For parents who spent this weekend loading up the family car with laundry bags that would knock over Santa Claus, schlepping your son’s not-so-mini fridge up cramped dorm staircases or struggling to apply fitted sheets to lofted bunk-beds that sit 3 to 4 inches from the ceiling, I don’t need to tell you that sending kids to college is a stressful affair.
Where it hurts the most, however, is not the week of aching knees that follows, but in the four years of endless assault on your bank account.
Since the 1980s, the inflation-adjusted cost of a college degree has nearly tripled, with tuition and room and board increasing at a rate eight times higher than wages. Higher education is now the only sector of the economy whose price balloons at a faster pace than our broken health care market: not a record that needed beating.
Enter Mitch Daniels. When the former Indiana governor took up the mantle as president of Purdue University, I was curious to see how his track record as an innovative and staunch fiscal hawk — nicknamed “The Blade” by President George W. Bush — would translate to such a bloated and anti-competitive industry.
Six years later, Mitch Daniels has shaped Purdue into the national model for making college affordable, attainable and actually worth it.
Daniels first made headlines in 2013 for freezing tuition across the board for all students at Purdue. Critics doubted he would be able to keep it up for long, but if your son or daughter enrolled at Purdue any semester since Daniels took the helm in 2013, they would have graduated without paying a nickel more per term than when they started.
Purdue has held firm against ballooning tuition costs nationwide because Daniels approached the problem as a businessman would: digging deep in the balance sheet to find waste and lower fixed costs, holding all segments of the enterprise fiscally accountable and tapping into new sources for revenue, such as energizing the university’s alumni network through the Purdue Day of Giving program and even brewing a university-branded beer.
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Other universities would do well to emulate Daniels’ success on another critical issue: reducing debt among graduates. One solution Daniels has implemented is income sharing: a program in which the university will pay for a student’s education in exchange for a fixed percentage of the graduate’s income for a fixed time. These agreements align the priorities of students and universities, shift the risk off of new graduates and onto the lender, and incentivize universities to help graduates find gainful employment as soon as possible.
Due to these innovations and holding costs down for students, the average debt owed by a Purdue grad has declined every year since Daniels took the reins, and while the national student loan default rate falls somewhere between 7% and 8%, Purdue’s is a third of that.
As I’ve crisscrossed Indiana this year, one question that comes up in every town is workforce development. By 2025 Indiana is expected to have 1 million job openings, and nationally there are already over a million more jobs than there are unemployed Americans. Universities must align their priorities with the needs of employers, and President Daniels has met this challenge by investing in workforce development programs throughout Indiana with the Purdue Polytechnic Institute and in online learning.
Daniels’ move to acquire Kaplan University and rebrand it Purdue Global last year — the first time a state university has acquired a for-profit college, and for the low price of $1 — conveys his long-term vision for what the modern university can be: a resource for students of all ages and stages of life to learn skills to help them compete in the modern workforce and fill great-paying jobs that are available now for those with the necessary training. This year, Purdue Global counts over 2,000 Hoosiers as students — predominately women — with an average age of 34.
As someone who is also trying to bring a business mindset to a bloated and arcane system — in my case, the U.S. Senate — I respect what Mitch Daniels has done in post-secondary education all the more. Fresh ideas are what we need, and Daniels’ success at Purdue is proof that fiscal responsibility and long-term thinking over short-term gratification are the principles for prosperity whether it be in government, business or education.
If the university system fails to heed President Daniels’ warnings, it may be at their peril. Already, many small colleges and universities have begun to collapse under the weight of large overhead costs, and if the perceived value of a college degree continues to fall as tuition costs continue to rise, you don’t need to be a math whiz to know what might happen next.
However, if universities do follow Mitch Daniels’ first-rate example at Purdue, he’ll be rightly remembered as a watershed innovator for the industry: the Henry Ford of higher education.