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Teach-out plan, records policies lead to re-enrollment

A new report by the National Student Clearinghouse Research Center and State Higher Education Executive Officers Association shows that students enrolled in a college or university that closes are significantly more likely to re-enroll within four months if the state where the college is located mandates the closing institution help students transition to another institution.

The report, which is the third in a three-part series about college closures, reviewed two types of policies related to transitioning to a new institution: teach-out plan policies, which require the college that is closing to have an agreement with a college that is willing to take on the former institution’s students, and student records policies, which dictate what student information colleges must retain and, sometimes, how those records should be stored and protected.

Students in a state that had one of those policies were 53.5 percent more likely to re-enroll following their colleges’ closure than those whose states did not have either policy. Having both policies in place led to a 94.5 percent increase in re-enrollment.

The report also noted, however, that students in states that offer some kind of financial compensation to students enrolled in a university that shuts down were less likely to re-enroll. These types of compensation include tuition recovery funds, which repay students’ tuition upon an institutional closure, or surety bonds, which operate much like an insurance policy that distributes money to students if their institution closes or in the case of a similar loss. In states that require either tuition recovery or surety bonds, students were 80.9 percent less likely to re-enroll within four months, and they were 72.4 percent less likely to re-enroll in states that require both.

The report, which utilized NSCRC data related to 467 closures between 2004 and 2020, notes the negative correlation between compensation and re-enrollment likely exists because many policies require students to choose between utilizing the teach-out option or receiving payment.

In one of its policy recommendations, the report advises states to “consider removing the restriction that students cannot access surety bond or tuition recovery payouts if they accept the teach-out option. Rather than forcing students into making a difficult decision between reimbursement or a teachout, these policies could be redesigned to provide incentives for reenrollment.”

Separately, tuition recovery and surety bonds also have no consistent positive impact on whether students whose college closed eventually complete a credential, but a combination of both forms of compensation is correlated with a 339.5 percent increase in completion rates over students in states with neither policy. On the other hand, student records policies and teach-out policies are negatively correlated with credential completion, even in states where both policies are in place.

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