Hawaii taxpayers spent $32.6 million on students who dropped out of college between 2003 and 2008, according to a new report.

The state’s spending on college dropouts is much lower than most other states, despite Hawaii’s relatively low graduation rate.

Nationwide, states appropriated almost $6.2 billion for four-year colleges and universities between 2003 and 2008 to help pay for the education of students who did not return for year two, the report released today says.

In addition, the federal government spent $1.5 billion and states spent $1.4 billion on grants for students who didn’t start their sophomore years, according to “Finishing the First Lap: The Cost of First-Year Student Attrition in America’s Four-Year Colleges and Universities.”

Hawaii’s spending ranked 45 out of the 50 states and the District of Columbia.

Hawaii’s spending is relatively low because of the state’s small size, said Mark Schneider, a vice president at the nonprofit American Institutes for Research, which wrote the report.

Schneider said Hawaii still does better than most other small states.

“You’re better than South Dakota and Alaska, but not as good as Wyoming,” he said.

About 25 percent of freshmen at the University of Hawaii at Manoa and UH Hilo do not return for their sophomore year and about 49 percent do not graduate in six years. The graduation rate is in the bottom half of states and U.S. territories, according to a related report.

Hawaii’s student loan default rate is also low. At  2.8 percent, it ranks 43rd lowest among the states and territories.

The dollar figures, based on government data and gathered by the nonprofit American Institutes for Research, are meant to put an economic exclamation point on the argument that college completion rates need improvement.

But the findings also could give ammunition to critics who say too many students are attending four-year schools — and that pushing them to finish wastes even more taxpayer money.

The Obama administration, private foundations and others are driving a shift from focusing mostly on making college more accessible to getting more students through with a diploma or certificate.

Mark Schneider, a vice president at the American Institutes for Research and former commissioner of the Education Department’s National Center for Education Statistics, said the report’s goal is to spotlight the costs of losing students after year one, the most common exit door in college.

“We’re all about college completion right now, and I agree 100 percent with the college completion agenda and we need a better-educated adult population and workforce,” Schneider said.

The report takes into account spending on average per-student state appropriations, state grants and federal grants, such as Pell grants for low-income students, then reaches its cost conclusions based on student retention rates.

The cost of educating students who drop out after one year account for between 2 to 8 percent of states’ total higher education appropriations, Schneider said. He said the report emphasizes state spending because states provide most higher education money and hold the most regulatory sway over institutions and can drive change.

Ohio, for example, has moved toward using course and degree completion rates in determining how much money goes to its public colleges and universities instead of solely using enrollment figures.

“We recognize an institution is not going to be perfect on graduation and completion rates,” said Eric Fingerhut, chancellor of the Ohio Board of Regents. “But at the same time, we know they can do better than they’re doing. And if you place the financial rewards around completion, then you will motivate that.”

The AIR report draws from Department of Education data, which Schneider concedes does not provide a full picture.

The figures track whether new full-time students at 1,521 public and private colleges and universities return for year two at the same institution. It doesn’t include part-timers, transfers or students who come back later and graduate.

The actual cost to taxpayers may run two to three times higher given those factors and others, including the societal cost of income lost during dropouts’ year in college, said Richard Vedder, an Ohio University economics professor. And tying state appropriations to student performance could just cause colleges to lower their standards, he said.

Robert Lerman, an American University economics professor who, like Vedder, questions promoting college for all, said the report fleshes out the reality of high dropout rates. But he said it could just as easily be used to argue that less-prepared, less-motivated students are better off not going to college.

“Getting them to go a second year might waste even more money,” Lerman said. “Who knows?”

Star-Advertiser reporter Craig Gima contributed to this report by AP education writer ERic Gorski.

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