As states continue investing in public higher education, new analysis from rpk GROUP reveals a costly inefficiency hiding in plain sight: lost academic credits when students transfer between institutions. The recently released report, Improving College Credit Mobility: Financial Benefits to States & Students, sheds light on how much this issue is costing—not just students, but also state and local governments.
While conversations around transfer students often center on student success and degree attainment, the financial consequences for public systems are significant. By focusing on five diverse states, the rpk GROUP analysis shows that poor credit mobility isn’t just a student problem, it’s a state funding problem, too.
Paying Twice: How States Lose on Lost Credits
Each year, more than a million students transfer between colleges and universities. When their credits don’t transfer with them, the cost is twofold: students must retake courses, and states must pay to subsidize those same credit hours again.
Across the five states examined in the report, the total cost to state and local governments of unused or duplicated credits ranged from $10 million to over $150 million per student cohort. In fact, for every cohort of transfer students, states are subsidizing nearly a year’s worth of extra coursework—and often paying more the second time around, particularly when students move from lower-cost community colleges to more expensive four-year institutions.
These dollars reflect subsidies originally intended to advance student learning thatinstead are spent on credits that don’t count toward a degree. Poor credit mobility creates a pattern of inefficient spending that drains public resources. This inefficiency takes multiple forms:
- Subsidies for community college credits that don’t transfer
- Additional subsidies to replace those credits at higher-cost four-year institutions
- Funding for excess credit hours, often a byproduct of transfer misalignment
Limited Tax Gains
While most of the fiscal benefit from improved credit mobility comes from cost savings, there is also the potential to increase state tax revenues over time. When more students successfully transfer and complete bachelor’s degrees, states benefit from a better-educated workforce. Depending on the state’s tax structure and labor market, increased bachelor’s degree attainment could generate $1 million to over $40 million in new tax revenue annually in those states studied by rpk. These gains stem primarily from higher income and sales tax contributions, with smaller offsets from reduced Medicaid spending.
Direct Cost to Students
Of course, the direct effect of poor credit mobility on students is always top of mind. On average, transfer students in the study lost the equivalent of nearly a full year’s worth of academic credit, translating into $5,000 to $12,500 in additional tuition costs. Despite the setbacks, completing a bachelor’s degree remains a high-value investment, with lifetime earnings gains of over $400,000—making it all the more important to streamline students’ path to completion.
What’s Next?
In a time of heightened scrutiny over public spending and college value, these findings offer a compelling case for state leaders and systems to invest in credit mobility solutions. The benefits are clear: reduced waste in taxpayer funds, more efficient use of public dollars, and improved outcomes for students.
Want to learn more? Download the full rpk GROUP report here.
