The recent NCLB regulations focus on high school graduation rates. Mark Schneider (as in former Bushie and now at AIR Mark Schneider), however, wants to know the stats on college graduation rates. And that’s exactly what he set out to discover in his new paper, “The Costs of Failure Factories in American Higher Education.”

His main conclusion? The ratio of federal grants aid to colleges and college students to actual diplomas is deplorably low. In fact, 408 four-year institutions graduate fewer than one-third of their students. And we thought a 70% high school graduation rate was bad. But the cost to taxpayers is even more astounding:

To assess the “cost” of these “failure factories” to society, Schneider calculates the amount of federal financial aid received by the 158,000 students who enrolled in a given year in the 408 institutions that graduated fewer than a third of their students. About 44 percent of those enrollees received federal grants averaging $2,405, and the average graduation rate at the institutions was 18 percent. He determines the total federal grants given to non-graduates from those institutions to be $120 million, and drops that figure to $90 million by assuming that 25 percent of them “eventually graduated from other institutions.” The report calculates the “lost tuition” paid by those students to be another $650 million.

The problem, he determines, is that universities and colleges are accepting students who are not academically prepared to handle the work. But his solution is a bit off. He argues that students should be informed of their chances to graduate from a specific school “so that students and their families can choose colleges at which they will have a higher likelihood of success.” Hmmm. Sure, let’s be pragmatic about where we’re sending our kids to school–Hahhvahd isn’t for everyone. But at the same time, let’s talk preparation. And by preparation, I mean k-12 education. You can’t learn calculus if you can’t add. But Schneider is right that if high school graduation rates can garner such attention in the 70s, shouldn’t schools of higher ed, also receiving federal dollars, be held accountable for rates in the 30s?

Yes, but the metric is all wrong, argues Cliff Adelman. First, using the standard 6 year mark to measure graduation is unrealistic when students are really taking more like 8.5 years to graduate. In fact, argues Adelman, if we used this 8.5 mark, he estimates that tertiary graduation rates would jump up to the levels of its secondary brethren. In addition, “the way U.S. data are reported makes no distinction by age at the point of entrance to higher education…. It’s a common sense issue when judging institutional performance: Age at entrance is far more significant than race/ethnicity or SES because there are constitutive life conditions and behaviors associated with age that influence progress toward degrees. That cannot be said for other standard demographics.” This all sounds plausible but I wouldn’t go so far as to discount SES.

And finally, argues Adelman, graduating 2/3rds of our tertiary education students is no great shakes either. But let’s be realistic. “[H]ow far does anyone think we can push that rate without passing out cheap degrees–an issue neither Mark nor many others who bemoan ‘low’ graduation rates address at all?” Adelman asks. A great question, since the value of a diploma should be paramount in this discussion. The U.S. is reknown for high quality tertiary institutions. Sure, the graduation rates are deplorable, but as we’ve seen with NCLB and secondary education, graduation rates mean nothing if the piece of paper being awarded holds little value.

We can make sure students know their “chances” of graduating before they enroll–and certainly before we award them federal dollars–but that doesn’t solve the problem. Kids not graduating from college means one thing, and it’s not that they’re going to the wrong schools. These kids “graduated” from high school, paper in hand, but were actually inadequately prepared to handle the work at a tertiary institution. That’s scary, folks. Let’s try some simple logic: If we make sure that secondary diplomas mean something, then we’ll be sending kids to college actually prepared to do the work, and more kids will graduate from college. Et voila. Higher tertiary graduation rates. Now, to make sure high school diplomas mean something, that’s a whole other conversation.

Former Ed Truster Kevin Carey loves Education Trust’s trusty new report on graduation rates (timed to coincide with the new NCLB regulations–see, Democrats and Republicans are already working together in Washington!). Said report explores No Child Left Behind’s requirement that high schools reach certain graduation rate benchmarks in order to make “adequate yearly progress,” and bashes (the many) states that set these grad rate targets low or expect too leisurely a pace of progress. Carey implies that this shows states are gaming the system “in an utterly fraudulent, cynical way.”

Well, that may well be true (we’ve not been shy about blasting states for their low expectations), but Carey leaves out a major factor: the definition of a high school “graduate” is malleable, so aiming to get everyone over that bar might result in the bar itself being lowered. This is not a hypothetical situation; it’s exactly the dynamic with NCLB’s requirement that 100 percent of students be “proficient” in reading and math by 2014. While this provision hasn’t caused a “race to the bottom,” it has led to a “walk to the middle” in an environment that discourages states to raise their expectations for what it takes to be “proficient.”

Everyone wants more kids to graduate from high school. But we should also want a high school diploma to mean something. These two objectives are in tension with one another, especially once we start talking about getting “all kids” or “almost all kids” over the graduation bar. (More so when we add students with disabilities to the mix.) An eighty percent graduation rate might be praiseworthy in a state where graduation implies true readiness for college-level work. Carey (and Ed Trust) should say so.

So let’s all remember a key lesson from NCLB: when setting arbitrary targets, beware the perverse incentive.

It’s not quite as bad as Marion Barry embracing vouchers, but is it necessarily a positive development that the United Way has selected dropout prevention as one of its three key initiatives? As the Washington Post reports,

The United Way of America, alarmed at the nation’s fraying safety net, will announce today that it will direct its giving toward ambitious 10-year goals that would cut in half the high school dropout rate and the number of working families struggling financially.

Curbing the dropout rate certainly deserves attention from the nation’s charitable donors, but the chances don’t appear high that a mainstream, let’s-all-get-along group like the United Way will tackle the underlying problems that lead to massive educational failure. Will the charity push for rigorous state standards or even national standards? Will it work to put pressure on failing school districts by supporting charter schools and other forms of parental choice? Will it tangle with recalcitrant teachers’ unions? Such actions are hard to imagine, which is why savvy observers should get ready to watch a whole lot more private money go down the tubes.