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What is the Real Cost of College Transfer?

Posted on 10/21/2014 by AcademyOne Insights

College students transfer from one college to another for a variety of reasons. With every one there is a transfer tax – a financial consequence - that is not only incurred by students but higher education institutions, states and the nation. It is the added cost resulting from students taking courses that don’t impact degree completion outcomes and lost course credits. We have to examine the impact of the transfer tax on all stakeholders to reveal the true implications that college transfer has on higher education.

  • Transfer Tax on Higher Education Institutions

    workforce Demannds

    Addressing the transfer tax on higher education institutions is more significant than ever as public colleges and universities struggle to increase degree completion while contending with performance based funding and the financial pressures of competing for tuition revenue, federal grants and state funding.

    As students lose credit through transfer and are required to retake a substantial number of courses, they end up enrolled at an institution for longer periods of time. They occupy seats and leave less space for new students by diminishing capacity. Not only does this make forecasting and budgeting for colleges and universities difficult, if a student is unable to enroll in the courses they need they will take longer to earn their degree - and will more than likely end up taking courses that are not applicable in order to maintain financial aid eligibility which leads to credit creep. In the long run, lengthy graduation rates negatively affect college national rankings, used heavily to recruit students, ultimately leading to lost potential revenue.

    Over a ten-year period, the University of Wisconsin System reduced the average number of credits per bachelor’s degree graduate from 145 to 135 by controlling credit creep in degree program requirements. This has translated into 12,000 additional seats across the system and has reduced time-to-degree for the average student by nearly a semester—a savings of about $3,000 in tuition and fees alone.[1]

    [1]“So What Now? Practical Strategies for Shifting the Cost Conversation,” Delta Project on Postsecondary Education costs, Productivity, and Accountability, 2012.

  • Transfer Tax on Students

    workforce Demannds

    As many as one third of first-time college students transfer at least once to another institution, with a quarter of them transferring more than once.[2] Those students find themselves taking longer to graduate and spending a lot more money to satisfy degree requirements when credit for coursework has been lost in the college transfer process.

    Not only do students incur costs from accumulating additional credits, but the longer they are enrolled in college, the more they will pay for fees, living costs, books and other education-related expenses. If a student has limited financial resources, they will find it even more pressing that federal and state grant eligibility is time-bound – federal Pell grants for example are awarded for the full-time equivalent of twelve semesters or six years.

    Another major cost to students is forgone wages they could have been earning while they are in school and not in the workforce. For working students, they miss out on the higher earning potential that a college credential provides.

    Approximately 39 percent of students who transfer colleges receive no credit for the courses they’ve already completed. On average they lose 27 credits - almost an entire year's worth of work. Meanwhile, another 28 percent of students lose some credits along the way during the transfer process. For them, about 13 of their credits don’t transfer— an entire semester's worth of work.[3]

    [2] “Transfer and Mobility: A National View of Pre-degree Student Movement in Postsecondary Institutions,”” National Student Clearinghouse, February 2012.

    [3] “Transferability of Postsecondary Credit Following Student Transfer or Coenrollment,” National Center for Education Statistics, August 2014.

  • Transfer Tax on States and Our Nation

    workforce Demannds

    With 65 percent of U.S. jobs requiring some form of postsecondary education by 2020, our nation is seeking to increase degree attainment by all Americans to meet workforce demands.[4] While states obviously benefit from an educated workforce through higher employment rates and higher earnings, they also benefit from increased tax revenue generated by this workforce. Four-year college graduates pay, on average, 78% more in taxes each year than high school graduates, and for those who continued on to earn a professional degree, average tax payments are more than three and a half times as high as those paid by high school graduates.[5] When students lose credit through transfer and are required to retake courses, they take longer to earn their degree and states lose out on this additional money.

    While state funding for public colleges and universities continues to subsidize the cost of educating state residents, spiraling expenditures on other high-priority areas are straining the ability of states to maximize their higher education investments in the face of growing demand. A substantial amount of taxpayer money could conceivably be reapplied to support more students, if students were not earning excess credit hours. As a result, many states are implementing policies to ensure students transfer smoothly and reduce spending on excess credits by enacting caps that limit a student’s number of credit hours, but these policies vary widely.

    Every year, U.S. students and taxpayers spend $19 billion dollars on excess credits - $7.7 billion covered by student tuition and $11.5 billion subsidized by taxpayers.[6]

    [4] “Recovery: Job Growth and Education Requirements Through 2020,” Georgetown University Center on Education and the Workforce, June 2013.

    [5] “Education Pays 2013: The Benefits of Higher Education for Individuals and Society,” CollegeBoard, 2013.

    [6] “The Game Changers: Are States Implementing the Best Reforms to Get More College Graduates,” Complete College America, October 2013.

  • Easing the Pain of Transfer Shock

    workforce Demannds

    Reducing the shock of transfer tax for students, higher education institutions, states and the nation involves establishing curriculum alignment policies, practices and methods that proactively market and address underlying degree completion requirements. This involves creating course applicability, acceptability and articulation across common transfer pathways within a state, especially through transfer articulation policies that establish a general education common core of courses, often referred to as a transfer credit matrix, framework or library. Altering transfer articulation policies and practices can reduce the coursework churn using proactive methods, and in turn diminish the financial impact of college transfer.

    Reducing time-to-degree can be accomplished using effective degree planning tools and facilitating the reduction of unnecessary course-taking by giving students and advisors the most accurate information and guidance. Providing transfer students with better academic counseling and access to the information and tools they need to self-evaluate a transfer will enable them to easily see how their previous and future coursework could be applied toward a degree. As a result, they will be able to identify their best transfer pathways and avoid courses that won’t count toward their chosen degree.

    Academy One helps students, higher education institutions and states proactively address the phenomenon of transfer tax by providing automated solutions that afford transparency and reduce the academic, social and economic effects often associated with college transfer. To find out more, check out our Transfer and Articulation Client Success Stories.

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