Why school graduation and retention rates are important to consider

By Carolyn Morris | Published on October 21, 2025

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Deciding what school to attend is a huge decision, and there are a lot of factors students should consider when making it. Some, like the perks offered on campus, seem important at first, but should not be the only reason you pick a school.

Two figures that have gained more interest in the last few years are graduation and retention rates. But what is so important about these?

What is graduation rate?

A university’s graduation rate is the measure of how many students who started in the same cohort will leave with a diploma within six years. With the passage of the 1990 Student Right to Know Act, the percentage of people who graduate “within 150% of the normal time for completion of or graduation from the program” must be made public by any degree-granting postsecondary institution.

How do you find a school’s graduation rate?

A search online with the name of any school followed by ‘graduation rate’ will quickly bring you to a page where the school has posted this information. You can also reach out to the admissions office to speak to someone about the graduation rate.

What is the national average college graduation rate?

According to National Student Clearinghouse Research, the U.S. college graduation rate was 62.2% in 2023. This rate represents the percentage of students who completed their degree programs within six years of starting.

While this is the national average, graduation rates can vary significantly based on factors such as institution type (public, private, for-profit), student demographics, and whether students attend full-time or part-time. Public institutions typically see slightly lower graduation rates than private non-profit schools, while private for-profit institutions tend to have the second lowest graduation rates overall.

Factors that contribute to low graduation rates like access to financial aid, academic support services, and the flexibility of degree programs can all influence a student’s likelihood of completing their degree. Additionally, students from underrepresented backgrounds, first-generation college students, and those balancing work and family responsibilities may face greater challenges in reaching graduation, which can impact these statistics at both institutional and national levels.

Why is a school’s graduation rate important?

Graduation rates are a key metric for assessing higher education success and are often used by students, parents, and policymakers to evaluate the quality and effectiveness of colleges and universities.

The graduation rate gives students insight into how many students are finishing their degrees in a timely manner once they enroll. It is not only a transparent metric that holds a school accountable, but it also can help a student measure the quality of the school.

There are flaws in relying on the graduation rate alone when considering a school. For example, students who transfer and finish their degree at another school are not included when compiling the graduation rate.

What is retention rate?

While the graduation rate measures how many students leave with a degree within four or six years, the retention rate measures the percentage of a school’s first-time, first-year undergraduate students who continue at that school the next year. Some universities have whole offices set up for recruiting students, but drop the ball when it comes to keeping them.

How do you find a school’s retention rate?

Unlike the six-year graduation rate, schools are not required to publish their retention rate each year. Some schools will publish this statistic on the same page as their graduation rate.

If a school does not feature this metric in an easy to find page, there are sites like U.S. News that will include the retention rate and other key data points.

What is the national average college retention rate?

According to the National Center for Education Statistics, the national retention rate increased one full percentage point to 68.2% from 2023 to 2024. This one percentage point increase indicates that more students are continuing their college education after their freshman year, which is an important indicator of student satisfaction and institutional support.

Retention rates are influenced by several factors, including academic preparedness, the quality of student services, engagement with campus life, and access to financial aid. Colleges that offer strong academic advising, mental health resources, and peer mentoring programs tend to have higher retention rates. Additionally, institutions with a more connected student body, opportunities for involvement in extracurricular activities, and a sense of community often retain more students.

Like graduation rates, retention rates can vary significantly depending on the type of institution. For example, four-year private non-profit universities typically report higher retention rates than public institutions or for-profit colleges. Furthermore, retention tends to be lower for part-time students, who may face challenges balancing school with work or family commitments, and for students from underserved or underrepresented backgrounds.

Improving retention is a key focus for many institutions. It enhances the overall student experience and contributes to higher graduation rates, which reflects positively on the institution's performance and reputation.

Why is a school’s retention rate important?

The retention rate measures how many students will return for their second year of school, and indicates if a school is living up to the expectations they set when recruiting students. There are also reasons out of the school’s control that could lead a student not to return, and it is important to take this measure with a grain of salt.

Looking beyond graduation and retention rates

While both of these metrics are important, they should be considered as a part of the bigger picture. Students leave after their first year of school or do not graduate within six years for a variety of reasons that might be out of a school’s control.

According to College Raptor, “there is some noticeable correlation between the selectivity of the college and higher retention and graduation rates, but that doesn’t mean that a school that falls below these numbers is a bad place. Be careful to compare colleges, or apples to apples.”

If you are really excited about a school, but the graduation and retention rates don’t look as good as other schools, it is worth reaching out to the admissions office or current students to learn more. Picking out a school is a major life and financial decision, so do your research and pick the best place for your future.

Maximize your college investment

Understanding college graduation and retention rates is crucial when choosing the right school for your future. These metrics can offer insights into the quality of education and support you’ll receive, ultimately influencing your academic success and return on investment.

To make the most of your college experience, it's important to not only choose the right school but also secure the best financial aid options. With Earnest’s flexible student loan¹ options, you can invest in your education confidently, knowing that you’re supported every step of the way. Explore student loan solutions tailored to your needs and start building your future today.

About the Author

Carolyn Morris

Carolyn is a content marketer and editor who specializes in financial services. With over a decade of experience in the financial services industry, Carolyn has a passion for demystifying the loan application and repayment process for students and their families.

Disclaimer

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.