Thursday, January 31, 2013

Closing Doors: What do School Dropouts Cost Us?

How Will You be Remembered?
How Will You be Remembered? (Photo credit: eyewashdesign: A. Golden)
by Associate Professor Kitty Te Riele, Principal Research Fellow at Victoria University, The Conversation:

As students head back to school this year, it’s worth sparing a thought for the many students who won’t return.

In fact, each year thousands of young people leave school without a Year 12 qualification or vocational equivalent.

For their own sake, we should be concerned about what these kids go on to do (or not do as the case may be). But these school leavers also bring a cost to the economy - costs which are harder to measure than you might imagine.

Counting the loss

Retention to Year 12 has climbed from 46% nationally in 1985 to 79% in 2011. Despite this improvement, the fact remains 21% of students leave early without a Year 12 qualification.

In the short term at least, these early school leavers save the government money because each school student costs the government about $15,000 per year. Under the Compact with Young Australians a young person up to the age 21 who hasn’t completed Year 12 or equivalent cannot get Youth Allowance and their family loses the Family Tax Benefit Part A.

In some cases, parents (or young people themselves) are even fined if the young person is not in full-time school, training or work before they turn 17.

Despite these short-term savings, governments want young people to complete school or a vocational equivalent because when they don’t, it costs much more in the end.

Most research in this area is quite old but it can give an indication of the cost of early school leavers and the financial benefits of increasing school completion.

One 1999 estimation put the cost to each individual early school leaver at around $15,000 per year in lost income, while the total cost of early school leaving nationally is $2.6 billion per year.

Another piece of research in 2003 estimated that the benefit of increasing the proportion of young people with Year 12 or equivalent from 80% to 90% would increase GDP by $1.8 billion within 20 years.

In the US, where more recent research has been done on this, it has been estimated that each additional high school graduate is worth US $127,000 to the taxpayer.

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