Public colleges and universities are remarkably poor at providing students and taxpayers transparent, objective measures of their worth even as tuition has grown three times the rate of inflation in the past three decades, according to a new report evaluating all 50 states.

Half of students in two-year state colleges do not graduate in every state but one. The dropout rate for four-year state colleges and universities is also approximately 50 percent in every state but the top three. If students manage to graduate, just 22 states can track whether they get a job in their field and what salaries they earn.

“With tuition growing, debt loads increasing, students questioning the marketplace value of their degrees, and large amounts of taxpayer dollars invested, the business community and the public are starting to ask questions of policymakers and higher education leaders,” said former U.S. Education Secretary Margaret Spellings, now president of the Institute for a Competitive Workforce at the U.S. Chamber of Commerce, which published the report.

Long-term higher education reform requires lawmakers and colleges to examine their spending patterns and measure the quality of the education they offer, the report says.

The third edition of “Leaders and Laggards: A State-by-State Report Card on Public Postsecondary Education” used six measures other reviewers often overlook to determine which states offer quality higher education, including student outcomes, accountability, efficiency, and innovation.

Abysmal Graduation Rates
State institutions should graduate students within six years and keep tuition costs low so poor students aren’t shut out, the report says.

Public four-year college graduation rates have remained relatively consistent over the past decade at 55 percent; while two-year college completion rates averaged 23 percent.

The report identified California, Florida, and Washington as the four-year institution leaders with dropout rates near 15 percent and completion rates exceeding 60 percent. Alaska, Idaho, Louisiana, and Nevada had retention and completion rates far below the national average.

Low Return on Taxpayer Investment
Publishing how much taxpayers spend for each degree produced is important to determine if the spending pays off, the report says. Cutting public funding off the top is not necessarily a good value for taxpayers, the authors say, since institutions almost invariably respond by raising tuition prices without lowering costs.

The national median cost per graduate at four-year institutions was just over $68,000, and $57,200 at two-year institutions.

Florida and Texas were the most efficient degree-granters, with costs per degree of less than $50,000. Alaska ranked worst efficient, at more than $142,000 per completed degree, followed by Vermont’s cost of over $100,000.

“Some state systems are doing a far better job of graduating students with the dollars they’re spending, and too few states are providing students, families, and taxpayers with the information they need to make good choices or hold higher education institutions accountable,” added Rick Hess, director of education studies for the American Enterprise Institute, which conducted research for the report.

Restructuring Policy for Efficiency
Outcomes-based funding is becoming a popular way to fund institutions based partly on outcomes such as degree completion rather than enrollment or course loads.

“States should move away from funding formulas that are based too heavily on student enrollment,” recommends Cheryl Oldham, ICW’s vice president. “Instead, states should require some portion of each institution’s base funding be tied to making sure students who enroll finish their degrees in a timely manner.”

Policymakers must analyze their own state carefully to develop appropriate next steps rather than trust a one-size-fits-all template, Oldham said.

The report says some states may want develop strong vocational certification to meet workforce needs. Improving retention rates at four-year institutions may be the priority elsewhere. All states should remove barriers that prevent students from transferring credits between institutions, it says.

“What we believe is needed everywhere, however, is for thoughtful reformers to move evaluation of colleges and universities from a focus on process and inputs to a focus on performance,” Oldham said.  “How many students earn credentials that signify real learning and have value in the labor force?  Which institutions are producing well-prepared graduates in cost-effective and creative ways?”

Vicki Alger, Ph.D. is a senior fellow at the Independent Women's Forum.