into what the consequences of debt are on these graduates, nor did they track what types of jobs college dropouts were able to find. Many of these prior students do have debt, and an extra $8,000 a year may not go very far when students have to spend it on paying off their student loans.

Clearly one of the best ways to graduate on time would be to not have financial pressures to worry about. This is likely one of the reasons why students from high-income families traditionally do better in college. However, there are some other ways students can better prepare for their education. They can start by knowing ahead of time what they would like to do and what major would be a good fit for them. They can choose a college that is affordable, or perhaps opt for a community college either to earn a two-year degree or eventually transfer to a four-year college (studies have shown that some students do much better at community colleges). And they can take advantage of grants, scholarships and federal aid dollars available to them.

It can be counterproductive to push students into college if they do not feel academically or financially prepared, as it may end up just leaving them with a big pile of debt and no degree. There are many tools available online or in an academic counselor’s office that can help students sort through their options, as well as determine a major that may be a good fit for them. The more research a student does about what they would like to do and what they are good at, the more likely they are to succeed. And this knowledge will benefit them even if they never end up completing their college education.

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Crissa Cook
Crissa Cook

Most students from middle or low-income backgrounds are now taking up loans worth thousands of dollars to pursue college degrees as it has become highly unaffordable for them. As a result they get stuck with a heavy debt after their graduation, which they have to repay till the retirement.

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