Full Episode Transcript
- [Narrator] We believe and I’ve always believed in this country that man was created in the image of God. And he was given talents and responsibility and was instructed to use them to make this world a better place in which to live. You see, this is the really great thing of America. It’s time to discover what binds us together, and finding it has the power to transform our world. That’s what I believe. How about you?
- Well, hi, everyone. I’m Doug Devos, and welcome to “Believe!” We’re thrilled to have you joining us again. Today’s topic is a wonderful topic, and talks about higher education. A lot of discussion in the marketplace about the cost of higher education, the value of higher education. And I am so thrilled to have a chance to speak with a great friend, the President of Purdue University, Mitch Daniels. Now I’ve got my gold sweater and black jeans on. So I’m trying to be gold and black here and do the best I can do to match up, but I had a tremendous experience at Purdue when I attended and have continued to just enjoy being part of the university ever since like I’m sure many of you are with your and with the experience that you had. But there’s a lot of questions today. And President Mitch Daniels has had a tremendous influence on innovation and creativity. And I wanna take a little time to think about what we all believe about higher education, be informed on that through President Mitch Daniels. So Mitch, thank you for taking the time to join today. We really are looking forward to this conversation.
- I’ve looked forward to it too.
- Great, thank you. So let me just dive in. So first of all, you have an incredible resume. You’ve had a lot of experiences before you joined Purdue. Right? You were the governor of Indiana, you were in the Bush White House, you were an executive with Eli Lilly. How have some of… And even if you go back further, just to your childhood, how have some of those experiences shaped you and prepared you for the role that you have today?
- I usually start this answer by saying scar tissue, which is not completely facetious because in past roles, a couple of them in particular were public and visible and you come to accept after a while that with that territory, comes a lot of criticism, sometimes, in fact frequently, unfair, untrue, and, you know, learning to that that just goes with the job and learning to shrug it off, not spend energy fretting over it is certainly part of it. Now, I don’t wanna overstate that. I’ve had a terrific experience here at Purdue that any negative comments that have come with it have been pretty infrequent, but they do come and some people I don’t think are ready for it if they are encountering it for the first or second time. I think the other answer probably is that as it was in my public elected job, business experience over and over, I find the most valuable things that apply are not those things I might have learned, although I learned a lot in white houses or in previous public life, but rather those things I learned running the rest of midsize then part of a bigger business, all the things that really makes society go, making ends meet and trying to bring new value to willing customers.
- Yeah, absolutely. So you’ve learned so much and when you came to Purdue, a lot of us were just thrilled to have some of your leadership, your character, your experience, in this role. But one of the main things, one of the questions I kinda started with, and I want you to help us think through this is, the cost of higher ed, huge topic today. Inflation’s a huge topic today, but the cost of higher ed has risen dramatically in recent years and decades. But yet you at Purdue have been able to keep tuition level for a number of years now. And I remember talking with you very early on when you started on that journey and you were making progress on that journey of holding the costs down. Help us understand how you view that, how you think about what you believe about the cost of an education, the value equation that, I remember you talked about this idea of the value equation of education. So I’d love to hear your thoughts and help us think about that.
