What is Graduation Rate—And Does it Matter?


What is Graduation Rate—And Does it Matter?

On average, four year college graduates will outearn those with just a high school diploma by nearly one million dollars over the course of their lifetimes. Now, this number will vary a lot depending on your major, your school, and your abilities, but none of that changes a fundamental truth of the 21st century job market: going to college has a tremendous return on investment.

To capture that return, of course, you will need to do more than just get accepted into college--you will need to actually graduate!

Graduation rates are typically expressed as the percentage of students who graduate in four years or six years (To find these percentages, you can visit College Completion).

Nationally, fewer than half of students graduate in four years, and only 60% graduate in six years. Those numbers are… not great. However, graduation rate varies considerably from school to school. At certain highly selective schools, over 85% of students graduate in four years and over 90% of students graduate in six years. Among for-profit colleges, on the other hand, the average four year graduation rate is a shockingly low 14%.

Colleges with the highest four year graduation rates
(source: collegecompletion.com)

Although a higher graduation rate is preferrable, a less-than-stellar rate should not necessarily be a deal breaker. After all, a school’s graduation rate is--much like its perceived level of prestige--closely connected with its applicant pool. More selective schools have the luxury of selecting those students best positioned to graduate on time, while less selective schools admit more students at risk of dropping out. If you are academically prepared for college, however, your chances of getting a degree on time may be quite high regardless of the school’s overall graduation rate.

That being said, some schools undoubtedly do a better job at graduating students than others. Consider the case of CSU Stanislaus and the University of Central Oklahoma, two public universities. Although the two schools are comparably priced, comparably selective, and comparatively sized, CSU Stanislaus outperforms its expected graduation rate by 7%, while the University of Central Oklahoma underperforms its expected graduation rate by 13%. That’s a pretty big difference*.

Although it can be difficult to determine the exact cause of such disparities, it is common for overperforming schools to provide more student support services, from personalized advising to new student orientation programs to extensive on-campus housing options (students who live on campus graduate at a higher rate). Generous financial aid may also increase students’ chances of leaving with a degree.

Ultimately, you should consider graduation rate as one factor among many. If you feel like a given school is a perfect fit, your chances of graduating on time may be quite high, even if the overall graduation rate is pedestrian. Still, a lower-than-average graduation rate is a red flag that can help you narrow down your list.


*These numbers are taken from a recent analysis conducted by The New York Times and the Urban Institute’s Center on Education Data and Policy. The expected graduation rate is based on student characteristics such as “income, race, gender, age and test scores.”

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