By Robert Balfanz and John Bridgeland

The nation’s high school dropout challenge is no longer a silent epidemic and many of America’s dropout factories are closing or being retooled. Our annual update to the nation provides both encouraging evidence that reform efforts are bearing fruit and disturbing news about the graduation gaps that remain.

The most recent data show that the nation has experienced the first significant growth in high school graduation rates in 40 years. Pushed forward by a five percentage point gain between 2006 and 2010, the country is finally on pace to reach the national goal of a 90 percent high school graduation rate.

Students who graduated in 2010 entered high school in 2006, when efforts to reform large, low-performing high schools that produced the most dropouts were intensifying. Examples of states, districts and schools making significant gains in graduation rates are growing, from Tennessee and Alabama, to the cities of New York and Cincinnati, and to schools in Washington County, Md., and Houston. The poster school for TIME’s Dropout Nation in Shelbyville, Ind., boosted its graduation rate from about 70 percent seven years ago to 90 percent today. The states of Vermont and Wisconsin have already met the 90 percent goal.

Other evidence of accelerating progress reinforces these gains. There are 583 fewer dropout factory high schools (graduating fewer than 60 percent of their students) and 1 million fewer students attending them in 2011 than in 2002, with a pace of progress much faster in the last half of the decade than the first. A more accurate calculation of graduation rates used in 47 states across the country shows nearly half have graduation rates of 80 percent or better. Encouragingly, the greatest gains have been among the populations and in the states with the furthest progress to make to strengthen our opportunity society, among Hispanics, African-Americans, and the high-poverty states of the south.

But our national leaders have been good at sounding alarms, setting national education goals, and not meeting them. The groundbreaking 1983 “A Nation at Risk” report offered sober evidence of our educational decline, while citing rising high school graduation rates over previous decades as a ray of hope. Three successive presidents challenged the nation to reach the 90 percent high school graduation rate goal by certain dates, only to see those deadlines missed or the pace of progress too slow to meet them.

The story this year is also full of challenges. Twenty-three states are not on pace to meet the 90 percent goal. While the greatest gains have been among students of color, graduation gaps among students of various races, ethnicities and needs remain so large they imperil progress. One-third or more of African-American students in 20 states and Hispanic students in 16 states will not make it to the graduation line with their class. There are no states in which the graduation rate for white students is so low. For students with disabilities or limited English proficiency, graduation rates are often far worse.

The last decade ushered in an era of progress, starting with the reforms of No Child Left Behind to close achievement gaps and boost graduation rates. Multiple sectors focused on breaking up, reforming or replacing the lowest-performing schools, creating more personalized learning environments and seeing the critical importance of extra supports for students entering 9th grade. In recent years, reforms have included using early warning systems to identify those students whose chronic absence, bad behavior, and poor performance in reading and math signal early trouble. With better data, nonprofits have retooled to match the tutors, mentors, and caring adults with those students most in need.

This past decade’s gains show that progress is possible, but it also highlights how far the nation has to go in creating an opportunity society that ensures all students have an equal chance to finish high school, ready for college and the workforce. To achieve this end, we must spread and sustain what we now know works to the communities and students who need it the most.