- It probably helped to have come from outside the system that that had its downsides. I had so much to learn, I think I’m still learning. But among the positive aspects probably was, I arrived here, is 10 years ago now. This isn’t a new topic, it was obviously even then to me, and I’d been out, I had been the employee of the six and a half million citizens of our state, you can bet I had heard a lot about the rising cost of higher education from them. And I frankly, overestimated how quickly and how severely pressure would come to bear on higher ed, I said to people at the time, we better to get a handle on these costs, we better break this pattern of annual increases, at Purdue it was 36 years in a row. And that was pretty typical. And I said, we’d better… How about we take at least a one year pause to indicate that we’re listening and that we understand that this is really starting to squeeze people, particularly those of moderate means. And so, my only surprise about all the current focus on this subject is that it took as long as it did, and that the market was as slow to start exerting its pressure as it finally has been. But, you know, it’s not a mystery to me how it came about. Two reasons, the first reason very simple, they raise tuition ’cause they could. Every business would love to have total pricing power, the ability to raise your price, and not lose customers. And for higher ed, it was, in fact, it was better than that when they raised the price. Some people assume that, because they had no other way to tell, they assumed that that meant the quality was better, if it cost more, must be better. No evidence of that, in many cases is plainly wrong. But that was a pretty nice way to do business while it lasted. The second thing was the system. I’ve sometimes said or written, if you set out to design a system that would cost too much, it will look pretty much like what we’ve got in higher ed. By which I mean, you’re, first of all, you’re selling what has been seen, at least, this is also beginning to change, it’s healthy, seen as a necessity. People really felt it was urgent for their child or for them to get a college diploma. And there was no measurement of quality, as I mentioned earlier. The people didn’t have a way to know whether they were getting good value, whether they were they were gonna learn a lot or a little during the time they spent in higher ed. And then very crucially, you flooded the system with third party subsidies, government loans and grants and so forth. So that the person or the family consuming the product didn’t feel the cost. Or maybe they didn’t feel till later when those student loan bills started arriving. And so they were desensitized to the price. Throw into the mix a lot of government regulation, which is expensive to comply with, and requires administrative people you wouldn’t otherwise need to teach young people. And, you know, you’ve got a formula for higher costs. And if that all sounds familiar to people in the audience, someone out there is saying, oh, yeah, I’ve seen that before. This is American healthcare, with third party payments, and very difficult to measure quality, not a lot of transparency, et cetera. And it is no coincidence that the only items in the economy which have gone up in price over the last maybe four decades faster than healthcare are college tuition, college room and board and college books.
- Wow. Well, that’s a trifecta of the impact on people who are looking for an education and, you know, as we try to shape our views, because sometimes you get into a world, you get in the world of academia, you get into, I’ve been in situations where I feel completely removed, I feel uninformed about where I am and you’re relying on people to tell you about it. And I’m sure there’s a lot of people in the audience who are making a higher ed decision or whose family are making a higher ed decision, this idea and because of all the talk and because of the cost, maybe there’s a crisis of confidence in higher ed. More and more people are trying to wonder about the value of it for them, and of course, the value is gonna be linked to the cost. So help us understand your perspective on the value of education and that you see and that is being created at Purdue by an amazing faculty, and it’s being created at universities across the country by amazing people. But help us understand that the value of that experience and what a student can really take away.
- You’re asking exactly the right and central question, this should always be as most of life is about value. You know, what quality does one take out of a given purchase relative to the price paid. And when higher ed is done well, and is done at a price that’s affordable, I think it’s one of the most valuable things any person, frankly, of any age because higher ed is no longer just for the 18 to 22 year old. It’s one of the most valuable things a person can do. And it’s such a common place now, because it’s true that we’re gonna be in a world of continuing or lifelong education. And places like Purdue have to be prepared to do that. And we are, we’re offering to people who’ve been out of here for years the chance if they want to come and learn more, or refresh what they learned before. But I say that it has to be done right and has not always been. I don’t know if crisis is the right word, might be. But certainly there has been a sharp plummet in confidence in higher education and in higher ed there’s no one to blame but itself, in my opinion. The percentage of people who say they see value, the percentage of young people who intend to go straight to college from high school have both dropped precipitously. The number of people on American campuses has declined now for 10 straight years. And since we’re not having a lot of kids in this country, those numbers are not gonna reverse. So there’s gonna be a lot of schools, if they can’t demonstrate and convince future, we’ll call them customers, of their value, then they are very likely to struggle.
