App version: 0.1.0

College Graduation Rates: Here’s Why They're Important to Examine

College Graduation Rates: Here’s Why They're Important to Examine
Rebecca Safier
Rebecca SafierUpdated June 21, 2024
Share this article:
Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
When it comes to choosing a college, there are many factors to consider, from location to available majors to cost of attendance. But another important consideration that you might not have thought about is college graduation rates. A high college-graduation rate suggests that a college sets its students up for success, while a low graduation rate could point to a subpar student experience or a lack of support. Before selecting a school, it’s worth digging up data on its graduation rates to make sure that the majority of students who enroll end up earning their degree.

What Are College Graduation Rates? 

College graduation rates indicate how many students earn their degree within a certain period of time after enrolling. You’ll commonly see a college share the percentage of students who graduate within 150% of the published time for the program. For a four-year bachelor’s degree program, that amounts to six years.  According to the National Center for Education Statistics (NCES), the graduation rate in 2023 across all schools was 62.2%.When you’re choosing a college, school-specific graduation rates will likely be more useful to you than national rates. Many schools will share this data on their websites, so it’s worth researching your school for this information. Looking at needs-based financial aid is a key step in preparing for college. So is finding out about college graduation rates.

Why Are College Graduation Rates Important? 

Graduation rates can be an important metric to consider when selecting a school. A high graduation rate can suggest a high-quality education, while a low graduation rate could be a red flag. At the same time, the meaning behind graduation rates is open to interpretation. While this data can be a helpful way to compare your options, it might not be the deciding factor in the school you ultimately choose. 

A Measure of Quality

When you enroll in a college, you do so with the intention of graduating with your degree. If a school’s graduate rate shows that most students achieve this objective, it suggests that the school offers a decent education and supportive environment. If it has a low graduation rate, on the other hand, that could indicate problems, such as:
  • Lack of academic or social-emotional support for students 
  • Unclear guidance around what classes students need to take to earn enough credits toward their major 
  • Expensive cost of living or tuition that students can’t afford 
  • Missing opportunities for extracurriculars, housing assistance, career planning, or other resources that promote positive student outcomes 
Of course, a low graduation rate doesn’t necessarily mean any of these things, so it’s worth researching a school and speaking with current students or alumni to learn more about what the student experience is like. Recommended: Understanding the Cost of Attendance

A Helpful but Imperfect Metric

Graduation rates can give you a helpful glimpse into how many students earn their degree, but the usefulness of these numbers is up for debate. As discussed above, the reasons behind a low or high graduation rate are pretty subjective. If a particularly selective school has a high graduation rate, for example, that might speak more to the academic commitment of the students it admits than the quality of the school’s education. Alternatively, a high graduation rate could suggest that a school offers easy classes that might not meet the standards of rigor that you’re looking for in your college education. While it’s easy to guess about why a college has a high or low graduation rate, you don’t want to base your college selection on speculation. Instead, take a close look at other important factors, such as teacher-to-student ratio and employment outcomes of graduates, if available. You might also consider retention rates, or the percentage of students who re-enroll after their freshman year. 

An Indication of Changes Over Time 

When you look at a school’s graduation rates, it’s worth exploring if they have changed in recent years. On the national level, graduation rates have been increasing.  Again, the reasons for this increase are up for debate — some point to a higher level of support for students, such as tutoring, accommodations, and financial advising — while others say that grade inflation has allowed students to pass more easily. Regardless, a dramatic decrease in graduation rates at a school you’re considering could be a warning sign about a loss of quality or an increase in tuition price. Recommended: What Is College Net Price and How to Calculate It

A Jump-Off Point for Learning About the Student Experience 

If you find a school has a low graduation rate, this piece of information can also be a helpful starting point to probe into why students are dropping out. You can search for dropout and retention rates to learn more about how many students are leaving. You might also speak to a tour guide, admissions officer, current students, or alumni for their take on why students drop out before graduating. While a school may or may not have data on specific reasons, your research might turn up some possible explanations. 

How Do You Find a College’s Graduation Rate? 

Many colleges share their graduation rates on their website. You can head to your college’s official website to search for this data or Google the name of your college plus graduation rate. To give one example, take the graduation rate of Tufts University. According to its data, the six-year graduation rate is 94%. You can alternatively find graduation rate data from the Department of Education’s College Scorecard. This helpful tool also gives insight into a college’s annual cost, financial aid awards, and other statistics, such as college graduate stats on median earnings.  

College Retention Rate 

An educational institution’s graduation rate isn’t the only data point to consider when researching colleges. You can also look at a school’s retention rate, or the percentage of students who return after freshman year. If the retention rate is low, that suggests that students were somehow disappointed with the school after arriving on campus. If it’s high, then that could mean that students felt the college delivered on the promises it made before you enrolled. You might be able to find retention rates on a college’s website, or you can check the Education Department’s College Scorecard for this information. 

Looking Beyond College Graduation Rates 

While college graduation rates can shed light on the quality of a school, they are just one measure of many. What’s more, a high graduation rate doesn’t necessarily mean a school is the right fit for you, just as a lower graduation rate might not be a dealbreaker. Instead, use graduation rates as a jumping off point to research what a college has to offer. Look for information on classes, majors, extracurriculars, study abroad opportunities, student support, financial advising, and other key metrics to determine if a school could be the right fit for you. 

Paying for a College Education

Students finance their education in many ways: family help, savings, scholarships, work-study, grants, and student loans. All students must fill out a FAFSA form to qualify for and receive student aid.Recommended: How Much Student Loan Debt Is Too Much?

The Takeaway

Most students rely on federal student loans. Private student loans come from banks and other lenders. There are considerations to weigh in both federal and private loans.To seek out a lower interest rate or different loan terms after graduation, you can refinance your federal student loans into a private student loan. Once a loan is refinanced, though, the loan holder is no longer eligible for government loan forgiveness programs. Make sure you do not intend on using government assistance programs prior to moving forward with a student loan refinance.If you do decide to refinance your student loans, consider Lantern. Lantern allows you to comparison shop multiple student loan lenders to find the best rate and terms for your situation.

Frequently Asked Questions

Should the college graduation rate affect your choice of college?
What is the national average college graduation rate?
Does a college’s retention rate matter?
Photo credit: iStock/Lacheev

About the Author

Rebecca Safier

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
Share this article: