President of Purdue University Mitch Daniels, believes so. And he aims to do something about it!
An FKD Feature exclusive

Mitch Daniels has been widely bestowed the accolade of “most innovative university president in America.” And for good reason, too. At Purdue University he is making “inventive, even radical, changes to the way his institution finances itself and imparts an education.” His cost-cutting skills are so legendary, in fact, that he was dubbed “The Blade” by George W. Bush (for whom he worked from 2001-2003 where he ran the budget office). At Purdue, his cost-cutting prowess continues where, according to Daniels, “we’re able to say … that the total grcost of going to Purdue will be less in 2020 than it was in 2012.”

Daniels’ “Affordability Campaign”   

According to Daniels, college degrees are a profitable enterprise in that universities set the price and the higher the price, the more “customers” are inclined to pay. Moreover, since the federal government loans much of the money to pay, people are inclined to pay any price for a degree. Daniels mentions all the milestones of life that people postpone in the name of their college debt: “marriage, household formation, child-raising, homeownership, business-start formation” and more. Daniels’ solution to all this? Among more sophisticated responses to the economic and social problem of college debt: “Don’t charge so darn much in the first place!” Daniels believes that widespread adoption of what he has termed Purdue’s “Affordability Campaign” would considerably improve higher education.  

A Favorable Response To “The Blade”

When Daniels arrived at Purdue University in 2013, the university’s tuition had been raised for 36 consecutive years. This annual “tradition” of cost-increases was halted for one year as soon as Daniels arrived. As he himself put the reason for this hiatus: “to indicate some sensitivity to what was a growing concern about the cost of it all.” And the results of the one-year cessation were truly extraordinary. No, the university did not come crashing down upon itself. In fact, in consequence of building a reputation “as a place where you’re less likely to get socked with an annual [cost-increase],” the school was met by the agreeable result of “record applications from higher and higher quality students.”

Room and board also was held at a constant and fixed pricing schedule,which is highly irregular as far as nationwide university habits go. But, again, the university did not come crashing down as a result of this decision. Additionally, textbook costs actually have fallen 30 percent as a result of Amazon’s setting up “their first brick-and-mortar facilities anywhere” at Purdue under Daniels’ tutelage.

The 1955 Friedman Strategy at Purdue

Why shouldn’t it be possible for an investor to buy a share in a student’s earning prospects? That is a question asked by the economist Milton Friedman, and posed in a paper of his, published in 1955. It is an idea that Mitch Daniels has taken up and run with since 2016 through his “Income Share Agreement.” The Income Share Agreement is an alternative to traditional student loans. In the Income Share Agreement, a student receives funding for his education in exchange for 10 percent of his income, post-graduation, for up to 10 years. Daniels says: Think of it as working your way through school “after you leave” and after you already have earned your degree. What’s more, after school, if you earn nothing or little ($20,000 or less), then you correspondingly “will owe nothing, or very little.” It is a very reasonable response but something that almost no other school offers.

Purdue University Global

The innovations do not stop at university-financing reorganizations either. In 2017, Purdue purchased Kaplan University, an online, for-profit, distance-learning institution. And it was relaunched by Daniels this year as a nonprofit called Purdue University Global. The aim here was to “expand access to education,” Daniels said. The online university now enrolls 29,000 students for whom “geographical proximity,” or a lack of time, are hindrances to enrolling in ordinary classes. At first, there was a strong negative response from more than 300 faculty members to the initiative. But, according to Daniels, he has won over most of his critics. Now, “there are far more faculty who are looking to see if there’s a program that they could originate for Purdue Global” than there are those in opposition. The aim to bring education to citizens who don’t have easy access, Daniels sees as a noble successor to the GI Bill of 1944 and the Morrill Act of 1862, both of which aimed to do the same.

The acquisition of Kaplan University was an attempt, and a realized ambition for the ever-self-improving Daniels, to heighten Purdue’s online-education offerings. “Every year, between Christmas and New Year’s Day,” Daniels said, “I write a little self-evaluation and give it to the board. Three years in a row, the worst grade I gave myself was for online education.” Of course, with the purchase of Kaplan, Daniels dramatically improved Purdue’s online options for students with less access to traditional education. Since his innovation, his self-evaluated grade has increased.  


Next year is Purdue’s 150th anniversary. The occasion is being commemorated with a lecture series entitled “150 Years of Giant Leaps.” The name is inspired by Neil Armstrong, Purdue’s most famous alumnus, who “visited the moon during the university’s centennial year.” Mitch Daniels is a trailblazer and an innovator. So much so, in fact, that his contract has been extended indefinitely by Purdue’s board of trustees. This, as a reward for Daniel’s innovations. As Daniels humbly notes: his innovations are only a small step for Purdue University. And yet, as journalist Tunku Varadarajan ascertains, after his recent interview with Daniels: “If others were to follow some of his ways, we could well have a giant leap for American higher education.”


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Posted 01.02.2019 - 08:00 am EDT