Daniels asks Congress to reform higher education financing
September 30, 2015
WASHINGTON, D.C. - Purdue University President Mitch Daniels called for shared accountability, additional financial transparency and income share agreements to help students pay for college while encouraging schools to reduce the cost of attendance and address rapidly increasing delinquent loan rates.
Testifying Wednesday (Sept. 30) before the Joint Economic Committee of the U.S. Congress, Daniels discussed the rapid increase in student debt — up almost $86 billion in the last year — and the negative impact student loan debt has on the borrowers’ investment decisions such as starting a new business, delaying family plans or major purchases such as a car or home.
“Congress should adopt a ‘first, do no harm’ policy,” Daniels said. “The most specious and counterproductive of suggestions is to simply hand out even more public funds, a ‘hair of the dog’ approach — if you’re hung over have another — if ever there was one.”
Instead he offered three areas in which Congress could take action:
* Financial transparency and literacy: Highlighting Purdue programs that more precisely communicate how much aid students are getting, how much they will need to raise on their own, and the cost to pay those loans back. Daniels asked Congress to encourage universities to be more transparent and specific about the costs and earning potential of the degrees students will receive. At Purdue, he said, more active counseling, coupled with four years of no increase in tuition, has produced a decline of $50 million, or 22 percent, in student debt levels over the last three years.
* Accountability: Daniels urged Congress to hold colleges and universities accountable for the federal loans they receive. “Colleges and universities receive taxpayer dollars with nothing at risk and no incentive to ask for less in tuition,” he said. “Fundamental reform towards a system of shared accountability is clearly warranted. Colleges and universities should have more skin in the game. They should share in the risk with students and taxpayers that the education provided might not lead to positive life outcomes, and they should be rewarded when results are good.” Purdue, Daniels said, is willing to take that risk.
* Income Share Agreements: Finding an option for college funding that doesn’t include private loans or PLUS loans should be a priority, Daniels said. Income share agreements could be that alternative option. Legislation currently being considered (HR 3432), he said, will provide important protections for students and offer clarity for the ISA provider, and he urged Congress to pass the bill as soon as possible.
“There is something very American and progressive about the idea that contrasts with the existing alternatives,” Daniels said. “Consider that with private and PLUS loans, access to higher education funding regressively depends on family wealth. With an ISA, family credit is irrelevant to one’s worthiness to get funding. What matters is the future, and an individual’s promise to work hard, and pursue the American dream.”
The full text of Daniels’ testimony is available at http://www.purdue.edu/president/speeches/2015/151030-JEC-Testimony-Mitch-Daniels-F1.pdf
About Purdue University:
A top public research institution, Purdue offers higher education at its highest proven value. Committed to affordability, the university has frozen tuition and most fees at 2012-13 levels. Committed to student success, Purdue is changing the student experience with greater focus on faculty-student interaction and creative use of technology. Committed to pursuing scientific discoveries and engineered solutions, Purdue has streamlined pathways for faculty and student innovators who have a vision for moving the world forward.
Founded in 1869 in West Lafayette, Indiana, the university proudly serves its state, the nation and the world. Academically, Purdue's houses top-ranking disciplines in pharmacy, business, engineering and agriculture. More than 39,000 students are enrolled, representing all 50 states and 130 countries.