Is a Big Dropout Rate More or Less Monetarily Profitable for Universities? (credit, fees)

[LauraC]

This is a business question so I posted it here rather than in the education forum where they probably wouldn't have an answer.

I'm curious and I've never read anything about this. Is it more or less MONETARILY profitable for well-known universities or colleges to have a lot of dropouts? What I'm wondering is if they admit a lot of freshmen who are likely not to make it to graduation, does the school make more money than if they admit freshmen who are likely to make it to graduation (less turnover) or is it a wash for the school, monetarily-speaking?

I included "well-known" so you would know I'm talking about schools who have no trouble getting freshmen-level or transfer students to apply to them.

In other words, does lowering academic standards for some or all incoming freshmen (or whatever they are called these days) actually pay off for the big universities/colleges, monetarily, in the long run due to a larger drop out rate?

Throughout the decades, I have never read anything about a university/college having a monetary motive for their academic admissions policy criteria. I'm post-retirement age, no kids, no friends or relatives with kids in college or about to start college. Just curious.

[TimAZ]

The retention rate is baked in the cake so to speak and they all have historical data to predict how many will stay in the system. Tuition and fees are non refundable after a few days so the drop outs are usually SOL. At top schools there are plenty of replacements waiting in line.

[doodlemagic]

I don't know how college attendance rates are all through the country but at many Illinois Universitites they are closing down dorms, talking about having to shut down altogether. I think U of I is the only school doing well enrollment wise. Eastern Illinois University was talking about shutting down, I hear several dorms are boarded up because they don't have students to fill them. I imagine many schools are happy to have anyone who will pay them regardless of how long they stay

[chet everett]

Schools do not want students to drop out. It is NOT easy to find "replacement' students. In fact even though schools don't generally refund fees or tuition the way the budgetary concerns work for both publicly supported schools and private institutions they NEED to run the facilities pretty close to capacity or they end up with deficits -- that is big reason why all kinds of schools have massively upgraded dorms, dining facilities, and entertainment options -- the revenue from these sort of "optional" expenses helps to cover the huge costs of paying for staff / benefits / operations.


Even less than demanding schools routinely reject kids who have signs of not being "in for the long haul" -- they take into account how many times the students contact the school via web / social media / traditional mail / in-person visits / telephone contact. That is part of how they judge the commitment of the student. The analysis of prior grades often includes using data from computerized statistics of which students seem to be at risk of not being able to handle the level of work needed to graduate -- tell tale signs like a mismatch between higher standardized test scores and poor grades can be flagged as a student that does not work up to potential...


Schools that see a large number of students drop out are severely penalized not just by the rankings done by magazines (which ultimately translate into fewer applicants...) but also by governing bodies and accreditation groups. Some schools take a proactive approach -- when they admit kids who are determined to be at risk of non-graduation they have specially designed sequence of courses and support to prevent drop-outs.