School endowments have been hit hard in the current economic crisis, forcing many to cut costs wherever they can. Most looked to non-academic student services first, laying off staff, closing cafes and cutting sports teams--anything that wouldn't hurt the scholarship of the students. However, according to a working paper by Douglas Webber and Ronald Ehrenberg of Cornell University, cutting student services can have a serious effect on graduation rates and student retention. The study shows that increasing funding for student services by $500 per student increases graduation rates by 0.7 percentage points. Moreover, that number gets bigger at institutions where the graduation and retention rates are already low and those with low average test scores and a higher number of first-generation college students.
Increasing student services funding has a larger effect on graduation rates than funding for academics. "Similar increases in instructional expenditures and academic support services expenditures would, on average, increase the graduation rate by about 0.3 percentage points." In addition, increasing funding for research actually decreases graduation rates by 0.7 percentage points.
One of the paper's authors, Douglas Webbers tells Inside Higher Ed: "This to me shows there are tradeoffs...[With research], you may be paying a cost in terms of hurting student services to the point of decreasing graduation rates. For the Cornells it doesn't matter, but at the State College of Law Resort, it does...I'm just putting more emphasis on it than they are."
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