- So talk about that a little bit more. So you’re seeing some signals, there’s a lot of conversation. And of course, in the business world, there’d be an immediate response to that. You lose a little market share, you lose some sales. Yeah, boy, a lot of people get a lot of activity. We know how that goes. But in business, sometimes two companies don’t respond. And they go out of business. So, are you seeing that as a possibility in higher ed? Are there gonna be schools that are going to not be able to sustain, not have customers, students, not be able to attract people for their services, and what happens? And how should they be innovating or thinking about staying relevant in creating that value? What are the some of the things that you would say they should be thinking about?
- Well, first of all, it is happening. We’ve lost 70 schools by one count in the last five years. And there are many more, I think, in very, very severe straits right now. Again, when I got to this job, people were forecasting much more radical shake out than that, and again, the system has shown it has a lot of inertia in it. A lot of, you would say in business, stickiness.
- Right.
- And so that needs to be taken into account. But it may be taking longer and moving a little more slowly, but the direction is very, very clear. What should schools do about it? You know, some are probably past the point of no return if they’ve backed themselves into a corner where they’re charging extravagant prices. For courses of dubious value in today’s marketplace, and taught in non rigorous ways. There’s not gonna be a simple exit. You’re starting to see schools, this will be familiar to people in business, consolidated or merged. You know, one way to survive is to take redundancies out or deduplicate back office and other functions. And I just heard from a couple of very fine, small, private, liberal arts schools in the Midwest who are going through exactly that process and wanna know about how to make it work. So, you know, the best thing that place can do, I think if they’re in that good shape, is to emphasize, if they can, a course wear that is relevant to today’s marketplace, and to try to declare that they’re gonna hold high standards, both of the rigor with which things are taught, the integrity with which it’s taught, and the values that the university stands for. But there’s been a flight from expensive small private schools, and also troubled to say, from some of our public regional schools around the country to schools like ours, where people have decided, you know, the quality is pretty darn good and it costs a fraction as much.
- Right. Right. And that’s just how any industry gets disrupted. Somebody offers a better product with better value, and people vote with their feet. They vote with their pocketbook. And that’s what they’re doing at Purdue. So you’ve been managing costs, and what are the results you’ve seen? We’ve talked about this before, I’d love to hear the latest on student, student quality, student achievement, some of the things that you’re experiencing at Purdue.
- You can get what some people call the virtuous cycle going. And I’d say we’ve been enjoying a version of that, as the years have gone by and with an academic reputation that is as strong as any certainly in our peer group. As our prices became more and more and more competitive, as we stood still, we actually reduced the cost of room and board and books. We’ve had record applications every single year, and the university has grown substantially about almost 30% over the last decade. And so, of course, one way to avoid price increases is to have very, very strong volume, strong top line, so to say, and we do.
- Yeah.
- I should say one other thing, it was thought, and frankly, I accepted as axiomatic when I got here, that if we grew the student body, that the quality of the incoming, or the readiness of the incoming students would slip, you know, you’re taking the next set of people you might not have accommodated before. And to be fair to schools that were practicing that, were becoming more selective, it wasn’t without a reasonable rationale, which was and remains to some extent that graduation rates need to be better than they are. There’s really nothing more unfortunate than to see the large numbers of people we have had who started college and didn’t finish. We may wanna talk in a minute about that whole subject because it’s more important than some people realize. There are twice as many people in that category. They actually sl–
- Please, dive into that. Dive into that. That’s absolutely critical.
- Yeah, no I will. But to complete the last answer, if you are a little more careful about who comes in, you will probably gonna have a higher percentage succeed and go out the other side. So the rationale for greater selectivity was not all nefarious, oh, yeah, some were chasing these ratings and so forth, but I don’t think that was the case here. Anyway, we reversed field and what I wanna report is that even though the student body has grown every year, the quality has risen, not fallen. And as I say, I think we have something of a positive cycle going in which our reputation has strengthened, and our reputation for value in particular. And so we are attracting more of the same excellent students that have always made up the Purdue student body. Now on the other side, again, it’s we now operate an online university called Purdue Global, which I believe is absolutely… It’s not only consistent with our land grant mission to spread and democratize education. I think it’s basically a prerequisite these days. And what I wanna… Reason I say that is Purdue Global serves a completely different audience. It serves almost entirely that group I mentioned that never finished college. And there are twice as many such people in America today than all the college students on all the campuses we spend most of our time talking about. And–
- Wow, that’s a huge number. Hard to imagine.
