College Dropouts Lost $3.8 Billion in Income in 2011

Posted February 27, 2012 by

College dropout t-shirtSixty-eight percent of those who dropped out of college in 2011 stated that they blamed financial circumstances and lack of time for dropping out. According to the Department of Education, only 50 percent of this year’s freshman will graduate within five years. As bad as that sounds, a staggering 59 percent of low-income students are expected to drop-out before earning their four-year degree and the disparity is growing between their rate and the 34 percent rate amongst high-income students.

Sheila Danzig, founder of said, “Students need to take advantage of what is available to them to ensure that they have the best chance at successful career. Many can test out of courses over a summer break and take less time to complete a degree.”

Dropouts cost themselves and society a great deal of money. While there is a high cost to stay in college today there is a higher cost to drop out. According to the American Institutes for Research, last year alone resulted in the following due to dropping out:

  • $3.8 billion in lost income;
  • $566 million in lost federal income taxes; and
  • $164 million in lost state income taxes.

One of the dropouts wrote: “I could say family obligations caused me to drop out. But the truth is that if I did not have to work to pay what the loans and scholarships did not cover I could have handled the family obligations fine.” Another stated: “I just could not keep up with my class work while working 30 hours a week.”

Drop-outs are very costly over the lifetime of the student. Looking at the American Institutes for Research numbers by state reveals that in California, for example, “college dropouts are losing nearly $15 billion in earnings over their work lives, costing the federal government more than $3 billion in lost income taxes.” In Texas and New York, dropouts “are losing more than $13 billion in earnings over their lifetime” and the government is losing “more than $2.5 billion in federal taxes.”

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