Why Are Students Dropping Out of College?
By Joe Messinger, CFP®
June 14, 2019
This fact may shock you…only 69% of students entering four-year public colleges graduate in eight years. (Yes, you read that right EIGHT years.) If you include two-year public colleges, the completion rate drops to 60.4%. For every 10 students entering postsecondary study, four are leaving school without finishing (or taking more than eight years to finish). How can we make sure students are financially prepared for college?
Why are students dropping out?
The reasons students drop out can vary and include:
- Not academically prepared
- Simply not happy or too stressed out
- Not sure they are doing the right thing or made poor choices in college or major
- Medical or family reasons
The primary reason that students drop out of college is financial. “The number one reason students give for leaving school is the fact that they had to work and go to school at the same time and, despite their best efforts, the stress of trying to do both eventually took its toll.”
Students are choosing to go to colleges they can’t afford. When they have to work and attend college at the same time, they face the risk of losing financial aid due to bad grades or lack of volunteer hours or other scholarship criteria.
When a student drops out of college, they have to start repaying their student loans.
After a grace period of six months, the monthly student loan payments will begin. Students might consider attending college part-time. If a student attends school at least half-time, they do not have to start paying off their loans right away. If part-time is not an option, then they will be faced with monthly loan payments.
The best defense is a good offense.
The best way to prevent dropping out due to being unable to pay for college is to make smart decisions BEFORE going to college. Successfully completing college requires good planning before the college is even selected.
- Parents need to plan out all four years down to the penny. Don’t just hope that it will all work out. Understand where each dollar is coming from and talk with your students about what the financial picture looks like.
- Remember to keep cash flow planning in the picture. Kids aren’t free when they live at home. Use those unused funds in the amount of money you have for college.
- Use student loans wisely. Very few students can afford college without loans. Keep them small…ideally less than the anticipated first year’s salary.
- Save as much as you can. A 529 college savings plan is a super tool.
- Take advantage of tax credits when you can.
- Choose a college with the best financial aid package for you. Don’t be fooled into including loans or work study in the “aid.” What actual FREE money is the student receiving?
- Consider work study knowing all the pros and cons.
- Understand the Return on Investment (ROI). Don’t go to a college with a huge price tag if the plan is to study elementary education. We need teachers, but we all know their starting salaries are very low. You can get an excellent education and be a success at a college that is more affordable. (Perhaps a teacher grant or teacher loan forgiveness is a good idea?)
With a smart financial game plan, a student can make a well-educated choice in their college. They’ll be on the most stable financial footing in order to complete college.