More than a decade ago, in 1996, the California State University (CSU) trustees adopted a policy to reduce the need for remediation to no more than 10 percent of incoming freshmen by 2007. In 1998, the state outlawed K–12 social promotion, requiring schools to retain any student performing below grade-level proficiency. Results to date are not encouraging.

In the fall of 2007, only 44 percent of incoming CSU freshmen were proficient in both reading and math. Of that cohort of students, 37 percent needed remediation in math, and 46 percent needed remediation in reading.  As of 2006, the most recent year for which complete data were available, at least 30 percent of University of California (UC) freshmen, 60 percent of CSU freshmen, and up to 90 percent of California Community College (CCC) freshmen required remediation—more than 655,000 students in all. Empirical evidence spanning two decades indicates that approximately 41 percent of those students, nearly 270,000 college freshmen, likely will not earn their degrees.

This study estimates the annual direct and indirect costs of inadequate education to students, schools, and the state for a single cohort of college freshmen requiring remedial instruction across all California public postsecondary systems, both two- and four-year. It finds that the total estimated annual cost ranges from $3.9 to $13.9 billion annually, driven largely by lost individual earnings associated with lower educational attainment and the related social costs. There is no way to predict how many of the estimated 255,000 community college students unlikely to earn a degree because they are in a remedial education plan to pursue four-year bachelor’s degrees. Therefore, this study uses low and high projections and finds that the annual estimated cost of inadequate academic preparation includes:

• $274 million in direct remediation costs to California public postsecondary institutions.
• $107 to $447 million in direct remediation costs to California businesses.
• $1.1 to $5.5 billion in diminished annual earnings to college students, which corresponds with:
• $245 million to $1.27 billion in reduced annual federal spending on California.
• $194 million to $1.05 billion in reduced state and local tax receipts.
• $1.9 to $5.4 billion in increased health care, crime, and social welfare costs.

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