- I know. And they’re less visible. So the average, or the typical student at Purdue Global is a woman, she’s likely to be as likely to be minority as not in her 30s, who has some kind of job, has family responsibilities and so forth. That sort of person is never gonna be able to come back to campus to finish a degree.
- All right.
- Almost certainly not. And so we had to find other ways to help her or him do it. And with the tools of the new online technologies, we’re able to do that and we consider that just as noble admission as helping that bright, fresh-faced 18 year old walk across the stage here four years later.
- Yeah, yeah. Fantastic to think about that. Let’s go a little bit kind of in that vein of innovation, because you’re part of a University Innovation Alliance. So you’ve been incredibly innovative at Purdue, you’ve connected with a few other university presidents who are thinking of these issues the same way. And one of the things I love you talked about was room and board and books. It’s identifying not just the tuition costs, but the other costs may be of attending, and being active about it and creating value in those places as well. But maybe not specifically, but help us understand, how should we be thinking about the work you’re doing with other college presidents to try to reform, if you will, the industry, or the function of higher ed in our society.
- I always try not to hold ourselves out as a model for anybody else. The decisions we’ve made, we believe, are right for Purdue and for our mission and for our values and tradition. They may or may not apply elsewhere. I will just say that I do think that, as we’ve been discussing that the marketplace is beginning to, I’ll say sensitize other universities more and more to this problem and it’s about time. We’ve smile a little when people say, as you just did, or we get some award, we’ve gotten a few for being innovative. And of course, we do try and we don’t consider ourselves you know, trapped. We try not to be trapped in old ways of doing things just ’cause they’ve worked in the past. You know the dangers of that in business or anywhere else.
- Sure.
- But I usually laugh about it because, you know, it’s just, I’m sorry to say, it’s not too hard to stand out I mean, in higher ed. It’s very interestingly, there are a bunch of ironies that I’ve taken note of here. One of them is that people in higher ed, they’re very, very bright and they think of themselves as very futuristic and forward looking, progressive and so forth. But in terms of how these institutions operate, they’re about the stodginess, most hidebound, reactionary places I’ve ever seen.
- All right.
- And so you do something that’s just a little bit different, and people take note or impressed. You may remember, I wrote in one of my annual letters, we just gotten a couple more awards for most innovative college or something like that. And so it was nice to see I said, but you know, when you’re driving 10 miles an hour but the traffic’s only going two, people think you’re a Ferrari. We’re just really not that good. We got a lot of work left to do.
- Well, I think, you know, in life, we all feel that way sometimes, but we gotta do what we can. And if you’re going 10 and the rest of world is going two, you’re making progress and we have to all keep trying to figure out how to do that. Let me–
- Just one more thing on this subject.
- Sure.
- It’s been more and more clear over time. And I’ve mentioned , if you just develop some sort of a track record of doing things a little differently, being willing to experiment with a new idea, you don’t have to be so darn smart because people bring their ideas to you.
- Right.
- You know, I think, oh, those crazy folks at Purdue probably try this, you know, and it’s been several technologies. I look at this window right now I see these little white, rectangular robots running around all over the campus. And we were the first place. It’s a company called Starship. So you can call up and they’ll deliver anything from your pizza, your cheeseburger or your Starbucks, the robot will bring it to you. And you’ll open it with your phone, a code on your phone. And they’re ubiquitous on our campus. The company is doing well, they’re now apparently on 20 some campuses, but we were first, why? I think because they figured that we’d be a little more than others to give it a whirl.
