Returns to bachelor’s degree completion among stopouts

https://doi.org/10.1016/j.econedurev.2021.102218Get rights and content

Abstract

The recent returns to bachelor’s degree completion for those with interrupted college enrollment (stopouts) is unknown. This information is especially important since re-enrollment programs are being sold as a ‘win-win’ for both schools and students. This paper contributes to the literature by using the National Longitudinal Study of Youth 1997 cohort with a fixed-effects difference-in-differences regression to estimate recent labor market benefits for stopouts. Re-enrolling and completing a bachelor’s degree leads to a significant increase in employment of 9.8 percentage points and a significant increase in real (2014) annual income of $5,392.

Introduction

There is a large literature that estimates returns to education; however, most focuses on traditional students who remain continuously enrolled. This ignores the fact that many students have interrupted enrollment, or stopout, while in college. For example, Pretlow, Jackson, and Bryan (2020) report that of the first-time students in the Beginning Postsecondary Study of 2011–2012 entering cohort (BPS:12/17), 38.8 percent stopped out at some point. This paper contributes to the literature by estimating recent returns to bachelor’s degree completion for stopouts.

I show there are economically meaningful benefits to bachelor’s degree completion for stopouts using a fixed-effects difference-in- differences regression and data from the National Longitudinal Study of Youth 1997 cohort (NLSY97). Students who re-enroll and complete a bachelor’s degree are 9.8 percentage points more likely to be employed, work 2.20 more weeks per quarter, and earn $5392 more in real (2014 dollars) annual income, on average. Allowing the degree to impact both the level and growth of income leads to a significant initial increase of $4294 and a significant annual income growth of $1121.

This is not the first paper to examine labor market returns for those with interrupted enrollment. Literature using less recent data has found that older adults who return for an associate degree or non-degree program at a community college experience similar labor market benefits as those without interrupted enrollment (Leigh & Gill, 1997). Light (1995a) uses the National Longitudinal Study of Youth 1979 cohort (NLSY79) and a model that allows wage paths to behave differently before and after re-enrolling to find that there are meaningful gains for those who re-enroll in school. However, the gains are smaller than for those who are continuously enrolled. While Light (1995a) focuses on white men, Monks (1997) expands the sample to include women and minoritized populations in the NLSY79 and focuses on those with at least 12 years of education but no more than 16 years of education. He finds that the interaction between age and college completion is significant and negative, but the main effect is positive and large enough such that those who complete before age 32 have positive benefits, while those who complete later do not.

Without knowing the recent economic benefits to bachelor’s degree completion for students who stopout during college, it is not possible to compare the costs and benefits of programs and policies aimed at inducing students to re-enroll and complete a bachelor’s degree. Colleges and universities are facing enrollment challenges, as the supply of potential students coming straight from high school is expected to shrink due to lower birth rates (Zahneis, 2021). This could greatly impact the financial situation of many institutions as decreasing state funding has led to an increased reliance on tuition (Webber, 2017). Companies that offer re-enrollment services are telling colleges and universities that it is cheaper to increase enrollment through getting students to return rather than recruiting new ones (for example, see InsideTrack (2021)). Thus, it is important for colleges and universities to think about how to best allocate their recruitment and retention budgets.

Numerous private sector firms exist to help create and implement re-engagement campaigns. For example, the Bill and Melinda Gates Foundation is providing grant support for the City University of New York system to receive free services from ReUp Education, a company that focuses on re-enrollment (Schwartz, 2019). InsideTrack advertises that the average cost per re-enrollment is only $216 (InsideTrack, 2021). EducationDynamics will help colleges and universities “develop a stopout contact strategy” and “scale your stopout campaign” (Gilmore, 2021).

Education companies are not the only ones interested in re- enrollment programs. The National Governors Association has compiled a brief summarizing best practices to help students re-enroll and complete a credential or degree (Alfuth, 2021). For example, Wayne State University has implemented the ‘Warrior Way Back’ program that forgives up to $1500 in debt over three semesters if students return to school (Medley & Rosales, 2020).2 Work is underway to expand the program both regionally and nationally (Medley & Rosales, 2020). In addition to debt forgiveness, some states have targeted those very close to completion such as with Mississippi’s Complete 2 Compete Initiative, some states have focused on streamlining the process to re-enroll such as Indiana’s Next Level Jobs Initiative, and some states focus on personalized assistance to re-enroll such as Tennessee Reconnect (Alfuth, 2021). The Lumina Foundation has also awarded nearly $4 million to Indiana, Maine, Minnesota, Oklahoma, and Washington for adult promise programs, which provides tuition free college for adult students (Lumina Foundation, 2017). Aside from concerns over workforce readiness, government may be interested in supporting re-enrollment campaigns to address concerns surrounding student loan default, which is more common among those who left without completing a degree (Dynarksi, 2016). It is important to know if students are benefiting enough to warrant these types of interventions.

The rest of the paper is organized as follows. Section 2 provides more information about who is likely to stopout and what we know about returns for stopouts. Section 3 describes the National Longitudinal Study of Youth 1997 data and provides descriptive statistics. Section 4 discusses the fixed-effects difference-in-differences regressions. Section 5 provides the results and discussion of the results. Section 6 summarizes and concludes.

Section snippets

Background on stopouts

There are numerous reasons as to why a student may decide to stopout of college.3 Credit constraints may exist due to the incomplete market for human capital (Becker, 1964, Friedman, 1962, Schultz, 1961). As a result of being unable to borrow against future earnings, students may need to take time off

Data and descriptive statistics

The data come from the NLSY97. The NLSY97 contains individuals who were born between 1980 and 1984 and there is yearly survey data from 1997 to 2011. After the 2011 round of data collection, the survey was asked every other year, meaning data is available in 2013, 2015 and 2017. However, many variables are filled in retrospectively including monthly college enrollment, degree completion, hours worked, and weeks worked. The main benefit to using the NLSY97 is the detailed labor market and

Methodology

I use a fixed-effects difference-in-differences regression to estimate returns to bachelor’s degree completion among stopouts. The fixed-effects difference-in-differences regression for labor supply is: Yiq=α0+Enrolliq×η+β0×BAiq+β1×AAiq+Ziq×ς+δq+γi+θiq+εiqwhere Yiq is either a dummy for employment, the number of weeks employed, or the number of full-time weeks employed for individual i in quarter q. BAiq is a dummy variable that switches to one if the person reports completing a bachelor’s

Main results and heterogeneity tests

Results from the fixed-effects difference-in-differences regressions are shown in Table 2 (results from the sample of stopouts and dropouts). Students who re-enroll and complete a bachelor’s degree are 9.8 percentage points (pp) more likely to be employed (95% Confidence Interval (CI) is (6.92 pp, 12.8 pp)). The decision to re-enroll and complete a bachelor’s degree impacts labor supply on the intensive margin as well, on average. There is a significant increase in quarterly weeks worked of

Conclusion

Colleges and universities across the country must make decisions about what funds to allocate towards re-enrollment and retention strategies to help students with some college, but no bachelor’s degree. With declining birthrates winnowing the number of students who could potentially enroll directly following high school and declining state support, the financial health of colleges and universities may depend heavily on their ability to recruit and retain previous students who left before

CRediT authorship contribution statement

Amanda P. Gaulke: Conceptualization, Methodology, Formal analysis, Data curation, Writing – original draft, Writing – review & editing, Visualization.

Declaration of Competing Interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

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    I would like to thank Co-Editor Doug Webber, two anonymous referees, Julie Cullen, Joshua Goodman, Mikael Andersen, Valerie Bostwick, Lois Miller, and participants at the 2021 SOLE conference.

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