24 Apr The Return on Investment of Student Success
By: Lynda McNair, Student Connections
In an effort to help students and families assess the return on investment (ROI) of higher education, the U.S. Department of Education provides various measures it considers indicative of student success on the College Scorecard website. These measures include:
- Graduation rate – percentage of full-time, first-time students who graduate within 150 percent of the expected time to completion.
- Salary after attending – median earnings of former students, who received federal financial aid for college, 10 years after leaving school.
- Students paying down their debt – share of students who have repaid at least one dollar of their principal loan balance three years after leaving school.
- Students who return after their first year – share of full-time, first-time students who returned to their institution after their freshman year.
The College Scorecard compares this data to national averages, allowing students and their families to get a sense of how successful other students have been in attending a particular institution.
The Department of Education also uses measures to assess an institution’s ability to participate in the federal financial aid programs, such as the three-year student loan cohort default rate and gainful employment data. While we don’t know what to expect from the Department over the next year, it appears that there is broad bipartisan support for additional risk-sharing measures that will further link student outcomes to ability to access federal aid for a particular institution.
With this increased emphasis on outcomes, schools are looking to invest in programs and services designed to help students along the pathway from application to graduation to student loan repayment. However, access to funding for these programs from state, federal or institutional resources is less likely given the current pressure to cut budgets and keep educational costs low.
I recommend that institutions consider calculating the cost of attrition to get a sense of the revenue implications of losing students before they graduate or complete their education goals.
Some questions to consider:
- How many students do we lose during the first term? During the first year?
- How many students do we lose overall?
- How much revenue is lost per student?
- What would happen if we lost 2 percent, 5 percent or 8 percent less students?
- What decrease in attrition is realistic for our institution?
You can find samples of cost-of-attrition formulas from organizations such as the National Academic Advising Association and Ruffalo Noel Levitz. These formulas can help you get a sense of the amount of money that may be available to fund programs that will help you to help your students succeed.