- Yeah, that’s a great story. If I could figure out how to place an order on my phone and do that sort of stuff, then maybe I could be a customer as well. But I may have to have my children help me.
- Well, it’s not hard. I’ve done it.
- All right, well, good. I may have confidence. Let me shift gears a little bit, staying on a similar vein maybe, not exactly of innovation but of leadership. I watched your address at the graduation last spring, spring of ’21 for the graduating class, and there was a lot packed in there coming out of COVID. You did a lot of things, Purdue did a lot of things that other schools didn’t do. Again, it was innovative, but it required leadership, required stepping out, and you talked a lot about how leaders have to balance risks. You can’t have an aversion to risk. And you talked about even how sometimes, you know, current leaders have failed when they were so fearful of uncertainty that they didn’t take all the other interests into account. Help us understand how you and the university thought through the response to COVID in the early days and the mid days and how you were able to be a bit of pioneer and continue to deliver services in the best way you thought possible to your students.
- Once again, we didn’t set out to make a decision that we would necessarily recommend to anybody else, but we did make a fairly early decision that it was our duty to stay open if we could. And we certainly knew that, that might not work. We were never gonna take reckless risks with the health of any student, faculty member or staff person or anybody in their community around us. And yet, we believed that it’s our job here to help these young people move as quickly as possible through a growth process that allows them to launch their lives successfully. And that it would be a default of that duty to simply throw in the towel at the front end and say it’s too chancy, you’re gonna have to add a year, postpone your life really by a year or more. And I also, it was fairly clear, I thought, and we gathered some of our best scientists to look at this at the very front end, even though none of us knew much. It was beginning to be clear early that this particular virus, as dangerous as it was in certain categories, was not dangerous much at all to the young people who predominate on our campus. So if we’d been running a nursing home, I would have had a very different situation. But we were the other end of the spectrum with an average age on campus in the 20s and an average age even in our surrounding area in the low 30s. So we thought that we ought to give it a try. And here’s another place where many years in business and private life I think was helpful. I looked at the implementation job we were going to have to go through to do this well. And I just concluded that we had to make early decision, we had so much work to do, we had to stand up. We don’t have a medical school here, we had to stand up an entire COVID apparatus from scratch. Testing, tracing, quarantining of those who were going to be temporarily out of service, a whole system so those students didn’t lose time. They could switch to online, and then back in to the regular course, all this and more. And so, in view of the fact that it might not work and we said, look, the minute we see that this is not working, we’ll have to join the parade and take a year out or shut down. One, to me, very obvious step that I was to this day I’m astonished others didn’t do the same. I said to our folks, what matters to me the most is not whether a lot of people get a little bit sick, but if anybody gets really ill. So I asked them to set up a severity index one to six, one was asymptomatic, two was one symptom, three was two symptoms, six was candidate for the hospital. And we watched that very, very carefully. If we ever seen a significant number of people in real danger, then we probably would have, you know, gone back to a more closed situation. So I do believe that history will judge harshly many of our decision makers in public and private capacities, who took what I think was the easy way out instead of balancing priorities. I mean, you’ve been a major leader, business leader, and I’m sure people in the audience do. It’s all about choices. It’s all about priorities. It’s all about balancing competing interests. That’s the very definition of a position of much responsibility. And I think so many people abdicated that duty, they hid behind alleged experts who only had one thing in mind, how do we have the fewest number of cases? And didn’t consider all the collateral damage they might be doing all the other harm that might come that need to be considered in the balance.
- Yeah, yeah, exactly. And in one of your quotes is kind of what you started with, “Boilermakers don’t scar easily,” meaning they stand up and take it and lead when necessary and where necessary, and make those sorts of choices. And I remember just watching from a distance at the time as you were going through that and the things you were saying, just so grateful for people who are balancing decisions, and as you know, we’re never gonna get every decision right. You know, leaders are gonna be wrong, I learned that early on. But you got to make a decision.
