One Trick For Keeping Kids In College: Forgive Tiny Debts That Force Them To Leave

Nearly half of all college students in America end up dropping out, an epidemic quit rate that’s poised to cause some serious economic trouble: Most jobs today require some form of higher education, leaving a gap of 3 million qualified candidates by 2018 that spikes to 16 million by 2025.

This achievement gap already costs the U.S. as much as $2.3 trillion annually in lost gross domestic product because less-than-qualified U.S. workers end up underperforming. At the same time, for those struggling to get ahead, a diploma also represents one of the surest ways to ensure upward mobility. People without a college education are three times more likely to live in poverty.

Burns says that most of UIA’s school presidents realized they were doing an awful job at keeping students enrolled, particularly those who from low-income households, first generation, or students of color. “[They said], ‘Clearly we’re all pretty united in a sense of urgency around this. Is there a way we can work together because working alone is a waste of time energy and money? And at the end of day, students are the ones who are paying the price.'”

One alarming trend: Despite receiving financial aid, roughly 4,000 seniors who have good grades may quit school because of small outstanding scholastic debt. The sums are often less than $1,000–but in many cases, such balances make them unable to register for their next batch of classes.

UIA and its partners will spend $4 million on micro-debt forgiveness, which will be managed by in-network academic advisors to use at their discretion over the course of the next five semesters. Half of the money is coming primarily from the Gates Foundation and Great Lakes Higher Education Corporation & Affiliates but the other half is a school match. Because every project that UIA does is carefully vetted beforehand, all institutions agree to double whatever philanthropic amount is directed toward their campuses.

The estimated award per student is projected to be about $900, but students can’t apply; administrators, who are adhering to an internal formula designed to spot the best candidates, will identify candidates and offer the one-time surprise infusion. “We know there’s variation across the 11 [schools] but we want to find the students who are low income, on track to graduate within a year—so they’ve already got a lot of effort behind them and it’s not too far ahead—but they have some unexpected costs,” she says.

The concept of micro-debt relief has already proven effective at Georgia State University, a UIA affiliate that started its own retention granting program in 2011 to try to support the 1,000 or so students that it was losing each semester of extremely small tuition balances. Georgia State’s program is open to all students, not just seniors. Historically, it has 75% of those with more than a year to go are still enrolled 12 months later, while 60% of senior recipients go on to graduate within the same year that they receive assistance.

“Completion grants have been a critical part of our efforts to help students persist and succeed,” added Tim Renick, GSU’s vice-provost in a press release about the new effort.

Burns expects UIA disbursements to cover only about half of the coalition’s students in need. That’s partly because of limited funding but also necessary because it’s a wide-scale experiment. Not aiding everyone creates a sad but necessary control group, allowing future funders to better compare the power of small, emergency cash allowances for those who received them versus those who didn’t.

More broadly, however, she hopes that UIA’s investment encourages other schools to act similarly. “This signaled where they should be focusing their attention,” she says. “These are many of the most innovative universities, who are saying, ‘These are things that are worth your limited time energy and money.'”