Chapter 15: Encourage Timely Degree Completion
A large majority of full-time students do not graduate from four-year degree programs on time. Similarly, a huge problem exists with two-year schools. The drop-out rate in general is a national scandal at all levels of academia, including doctoral-level programs. Huge amounts of resources are devoted to giving incomplete educations to students, who often incur large debts and, because they lack a degree, are unable to get a well paying job that will compensate them for their college expenses.
In part, of course, students drop out because they were inadequately prepared for college and, in some cases, should have never enrolled in the first place. But often perverse incentives keep students lingering around colleges for long periods, whether or not they obtain a degree. The fifth or sixth year student pays the same tuition money usually as the third or fourth year student, and very often earns the institution the same amount of state subsidy. Rather than pushing students to graduate in a timely manner, skewed incentives lead schools to encourage students to take five or six years to get a bachelor’s degree.
This problem is much smaller at private not-for-profit schools. In those institutions, the aforementioned perverse incentives are less present. High tuition costs provide a strong incentive for students to avoid the fifth or sixth year of study. Academic standards on average are higher. States and individual institutions wanting to lower dropout rates and time to completion will change their incentives. Indiana, for example, gives a cash bonus to universities whose students graduate in the standard four years. An alternative approach is to deny subsidy payments for any student with more than, say, 110 percent of the credit hours needed for graduation.
Again, a voucher system of government subsidization offers good ways to provide incentives for timely completion. Deny subsidies (vouchers) to students with more than 100 (or perhaps 110) percent of the hours required for graduation. Give a bonus payment to students graduating early—a payment smaller than the subsidy associated with the period of early graduation, but big enough to incentivize students to seek early graduation. Again, insist upon ease of course transfer between institutions, and encourage early enrollment, Advanced Placement, credit via the CLEP exam (perhaps paying the fee for students to take the test), for-profit accredited internet-based courses, etc.
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