- We made all kind of mistakes and some of them are kinda comical to look back on, again, none of us knew that much. And, you know, a basic rule of business or life, I think, that gives that… And I tell our students all the time, we love data around here, we like to gather it and analyze it. And it’s a core skill of life, we teach it to every student now, doesn’t matter what you’re studying. We want you to be a data analyst at least . Well, I also tell them, you are probably never gonna confront a significant decision with all the data you’d like to have.
- Right.
- At some point, if you wait till that, if you wait till you have everything you think you need to know, somebody else already has the customer, somebody else has already captured the market, somebody else’s beating you to the punch. So we, again, we did some things that looking back didn’t do any darn good at all. And I laugh about some, I mean, I was out bragging about how much plexiglass we had bought. I put it up everywhere. Well, a year or two later, the data says, you know, that probably didn’t stop much of anything. We move beds and I feel badly all the workers who went into all our residence halls, somebody calculated that you could really reduce the likelihood it spread if you had more distance between, let’s say, they’re two people sleeping in the same room.
- Right.
- So we moved whatever it was, 15, 20,000 beds so they’d be on opposite ends prior to make any difference. If you’re in the same room, you probably caught it. Things like that. While scrubbing them counters like mad men and then it turns out don’t really spread much that way, but who knew? So we did everything we could and you’re right, when you tackle a problem like that, you’re probably gonna make some mistakes. You just have to own up to ‘em and no, don’t make ‘em twice.
- Yeah, exactly right. Learn from them and move on. But again, I think that’s a really interesting chapter in Purdue’s recent history about, you know, as I appreciate your duty to the mission, and that we had a duty to fulfill and you had a duty to fulfill and you were gonna figure out how to do it the best way possible without being reckless. I think that’s, you know, we all take measured risks in life. And I remember you talking about there’s other risks on campus that population faces. It’s not just a COVID or infection risk, and there’s other risks that we all face in life.
- Absolutely. You’re right, the evidence has just been piling up and piling up worldwide frankly, but across society of, we’ll be finding out for a very long time about very real human costs. Forget economic costs, which were horrendous. Human costs, I just saw today that deaths from alcohol in the sub 65 population exceeded deaths from COVID over this period, and the scientists who produced this demonstrate that these deaths jumped up and clearly many are COVID related. There’s just so many examples, but what our K‑12 kids lost. And somebody better be working on how to catch them up because it doesn’t happen naturally or automatically. So I believe, you know, years from now, social scientists and scientists here will still be tabbing up the consequence of one dimensional thinking refusal to try to wrestle with the really difficult balancing questions we discussed.
- Yeah, absolutely. And I love this way you’ve talked about, boy, if you’re gonna try not to have any risk at all, you’re not gonna take any risk at all. It’s just a great, great summation.
- Yeah. Right. I mean, this country was built by people who took enormous risks, got in leaky boats, some of them didn’t get here at all, you know, landed with nothing, and taking the chance that they could find a first rung on the ladder, and all that marched off into the wilderness not knowing what dangers they were exposing themselves to, and often losing their lives. But we ever lose that sense of risk taking an adventure, we got big problems.
- Yeah, yeah, absolutely. So let me shift gears again, and another phase of innovation, maybe switching towards more of the policy side of things, and it’s particularly with regards to student loans, you talked about it earlier. But what started as a great way to kind of encourage people to get a college education in the 1970s, take out this loan, get the support, has really turned into a place now it’s a hugely political topic. And there’s a lot of people who took out their student loans and paid back their student loans. And there’s a lot of people today who where some people say, well, they shouldn’t pay their student loans, and college should be free. Help us understand your perspective on, from a policy perspective, how we as a nation or citizens should be thinking about our role in helping or connecting people with the opportunity to have higher education or college education.
