Report: Institutions sharing risk by admitting at-risk students
- President Donald Trump and congressional Republicans have said institutions need to have more "skin in the game" around student outcomes, but according to a paper from the National Association of Student Financial Aid Administrators, institutions take on significant risks by when choosing to admit at-risk students.
- The authors argue that any risk-sharing policies that seek to punish institutions for negative student outcomes, rather than incentivize increased success, would offer an additional disincentive to take on these students, widening the access gap.
- A greater push for risk sharing, the authors said, could lead to increased private borrowing and more personal debt, as institutions — particularly community colleges — may choose to opt out of accepting federal financial aid altogether and students will be forced to find alternative ways to pay for their educations.
As the paper authors argue, community colleges and other open access institutions have missions to serve all of the community's students, regardless of their academic preparedness or financial situations. Institutions already spend quite a bit of money on students who do not complete. A 2018 Ruffalo Noel Levitz report put the median cost of recruiting a student at $2,357 for private institutions and $536 for public institutions, so non-completers take with them the amount invested to bring them to campus and add an additional need to invest more to fill their seats.
There's also a loss of dollars associated with attrition, whether in the form of withheld funds dispersed based on the number of students enrolled, or for institutions in the 35 states with performance-based funding models, a direct loss of revenue tied to low student outcomes.
But a 2012 report from the American Institutes for Research found one-third of all estimated expenditures at public two-year institutions, 13% at public four-year institutions and 9% at private four-year institutions were due to attrition. However, the report stated early attrition is a bigger problem for the nation's attainment goals, but imposes a lower hit on the institution, because of less time spent in seat. This may be the idea behind the often-discussed "weed out" classes at large institutions — if colleges and universities can identify early which students may not be successful long term, they can save tens of thousands of dollars down the road.
As the authors point out, rather than encouraging institutions to spend more time and money to guarantee the success of individual students, these policies create disincentives for enrollment. Lower-income students could be shut out, as institutions decide they cannot afford the risk that these learners have to drop out — and even top students from poor-performing high schools could be left out as administrators deem them not college ready.
Many institution leaders are recognizing the need to reach back and be involved with students from an earlier age to help make sure they're ready when they arrive on campus, and still others have worked to forge community partnerships to help close gaps for students who have small life expenses that may threaten to derail them.
But largely, many top institutions choose to avoid most of these students — just 3% of students at the nation's high-performing institutions are from low-income families. Instead, these students are often funneled into shorter certificate programs or they find homes at open access institutions, like community colleges or historically black institutions, many of which still manage to graduate more of low-income people than their elite peers despite being historically underfunded and lacking resources, data show.
- National Association of Student Financial Aid Administrators Issue Brief: Institutional Risk-Sharing
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