This paper investigates in a non-parametric framework whether academic programs maximize their student graduation rates and program quality ratings given the first year student dropout rates. In addition, it explores what institutional and program characteristics explain this interaction. The results show that there exists a large variation in how academic programs are able to deal with the selective nature of first-year dropout. Nevertheless, we can accurately explain the variation among programs by program and institutional characteristics. It seems that universities can maximize the relation between first-year dropout, graduation rates and quality ratings in several ways: (1) by improving student program satisfaction, (2) by better preparing certain groups of students for higher education, (3) by supporting male students, (4) by supporting ethnic minority students, (5) by attracting older staff, and (6) by strengthening the selective nature of the first-year (i.e., increasing the academic dismissal policy threshold).
JEL-Classification: C14, C61, I21
Keywords: Student dropout; Student graduation; Conditional efficiency; Nonparametric estimation; Universities.