- Right. Well, I do have strong views about this. And they start where you did, that the graduates Purdue University are 99% certain to pay back their student loans. The people who are… The vast majority of people who took out loans and aren’t paying them back knew what they were getting into or certainly were on notice. Yeah, there were a few of the edges who might have been actively misled, but most knowingly borrowed that money and if they made a bad calculation, it was their own. The idea of wantonly or forgiving these, I think is wrong in every dimension. I mean, first of all, it’s, I think, ethically wrong to teach as a terrible moral lesson that people can take on an obligation like that, and then just walk away from it, particularly when many others honored their own commitments. It’s absolutely sure to be unfair in the sense that well to do people will benefit substantially in fact, probably more. They’ll probably have more money forgiven. And so it’s a very inequitable thing to do. And then finally, it’s a huge injustice to the American taxpayer. You know, when the federal government took over the loan program, they told everybody it was gonna make a profit. Oh, this is a smart thing to do. Because it’s a colossal loser, they’ll make it more so if they start forgiving loans that otherwise are supposed to be paid back. And what that is, frankly, is an appropriation by the executive branch. That is to say they’re spending taxpayer dollars, that’s who will pick up the tab instead of the individuals who undertook these obligations. So if it sounds like I don’t have a lot of use for those suggestions, I guess that’s correct.
- But you’ve also come back and appreciate that, thank you for sharing that. ‘Cause it’s hard for us to understand the enormity, even the size, you know, you’re talking one and a half trillion dollars. It’s hard to grasp the size of a million, let alone a billion. Now you’re talking about a trillion and you’re right, all the dimensions across which it could be a challenge, but you’re trying to respond with innovative ways for people to pay or for others to invest in a student so that they can have an education. Help us understand how you’re thinking about some of the new ways to do it rather than what’s out there in the policy world right now.
- Yeah, well, you’re referring to income share agreements, which I’ll describe. I’ll just say there’s an old way and a new way to deal with this. The old way, I always say, if you wanna control student debt, don’t charge darn much in the first place.
- Right.
- We’ve cumulatively over the 10 years that we have controlled student expenses here, and actually lowered them here at Purdue, someone calculated that if we had gone up at the average of our peer group, Purdue families now would have spent cumulatively a billion dollars more than they have. So there’s money, a lot of that money would have been borrowed if we had not done what we did. So there’s that. Income share agreements are an old idea that nobody had tried. So we did. The simple way I usually describe it is their equity is opposed to debt. So student doesn’t borrow any money. The student signs an agreement with an investor. And usually it’s, in our case, it’s our foundation which has raised in some funds for this purpose, and agrees to pay a specified percentage of income, whatever that income is, for a specified number of years after graduation. So the risk is shifted entirely from the student, or the graduate to the investor. If the student has no income, he pays nothing. If he goes off to bed to find himself, that’s the investors problem. If he had a student loan, the loan will be sitting there, it will be compounding every day of his life. So that’s, to me, the most attractive thing. It has other features that I think are very positive. If we could make it large enough over time, the market would begin to tell future students what they valued more, which is to say, and we had to sort of jury rig this based on historical data. But somebody who’s very likely to earn a larger income, let’s say, an aeronautical engineer, or a computer science graduate, will be asked in the agreement for a smaller percentage, and probably for a shorter time. Because it’s more likely to, they’re highly likely to be in demand, get a good job, and pay this very affordable amount. Remember, the student agrees to this. It’s an affordable percentage, whether they make a lot of money or a little.
- Right.
- And conversely, someone who studied something that at the time was seen as less valuable, is gonna be asked to, in any agreement, to pay a higher percentage of what’s expected to be lower earnings. But in any case, the risk shifts from the student, the risk… The student has frozen exactly their obligations and protected themselves in a way that’s not possible with conventional loans.
- Yeah. I remember a friend looked at the possible degrees when I was in school, went right to the potential income from each of those degrees and said, “Here’s what I’m going to do.”
- Yeah.
- And that was their decision.
