Saying that the United States is in the midst of a college dropout crisis is not an exaggeration.
Thirty percent of college students who enroll do not end up with a degree. A disproportionate number of dropouts are poor and middle class, and they often have nothing to show for their time in school but student loan debt.
Why Students Leave
There are several key factors that experts say contribute to the rising dropout rates:
Economy: Students leave college in higher numbers to pursue jobs when the job market is strong. Although many may plan to resume school in the future, most do not.
Socioeconomic standing: Nearly one third of low-income students drop out within the first two years for financial reasons, including insufficient housing and inadequate childcare.1
Student loan debt: The average student will take out more than $35,000 in student loans and 44 million Americans now owe an all-time high of $1.6 trillion in student debt.3,4
Cost/benefit ratio: Over half of people who graduated from college with student loans over the past 15 years believe the value of the diploma doesn’t outweigh the burden of debt, according to a 2019 survey by MorningConsult.5 Almost 65 percent of current undergraduates, even those without student loans, don’t think a college education is worth the cost.
Of course, statistics show that this perception is inaccurate:
- College graduates earn 80 percent more each week than high school graduates6
- Employment will grow 10 percent between 2016 and 2026 for jobs requiring a bachelor’s degree
Additionally, those with college degrees:
- Live longer by up to 10 years7
- Experience lower unemployment – 2.2 percent with a bachelor’s degree vs 4.1 percent with a high school diploma and 3.7 percent with some college but no degree
- Increase employment opportunities in their communities by attracting stronger employers to the area
Impact on Colleges and Universities
With over 4,000 colleges and universities to choose from, students pursuing higher education often look to college rank to determine the best fit. One of the most well-known rankings is by U.S. News and World Report, which ranks schools according to a variety of factors, many of which pertain directly to graduation rates.8
A higher dropout rate means lower graduation rate, which impacts future enrollment, tuition cost and even alumni contributions.
How a Financial Wellness Program Can Help
A FINRA study9 that examined the outcomes of mandated financial education for students ages 18 to 22 found that integrating financial literacy education into the curriculum led to:
- Increased graduation rates/lower dropout rates
- More student persistence to succeed
- Higher student credit scores
- Lower student loan delinquencies
College students are taking out student loans as a last resort and without essential information, including ways to finance college, how to avoid borrowing more than necessary, repayment options and more. According to a 2016 Sallie Mae study of college students10:
- 33 percent want information on how to pay for college
- 38 percent want help understanding personal finances like budgeting
- 48 percent want strategies for limiting student loans
The iGrad Financial Wellness Program gives students:
- In-depth knowledge of student loans
- Interactive budgeting tools
- The Student Loan Snapshot Tool, which helps students borrow smarter and compare repayment options
- A scholarship search tool
- An interactive financial aid “coach”
- Financial educational content including nearly 1500 articles and 250 videos
- A gamification hub with fun educational games and simulators