This study examines trends in dropout rates in Korean colleges of education (teacher-training colleges) and empirically analyzes the association between the results of the Fifth Cycle Teacher Education Institution Competency Assessment (released in 2021) and dropout rates. To this end, a panel dataset of 45 colleges covering 2022–2024 was constructed, and panel regression models were estimated to identify institutional-level factors associated with dropout rates. The findings are as follows. First, overall dropout rates increased over the three-year period, with patterns varying by institutional type; notably, the gap between non-metropolitan private universities and metropolitan national universities widened over time. Second, the competency assessment grade and institutional location were significant correlates of dropout rates: compared with A-grade institutions, B-grade institutions had higher dropout rates, and non-metropolitan institutions had higher rates than metropolitan institutions. Moreover, over time, dropout rates at C-grade institutions increased relative to those at A-grade institutions. Based on these findings, this study discusses whether the competency assessment system aligns with its original policy objective of improving the quality of teacher education institutions and suggests strengthening and refining the existing consulting framework to enhance its effectiveness in reflecting institutional characteristics and contexts.