- Yeah, a lot of smart students do it now and all this would do is bring the finance if they need more finance in the line with that. We never recommend it in lieu of a subsidized student loan, those are still when your fellow taxpayers are picking up part of the cost, you can’t beat those. But for many students, that’s not enough, and they need to borrow more. And that’s where a lot of them get into trouble.
- Yeah, yeah. Well, again, just another example of an innovative idea of trying to help solve the problem of high costs and making higher ed accessible to more and more people. Mitch, as we wrap here, and I’m so grateful for your time to talk with us about these things to help us understand, help us to get an understanding so we can kind of land on where we all believe all of us in the audience what we believe about this topic ’cause it’s so important. Help us to… Maybe just kinda close with what you see as the role of higher ed in our society. How… Even if we’re not getting a degree, even if we’re not getting the education, how should we, just as a citizen, step back and say, what’s the value? What’s the role that this education experience? And if it’s not just higher ed, maybe all of educate, what role does that play in our society and why should we be paying attention, caring about these discussions or these debates?
- I think the answer in one sense, to produce productive high-character citizens. And so that means to transmit the skills and the knowledge that young people need to be productive it should include some grounding in the ways and means of a free society, which is doing a terrible job, almost a counterproductive job in too many cases here at Purdue, starting this year with this year’s freshmen. It’s optional for their upper class colleagues. But starting with this year’s freshmen, sometime during their time at Purdue, they will, as a requirement of graduation, they will have to pass a fairly straightforward test on civics, civics literacy. And it’s not onerous or burdensome, but we think it is a part of our responsibility to send out not only people who can write brilliant computer code, or devise the next leap forward and precision agriculture or even simply be great leaders of businesses, talented business people, but people who are aware of their responsibilities and of the mechanisms of a free society. The kind that underlies all things they hope to do in life. And that’s something that was once pretty well understood in the K‑12 system, it’s disappeared there. There are even places where as I say I think people, young people are being taught, poorly taught the dishonestly even, about our history and about our civic traditions. Many of them arrive here not knowing much of anything about the system which has made a great, great country possible. So that’s what it’s about. For a few institutions like ours, not all but it’s not just about transmitting knowledge, but about generating new knowledge. And so that’s something we take very seriously here. So we have some fantastic researchers pressing out the boundaries of what is known all the time. But, I would say, the core mission for colleges of all kinds everywhere is the one I just mentioned. And I hope we’ll see more attention to that because many have, as our conversation has frequently mentioned, have many people are now very dubious that their job’s been well done.
- Yeah, yeah. And there’s enough visibility to those things. As you said, people are being taught dishonestly, or some things that are happening. With that again, citizens are seeing and watching and wondering then about the industry or the whole scope of higher ed. But Mitch, thank you so much for locking in, and being so passionate and straightforward about, you know, the roles and responsibilities and the performance of what a major university like Purdue is doing. So any other thoughts that you’d wanna share with our audience as we kinda wrap things up here just, again, so grateful for this conversation.
- All my other thoughts right now are about basketball. So I hope by the time the audience sees this, they all know how to say, Boiler Up!
- All right, well , I’m with you there. So we could have a whole another episode on sports and the impact in a university or in a society. But I hear you on that one. Mr. Daniels, president of Purdue University, thank you so much for taking your time. Thanks for helping us get a better understanding of the work you’re doing, the innovation that you are part of, and sparking in the importance of the role of higher education and expanding knowledge. I love that piece as well of just not just sharing, but expanding, finding new things. And we can be very proud as… I’m very proud as a boilermaker to be part of that tradition. I don’t know what I’m doing to help it too much. I’m trying not to hurt it. But I’m grateful to be part of it. So thank you for your time.
- Enjoyed it.
- Great, thanks. And thank you all for joining us, our time with Mitch Daniels, president of Purdue University. Thanks for joining us. We look forward to seeing you soon on the next episode of “Believe!”