Researchers studying how to improve graduation rates at public colleges and universities have come up with a surprising and counter-intuitive finding: Many students may fail to complete a bachelor's degree not because the work is too hard — but because they're not challenged enough.

It's well known that colleges with the most selective admissions criteria tend to have the highest graduation rates. But even when researchers compared groups of students who had similar academic qualifications, they consistently found that those attending schools with the more demanding academic requirements were more likely to graduate.

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"There is a net effect related to selectivity that is powerful," says Princeton University president emeritus William Bowen, lead author of Crossing the Finish Line: Completing College at America's Public Universities, out today. While everybody does better at stronger schools, "the difference in outcomes … is greater for minorities than for other people," he says.

The book is based on detailed data for 21 flagship public universities and four statewide higher education systems; it explores how the USA might close gaps in college completion rates — a goal embraced by President Obama as a way to increase the nation's economic competitiveness. The research focuses on public higher education, where more than 75% of students enroll, because part of the mission of public institutions is to serve as an engine of opportunity.

The findings underscore age-old advice: Students should enroll in the most selective college that will admit them. But the problem is not that qualified students are being rejected from academically demanding schools. "They never apply in the first place," Bowen says. And the research found that those aiming too low were most likely to be minorities, low-income students and those whose parents never finished college.

The researchers recommend more effective counseling of high school students as they consider their college options. Also, "We need to understand better why students at more selective places graduate in larger numbers," Bowen adds. "We think we know some reasons. One is peer effects. A second is expectations. If you go to a place where the assumption is that everybody is going to graduate … you don't want to be the person who falls behind."

Molly Corbett Broad, president of the American Council on Education, a non-profit group for college presidents, says the research "tells us that there is potential to improve educational attainment (rates) if we step up to the issues that are standing in the way."