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Colleges’ role in curbing the student debt crisis

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In this Nov. 9, 2017, file photo people walk by Old Main on the Penn State University main campus in State College, Penn.(Gene J. Puskar, File/AP)
In this Nov. 9, 2017, file photo people walk by Old Main on the Penn State University main campus in State College, Penn.(Gene J. Puskar, File/AP)

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America has a student debt crisis. But who is responsible for the crisis?

Higher ed is taking in the money from students, who owe more than a trillion dollars in student loan debt.

And it's part of the reason why tuition inflation has historically been higher than regular inflation.

The federal government is trying to get a handle on it.

Today, On Point: What colleges and universities need to do to wrestle down the high cost of higher education.

Guests

Eric Kelderman, senior reporter for The Chronicle of Higher Education. (@etkeld)

Mitch Daniels, president of Purdue University. Author of the recent opinion piece in the Wall Street Journal Student-Loan Forgiveness and the National Debt. (@purduemitch)

Also Featured

Kevin Carey, vice president for Education Policy and knowledge management at New America.

Interview Highlights

In 2012, revenue from tuition for Purdue was about 36% of revenues. By 2022, revenues from tuitions held at about 35% of revenues, although of course, with inflation, costs increased to $1.46 billion. How do you hold that steady?

Mitch Daniels: "We made it our top priority. Our priority is value, which is to say quality over price. But we we've asked ourselves each year, What would we need to do to avoid a tuition increase on our students and families? I sometimes say we solve the equation for zero.

"And I do believe we've achieved a nearly universal enthusiasm on our campus for doing this, which means that everybody thinks about it and looks for ways small as well as large to restrain costs. It's also fair to say that once this cycle started and by cycle, I mean we're now a decade into this, not just holding tuition where it was, but we've lowered the cost of room and board and books.

"The all-in cost, so-called cost of attendance at Purdue is lower in unadjusted nominal dollars now than it was in 2012. Our room and board costs have gone from most expensive to least expensive in our peer group. So this can only happen when you have alignment around a goal, across an institution the size of ours.

"But the virtuous cycle, as some people call it, has been that our student body has grown by 30%. So our revenues have grown without a price increase. And we know that from serving our students that there are multiple factors, starting with academic quality. But a reputation for care, about affordability, has been a major contributor to that growth."

On the first years of the tuition freeze at Purdue

Mitch Daniels: "I'd love to tell you that it was all very difficult, but that really wouldn't be. The fruit hangs pretty, pretty low in high red, after decades as you illustrated in the previous segment, of increases, essentially unfettered increases. They raised prices because they could, because the general rules that govern competitive markets weren't operating here. And so there was, as I say, a lot of fairly easy adjustments to make.

"I want to say that we never would use a word like forfeit to describe our declining to impose an increase on our students. We view it very much the other way around. That the presumption ought to be that we will not do that unless we absolutely have to. You know, over the last decade, Perdue families ... are in possession of $1.3 billion that they would have paid to us if we had raised costs at the national average."

On merit increases for certain personnel

Mitch Daniels: "The bloat of administration in higher ed has been chronicled. Eric and others have written a lot about this, and we scrutinize that very carefully. We watch among the ratios and measures; we watch with the most care students to administrators and faculty to administrators.

"And we've brought those down a lot. Now, the federal government, you're going to ask at some point what they could do. And one thing they could certainly do is deregulate and relax some of the frankly useless impositions that they have placed on schools. It's not a complete excuse for the administrative excesses, but it's part of it."

The Biden administration's free community college plan

Mitch Daniels: "I think there are other reasons to be troubled about the proposal, starting with the fact that the nation doesn't have the money. We're borrowing all this money. You know, the notion, by the way, that student debt has been canceled is a complete misnomer. It hasn't been canceled, has been transferred from people who borrowed the money, to people who didn't.

"And so here on community colleges, I've struggled with this ... and wrestled with this in two lives now. A better, more effective community college system would be a great thing for this country. It's not performing very well in most places, with graduation rates in the teens.

"And, you know, until we find better ways to help young people or make sure young people succeed, much as Eric correctly identified, the new efforts that are going on in conventional higher ed. And until we do that, I think you also want to just be careful about even further subsidies of that system."

How replicable do you think Purdue's system of freezing tuition and finding cost controls is?

Eric Kelderman: "I think within that sector of higher education, which is large, relatively prestigious land grant universities, I think a lot of institutions are doing something similar. I mean, if you look at, for instance, the University of California system, something like half of their graduates incur no debt. I think Purdue, it's maybe higher than that, which is admirable.

"And Ohio State, for instance, the president there has just begun a pilot program with the plan to make all students graduate without student loans. Part of that's, you know, on the process of fundraising, etc. So, I think within that sector, certainly there's the ability to do much of what Purdue has done, and many institutions are pursuing a similar path."

This program aired on November 4, 2022.

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