One of the great statistical crimes of our generation is the Federal Graduation Rate (FGR). On the surface, that number–expressed as a percentage–seems to say a lot about a university. After all, a university that is graduating 90% of its students has to be a lot better than one graduating only 40%. Right? And it’s certainly better than one graduating only 10%. No doubt about it!

Until you look behind the numbers and understand their absurdity.

Here’s how the federal system works: Each fall, our universities collect the names of all the full-time freshmen who enrolled. To make things simple, let’s say there are only three universities in our state–Campus Red, Campus Blue, and Campus Green. Let’s pretend that Red and Blue are regional universities, while Campus Green is the flagship.

During the fall semester six years ago, Campus Red enrolled 1,000 new freshmen while Campus Blue did exactly the same. Campus Green, being much larger, enrolled 5,000 new freshmen.

Now, according to the rules governing the Federal Graduation Rate, we wait six years, then we look at the list of names of all the students who signed up this fall. Then we have the numbers we need to calculate our graduation rate.

Here’s what happened:

At Campus Red, 400 students from that class graduated from Campus Red within six years. But 200 transferred during that time to Campus Blue, where they graduated within that same six year time frame. And 300 transferred to Campus Green, where they also graduated within the same six years. 100 students cannot be accounted for, so we assume they flunked out, dropped out, or otherwise didn’t graduate within six years.

It seems as though Campus Red’s graduation rate ought to be scored at 90%, since 900 out of the original 1,000 freshmen now have a bachelor’s degree from one accredited university or another. But that’s not how the Federal Graduation Rate works.

The FGR punishes Campus Red for allowing students to transfer to other universities in the state, even though the legislature enacted laws forcing these universities to permit easy transfer. Since only 400 of the original 1,000 students actually graduated from Campus Red, the federal government publishes Campus Red, by publishing its graduation rate at 40%.

That’s not the end of the story.

At Campus Blue, those 200 students who transferred in from Campus Red can’t be counted toward Campus Blue’s graduation rate. Neither can Campus Green count the 300 students who transferred from Campus Red. Transfer students skew the graduation rate in both directions.

What this means is that in states where laws are in place to facilitate transfers from one university to another, both universities are punished by the FGR.

During the time I served as president of McNeese State University in Lake Charles, Louisiana, 52% of all the diplomas I handed out were not counted in the Federal Graduation Rate statistic. That happened because (a) 40% of the diplomas were handed to transfer students who arrived from other universities, and (b) some students chose to graduate in seven or eight years rather than six, because they made it a practice to alternate working and going to school (to avoid going into debt). One common scenario was the local student who had chosen to go to LSU or another large university, only to discover that he or she would be more comfortable at McNeese. So they transferred in. But sense their names weren’t only our original “full-time freshmen” rolls, we couldn’t count them in our graduation statistics. Neither could LSU.

I used to joke that if we really wanted to improve our graduation rate, we should include a question on our application for admission. The question would be as follows: “Do you plan to transfer to another university?” Then, if the answer is yes, we should refuse to admit that student, because the federal government would treat that transfer as a failure on our part.

Doesn’t seem right to punish universities who are setting up cooperative programs with other universities throughout the state. But that’s the way the FGR works.

Moral: Feel free to ignore the Federal Graduation Rate statistic. It bears almost no relationship to the quality of an institution. In fact, in some cases, it may lead you to an institution where students have no easy opportunity to transfer to programs they might discover after they have enrolled as freshmen.