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Quality of Peers and Ease of Transfer Are Key Factors in Graduation Rates

Report: “A New Measure of College Quality to Study the Effects of College Sector and Peers on Degree Attainment”

Authors: Jonathan Smith, policy research scientist at the College Board, and Kevin Stange, assistant professor of public policy at the University of Michigan at Ann Arbor

Organization: National Bureau of Economic Research

Summary: Recent high-school graduates who start their higher education at community colleges are far less likely to earn bachelor’s degrees within six years than are those who begin at four-year colleges, the researchers found. This paper examines why that is.

The authors concluded that nearly half of the gap in bachelor’s-degree attainment rates is explained by differences in the students’ peers. In general, students who attend open-access community colleges have lower academic-achievement levels than do students at four-year colleges.

While peers and resource constraints can drag down graduation rates for those starting out at community colleges, transfer barriers can be equally harmful, the researchers found. Those include credits that are lost when students move from two- to four-year colleges.

In the study that underlies the paper, the researchers examined three million recent high-school graduates, using PSAT scores as a measure of academic ability. (Many students who attend two-year colleges don’t take the SAT, so the PSAT is a more useful measure across sectors.) The data come from all PSAT takers from 2004 to 2006.

The researchers concluded, among other things, that:

  • Policies like free community college that place incentives on two-year over four-year enrollment may lower some students’ chances of earning a bachelor’s degree, depending on the quality of the college selected.
  • Having stronger peers is associated with higher attainment in both
    sectors, although it matters more at four-year colleges.
  • Community colleges shouldn’t be considered as a single alternative to four-year colleges but instead as a range of options, as demonstrated by the average PSAT of students who enroll.

Bottom Line: The growing number of students who opt to save money by starting their bachelor’s degrees at community colleges should consider the academic quality of the college as well as the effectiveness of its transfer policies. This paper provides a more-nuanced look at the quality of two-year colleges, which are often lumped together.

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