Students dropping out of colleges after the first year will not only dampen their future prospects but also waste billions of taxpayers’ money, says a study.

The state and federal governments' spent more than $9 billion to support students at four-year colleges and universities who didn’t start their sophomore year from 2003-2008, says a report from American Institutes for Research (AIR).

With states incurring a major part of the expenditure, AIR estimates their appropriations at $6.2 billion on student dropouts during the same period, the report, released on Monday, said.

On average, taxpayers’ subsidies for students in public colleges stand at about $10,000 per student per year.

With 30 percent of the students leaving college after the first year, the federal government spent $1.5 billion on grants and states doled out $1.4 billion, says the report titled "Finishing the First Lap: The Cost of First-Year Student Attrition in America's Four-Year Colleges and Universities."

“These costs can be heartbreaking for students and their families, but the financial costs to states are enormous,” said Mark Schneider, vice president at AIR and the former commissioner of the federal National Center for Education Statistics.

California ($467 million), Texas ($441 million) and New York ($403 million) were the leading states in government spending on students who dropped out before their second year, while thirteen states recorded more than $200 million of such wasteful expenditure.

To protect the future competitiveness of the US, President Obama, in his first speech to a joint session of Congress in February 2009, sought to have highest proportion of college graduates in America by 2020.

“The nation will have a difficult time reaching the Administration’s policy goals if we continue to spend so much money on students who don’t even finish the first lap, let alone fail to cross the finish line,” the report says.

With states already finding it difficult to support funding for all kinds of programs and services, the report finds increase in the cost of states appropriations by 15 percent over the same period.

“As state colleges and universities struggle in a difficult budget environment, what is most disturbing is how much direct state support has been lost to college drop-outs,” Schneider said.

The United States spends more on higher education than any other nation in the world, yet American students’ success is not commensurate with these world-class expenditures, says the report.

The report points out various reasons for this failure such as students unpreparedness for rigors while entering colleges; colleges and universities not performing well in educating students; and lack of public campuses accountability by states.

According to AIR, only about 60 percent of students in the nation graduate from four-year colleges and universities within six years.

The nation urgently needs to solve the low graduation rate problem and to increase the pressure on colleges and universities to be held accountable for the success and failure of their students, the report notes.

The study did not cover the costs to taxpayers on students who drop out sometime after their sophomore year.