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College Dropouts

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Economics of a College Drop Out

Research Term Paper

By Eleazar Rangel

7/02/2013

South Texas College
Econ 2302
Professor Oscar Plaza

A. Introduction: Economics of a Dropout High cost of college and several other factors are causing the number of college dropouts to rise drastically. Understanding why this numbers are soaring is important. For example why has the rise of the cost of college nearly sextupled since 1985? Or why has the student loan debt held by Americans surpassed the $1 trillion mark? In addition to answering these questions, I will discuss the different arguments, opinions; facts regarding the toll college dropout play in this economy, and finally my final point regarding this college dropout syndrome.

B. The issue: Why are students dropping out of college? This is an important topic because what factors cause students to drop out of college? According to a study from Harvard University, only 56% of students who enter college or universities graduated within a six-year period (only 29% who enter a two-year program graduate within a three year span). A main factor, according to the Harvard study, is the rising cost of the college education. Since 1985 the amount of student loan debt has surpassed the $1trillion mark and cost of a college education has sextupled. The graph below, by the Federal Reserve Bank in New York, shows the difference in price changes since 1985.
As you can see in the graph college tuition and fees has drastically gone up compared to medical care, gasoline, and other consumer items. “In other words, while consumer prices have roughly doubled, tuition fees have sextupled.” According to the Article “Why do Students Drop Out of College” by Elizabeth Wistrom, approximately 35% of students who enter college will drop out during their first year. Why? Some students are just too lazy to apply themselves, others are not interested in a higher education, and some just enroll in college to please or satisfy their parents. In a study conducted by Bill and Melinda Gates Foundation in 2009, the main reason of dropouts is “they need money for survival”. Unlike in the past, students today have families, have to work, and though they might receive financial aid, it is not enough to live on. Paul Eaton, Director of Orientation of University of Louisiana at Lafayette, suggested that parents talk to their sons/daughters about the importance of time management, finances, and the academic expectations. Parents as well as the educational system needs to provide students with much financial assistance as possible because a student cannot survive in todays economy without a job and stress of a family or working.

C. Facts: The Dropout rates and Economy College dropouts cost the economy billions according to a study by the American Institutes for Research (AIR). College dropouts cost themselves and the economy a whopping $4.5 billion in lost earnings and federal and state income tax revenue each year! According to the study out of 1.1 million students who started college 500 thousand did not graduate within the six-year span. The report stated, “ Students lost approximately $3.8 billion in income, which could have generated $566 million in federal income tax revenue, in which states could have collected more than $164 million in state income taxes.” A growing number of people have acquired a mountain of debt but no degree, stated Yian Q. Maui in his article. Many educational experts are starting to argue that staring college and getting into deep debt without a clear plan is the recipe for disaster.
The Obama administration is working on addressing this issue by ensuring high school students are prepared for college. Men are more likely to dropout from college than women stated Ben Casselman in his article “ Why men are more likely to drop out”. Past research has showed that jobs are more gender-segregated in low education occupations the reason women are at a lower rate of dropping out is because “Women experience a much larger immediate economic penalty for not graduating from college than do men” the author stated. “Female drop outs simply face worse jobs than men do”. Less educated men are most likely to find high paying jobs in construction or manufacturing than uneducated woman. Meanwhile the decision for men to pass of college does have an affect in the long run. As the “gap” between men with and without a degree grows, educated men are enjoying more advances and growing opportunities. Those fast paying jobs are going away fast and uneducated men are staying unemployed thinking “what if” I have gone to college.

D. Analysis: What can be done to help students remain in college? Attending college as a full time student may be a factor associated with the completion of college, however being a full time student can be unrealistic for a student who is a parent and needs to work to supply and survive for their family. In recent studies college dropouts who participated in a study were asked possible solutions to the problem. Most believed the favorable solutions were to allow more part-time students to qualify for more financial assistance; offering more evening and weekend courses; cutting the cost of tuition and fees and textbooks; and providing childcare. The two least of the percentage of college dropout were more online courses and simplifying college applications.
As suggested by Paul Eaton parental involvement is a concern in order to help their children remain in college. Suggested by Paul Eaton that parents talk to their sons and daughters about time management, finances and academic expectations, as these are the three most often main concerns of students. Also the establishment of connection with organizations, activities and interaction with students on campus can help the student transition to college life and to build a support group. The main reason of first year student dropout is mainly cause a student needs to survive; a student cannot simply survive without holding down a job in today’s economy. When the stress of both work and school not mentioning raising family students will buckle under stress. This is why parents as well as educational system must help and provide students with as much financial assistance as possible. “ Higher education is not a luxury it’s an economic imperative that every family in America should be able to afford.” (Obama)
E. Conclusion: The college dropout toll plays a big part in our nations economy. Getting into college is the easy part; acquiring a diploma is not. Work, family, financial needs, proper education are some of the many factors that can prevent a person from attending or getting a diploma. I think though what we do no realize is that there is lots of help out there just not enough information for students. Several websites are out there to assist students with the challenges they might face. Education weather a man or woman is important in this economy and this nation. Students need to find the right college and not have the mentality that they need to enroll to college right after high school. They have to be smart about their decisions. “ Higher education is not a luxury it’s an economic imperative that every family in America should be able to afford.” (Obama)

References:
Ccrzadiewicz (2012,Feburary, 8) Why do students dropout of college? Retrieved from: www.brighthub.com/educational/college/articles
Oaks, Eilen (2012,April, 30) The college dropout crisis: The real price of education. Retrieved from: http://eportfolios.ithaca/edu/eoaks//collegeessays/college
College dropouts cost the economy billions (2012, August, 22) Retrieved from: www.good.is/posts/college-dropout
College Dropouts have Debt but no Degree (May 8, 2012) Retrieved from http://articles.washingtonpost.com/2012-05-28/business/35458439_1_college-dropout
Charles McKeniz The College Dropout Crisis: The Real Price of an Education (April 30, 2012) Retrieved from http://eportfolios.ithaca.edu/eoaks1/colegeeessays/collegedropout/
Study: Nearly Half of America’s College Students Drop Out Before Receiving A Degree by Travis Waldron (March 28, 2012) Retrieved from http://thinkprogress.org/education/2012/03/28/453632/half-college-students-drop-out/ Why Men Are Most Likely to Dropout by Ben Cassleman (February 22, 2013) Retrieved from http://blogs.wsj.com/economics/2013/02/22/why-men-are-more-likely-to-drop-out/ How to cure the college Dropout Syndrome (May 31, 2013) David LeonHardt. Retrieved from http://economix.blogs.nytimes.com/2013/05/31/how-to-cure-the-college-dropout-syndrome/?_r=0

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