The Washington Monthly and Education Sector, an independent think tank, looked at the 15 percent of colleges and universities with the worst graduation records--about 200 schools in all--and found that the graduation rate at these schools is 26 percent.
These are not the for-profit schools that have gotten such bad publicity recently. These are ordinary private and public universities and colleges.
The authors conclude:
On the surface, a peaceful university campus can seem like a vital asset to the community. But a university with an 87 percent dropout rate is a service to no one. And chronically dysfunctional organizations can be very difficult to change. There is no reason that states can't quickly build newer, better, more cost-effective public universities to educate people who are currently stuck in college dropout factories. No university, regardless of historical legacies or sunk cost, is worth the price being exacted from thousands of students who leave in despair. The sooner we acknowledge that, the better off those students--and the rest of us--will be. [italics added]
When the authors say that there is no reason that states cannot shut down ineffective colleges and build new ones, they show a fundamental misunderstanding. Government has many, many reasons to keep failing, unsustainable operations in place. One major advantage of markets is that they tend to punish failure.
Having said that, I would not want people to go overboard in using the graduation rate as the key indicator of college quality. There are ways of manipulating that number that would not be socially beneficial, such as lowering performance standards for students. Another technique would be for scollege to reject the students that appear to be least likely to graduate. Perhaps that would be a good thing, all in all, but it might not be the outcome that the social engineering types have in mind.