December 5, 2023

Economix: The Rise of the Five-Year Four-Year Degree

Today's Economist

Judith Scott-Clayton is an assistant professor at Teachers College, Columbia University.

During this graduation season, roughly 1.7 million students will collect a bachelor’s degree. And here’s what should be an easy question: how long does it take to earn a four-year degree?

For a majority of today’s college graduates, the answer is at least five years.

This is not explained primarily by students attending part-time or leaving school for some time and then returning (as was the case with Burlyce Sherrell Logan, who completed a bachelor’s degree 55 years after she first enrolled, and whose inspiring story was described in a recent New York Times article). Even among graduates who continuously attend full time, 45 percent need an extra year or more to finish (see chart below).

U.S. Department of Education, National Center for Education Statistics, Beginning Postsecondary Students: 2009 Database. Computed by N.C.E.S. QuickStats, May 17, 2011.

It wasn’t always this way: research by Sarah Turner documents a substantial decline in on-time degree completion over the last 30 years. So what’s going on?

From an economic perspective, it’s not clear that there is an optimal time-to-degree, and for many students, it’s certainly better to complete college in five or six years than never complete at all. But stretching out a four-year degree means extra years of tuition costs, and additional years of labor market earnings and experience forgone. For students on financial aid, the five-year four-year degree also costs taxpayers.

Some potential explanations are not as straightforward as they first appear. For example, students spend more time working for pay than they used to. But it’s not clear whether this is a cause or consequence of lengthening time-to-degree. And if students are academically capable of completing college in four years, the extra money from a part-time job does not necessarily pay for the extra cost of a fifth year of college.

Overcrowding at public institutions, which may prevent students from taking the courses they need, is one explanation that has some support in the research. Unfortunately, having students hang around for five years ultimately does nothing to solve overcrowding; rather, it ensures that it will continue into the future. The freshmen who are shut out of a class in Year 1 come back to take the same class in Year 2, shutting out the next crop of freshmen.

If poorly managed, even a one-year enrollment shock could lead to persistent inefficiencies. Imagine what would happen if an airline double-booked a single flight, then gave the excess passengers first priority on the next flight – thus bumping everyone on that flight to the next one, and so on. If the airline has no excess capacity, one overbooked flight can create a perpetual delay.

Federal financial aid regulations, which generate perverse incentives for both students and institutions to extend time-to-degree, are another possible culprit. The regulations define a student as full-time if she enrolls for 12 or more credits a semester, even though a bachelor’s degree typically requires at least 120 credits to complete. So a student rolling along at the minimum full-time level would need at least five years to finish.

While the policy does not prevent students from taking more credits, it doesn’t provide any incentive to do so, either. Pell Grants, for example, provide the same funding whether a student enrolls for 12 or 15 credits per term, so a student who takes five years to complete can get 25 percent more in cumulative aid than a student who finishes in four. (I and several other economists have suggested changing the federal definition of full-time enrollment to 15 credits a semester.)

Similarly, it’s not clear that colleges have much incentive to get students out any faster. Although most institutional expenditures are related to providing instruction, many institutions charge a flat tuition rate for students taking 12 or more credits, and the revenues that these institutions receive from state and local governments are sometimes pegged to their number of “full-time” enrollees. A college that gets the same revenue, but incurs greater costs when a student takes 15 credits instead of 12, may not particularly mind if students want to follow a five-year plan.

At least anecdotally, taking five years for a four-year degree has become an accepted norm on many campuses among both students and administrators.

One of my graduate students described her freshman orientation at a large state university, at which the university president explicitly told students not to rush through their experience, that “the standard time to completion was five years,” the student recalled, adding: “He encouraged us to explore electives. At that time, my father turned to me and said, ‘You will finish in four. There is no reason to drag this out.’”

The student graduated on time. So while some factors push in the opposite direction, perhaps there’s no incentive as powerful as that simple parental directive.

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