Academic Success and the Transfer of Community College Credits in the Principles of Economics

Abstract

A growing number of today's college students attend local 2-year community colleges. Many of these students will ultimately transfer to major universities in pursuit of the traditional Bachelors degree. However, the question of whether such transfer credits adequately prepare students for future academic endeavors is important for educators interested in preparing successful students and maintaining the quality of their institution. In this paper, we examine whether transfer students achieve the same levels of academic success, measured in terms of GPA and graduation rates, as students taking the Principles of Economics course sequence at the home university. We construct a recursive system using an educational production function approach in which final cumulative GPA is determined by a series of academic aptitude, demographic, and college major variables. A probit model is then used to estimate whether graduation is achieved based on academic performance, as measured by GPA, and other variables reflecting personal differences and differences in opportunity costs. The model indicates that transfer students perform poorly relative to native students in terms of cumulative GPA. However, we also find that this result is driven by a self-selection process whereby the more academically challenged students are those who choose to transfer credit from 2-year schools. Once this selection process is taken into account, our model then predicts that the decision to transfer is rational in that it raises GPAs and enhances the probability of graduation. Finally, we find that grades in the Principles sequence are strong predictors of overall academic success.