Thursday, May 06, 2010

Dropouts with Loans

In thinking some more about the Frontline episode, and reading through all the comments, it occurred to me that I had left out two major issues.

The first I've addressed before: the pyramid scheme of graduate education has produced the faculty to work in the for-profits. If the for-profits couldn't find faculty, they wouldn't be able to do what they do. They can, because the non-profits have failed to bring their training in line with their hiring. Seems to me a smart critter wrote something a while back about a system sowing the seeds of its own destruction; that seems to be the case here. It's why I worked at Proprietary U in the first place; the only gigs I could get at traditional colleges at the time were adjunct, and I needed to support myself. Now that the proprietaries are moving into graduate education, an accidental mechanism is starting to look like a perpetual motion machine. Any proposed reform that doesn't address the surfeit of qualified prospective faculty won't get the job done. Regional accreditors, I'm looking at youuuu........

The second I haven't really addressed before in any serious way, and I should have. It's dropouts with loans.

Graduates with loans often have issues repaying them, but at least we can say that they got something for their debt. A degree is no guarantee of a job, as plenty of recent grads found out in the Great Recession, but that isn't the fault of the college. And when things bounce back, a degree in hand will often count for something, and sometimes for quite a bit.

But a dropout with loans is just hosed. Student loans are tenacious and often quite high; carrying that debt load while working high-school-diploma jobs can't be easy. Most of the time, I'm still comfortable saying that a college degree is a good economic idea. But dropping out after a few semesters could easily leave someone much worse off financially than never attending in the first place.

That matters because such a large number of students who start degrees don't finish them. This isn't a problem confined to a few people who spent their time shrooming when they should have been studying (even conceding that some of those folks exist). And I'm not referring to the community college student who does a year at a cc and then transfers to a four-year school and graduates. (That student shows up in our numbers as attrition, which is kind of annoying.) I'm referring to the millions of students who get some semesters behind them but never get the degree.

From a student loan perspective, if you're going to drop out, the best time to drop out is your first semester. This may help explain why first semester students drop out at much higher rates than students who are farther along. (There are plenty of other factors, of course.) At least at that point you haven't lost nearly as much time and money as you would if you had stuck around for another year.

I'm not sure if there's a good public policy answer to this.

Presumably, in the name of harm reduction, public systems might try charging less for the earlier semesters and more for the later ones. In a sense, that happens now with students who do two years at a cc followed by two years at a state college or university. Or they could weight financial aid differently, with more scholarship or grant aid frontloaded and loans comprising larger percentages towards the end. (Interestingly, that's the opposite of the way Snooty Liberal Arts College did it. There, the senior year got a better aid package than the year before. The idea, I suspect, was to cultivate future alumni as future donors.) A former colleague once suggested that matriculating students put down "graduation deposits" of enough money that they actually feel it; when they graduate, they get it back. I doubt that we could actually get away with it, but to the extent that it incentivizes graduation, I could see the appeal. (To get around a conflict of interest, the college couldn't keep forfeited deposits; I imagine they'd revert to the state.)

Alternately, we could greatly reduce access to college in the first place. Highly selective colleges have much lower attrition rates, generally speaking, than do open-admissions ones; if you just screened out the higher-risk students in the first place, you could solve most of the dropout problem.

That argument makes a certain limited sense, until you imagine being told that you don't get to go to college anywhere, ever. Given the very shaky predictive validity of tests given in high school, I'd be wary of banning anyone for life. Some people who were screwups at 18 come back as motivated go-getters at 28, having been kicked around by life in the intervening years. I'd hate to take away their second chances. Second chances are inefficient by definition, but they serve a valid social purpose.

The downside of letting people have a chance to fail is that some of them will take you up on it. They'll walk away without credentials but with student loan payments. That's a real burden, and one that shouldn't be left out of these discussions.

Wise and worldly readers, do you have a better idea for the problem of dropouts with loans?