collegeStudents who drop out of school before reaching their sophomore year cost taxpayers billions of dollars, according to new research.

Taxpayers spent more than $9 billion over five years subsidizing students who didn't make it to the second year of four-year degree courses, according to new research from The American Institute for Research (AIR).

"Every spring, hundreds of thousands of students decide not to return to college," Mark. Schneider, AIR's vice president, said. "The financial costs to states are enormous."

Most students attend public colleges or universities that are subsidized directly and through grants to students. Nationwide, these subsidies average nearly $10,000 a student each year.

California lost $467 million in college-drop out subsidies, with states including Texas and New York also topping $400 million. The average state spent $120.5 million in state subsidies to first year dropouts between 2003 and 2008.


Increase your money and finance knowledge from home

Intro to Retirement

Get started early planning for your long term future.

View Course »

Timing Your Spending

How to pay less by changing when you purchase.

View Course »