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The Daily Rundown
updated 6/12/2013 4:48:46 PM ET 2013-06-12T20:48:46

With college tuition rising, universities and lawmakers are scrambling to find a solution. Former Gov. Mitch Daniels says that universities must adapt.

College costs, excluding room and board, have increased more than 25% at private universities and more than 60% at public universities in the past 10 years.

Purdue University President and former Gov. Mitch Daniels, R-Ind., says that’s got to change so that higher education is affordable for more students.

Daniels said on Wednesdays The Daily Rundown that part of the reason tuition rates have been rapidly rising is the flood of easy loans to students.

“With the best of intentions, we’ve subsidized, poured loans and grants into higher ed. Universities did the human thing— they pocketed the money. But students and their families were no better off,” said Daniels.

Both lawmakers and universities are grappling with ways to make a secondary education more affordable.

An interest rate hike on new student loans will take effect July 1 under current law if lawmakers can’t agree on how to stop it from going into effect. Last month, President Obama urged Congress to freeze student loan rates. While student loan interest rates remain an important issue, some economists say that the rising cost of college is an even bigger barrier.

Schools are offering record amounts of financial assistance to incoming freshman. And college applicants certainly recognize the impact of tuition on their decision. In fact, a study released by the University of California-Los Angeles found that over 43% of students entering their freshman year view the cost of attending this college as “very important.” This was an all-time high since the survey began in 2004.

In recent years, many universities have implemented temporary tuition freezes and a handful have even cut their tuition rates in an effort to encourage accessibility.

Daniels believes that universities will have to change. Rather than focusing on spending extra tuition dollars on “country club amenities” and “very lavish facilities,” Daniels says that “universities will need to deliver an excellent education at a very affordable price, prove that students learned and grew while they were there.”

“It has been too easy to add these nice-to-do items and just send the bill to A)the taxpayer and B)the students family. That game is up,” added Daniels.

Daniels also shared his belief that universities must lead the way to make sure college sports are fair and student- oriented. Purdue is one of only seven division one schools which does not use tuition dollars to subsidize its athletic programs.

“[The NCAA] doesn’t have the tools to enforce the improvements and reforms they would like to bring. I think they’re working on it as hard as they can. But universities are going to have to police themselves and get it started that way,” explained Daniels.

Video: Deep Dive: As college tuition increases, student enrollment decreases

  1. Closed captioning of: Deep Dive: As college tuition increases, student enrollment decreases

    >>> today, a deep dive into our education nation focus and the financial burden being shouldered by millions of students and their families just to get through school. more and more, the cost of college has become a critical part of deciding where kids will go. frankly, if they go at all. a study by the university of california earlier this year found that 43% of college freshman say tuition costs are a very important factor. highest percentage ever recorded on that question. it's no wonder. on the left, you can see the average tuition cost of the college semester. over the past ten years, the average cost for a private university is up more than 25%. for public universities , ready for this it it's up more than 60%. that does not include room and board. it would be one thing if it was increasing at the rate of everything else but it's not. in that same time period in what may have been an attempt to take advantage of the fact that parents and students could get cheap loans, the average tuition cost rose 71%. at public universities , tuition costs have more than doubled. president obama called on congress to freeze student loan rates as part of an effort to keep higher education from getting out of reach.

    >> we can not price the middle class or folks who are willing to work hard out of a college education . we can't keep saddling young people with more and more and more debt just as they're starting out in life.

    >> so as college has become more cost prohibitive, universities are being forced to come up with new ways to get students to enroll. schools are offering record amounts of financial assistance to incoming freshman. other universities are freezing tuition and cutting costs to make their programs more attractive. this spring, purdue university announced it will freeze tuition at its flagship campus. mitch daniels is the president of purdue . he's in washington to receive the prize in outstanding achievement. congratulations on that. this issue of college, you know, we're having this political fight over the cost of student loans and the interest rate there. but the root cause has been this incredible i would say irresponsible increase in the cost of education over the last 20 years. is there any defense? you're just there so you don't have to own the problems of the last 20 years. is there any defense over this from the university community ?

    >> i think it was only human for people to do what they did. no, i think the outcome's indefensible. we at purdue are -- decided we're getting off, first of all, the sticker price treadmill. there was an assumption apparently correct for a while that the more you charge, the more value people would assume was in the product, which is not the case. you know, student loans --

    >> because it was so easy, people -- my theory was it's too easy to get loans, too easy to make a parent get a second mortgage.

    >> absolutely. with the best of intentions, we subsidized loans and grants into higher eds. students and their families were no better off. so i think something very different is coming. and universities, and we intend to lead there at purdue , will need to deliver an excellent education at a very affordable price. prove that students learned and grew while they were there. we think that's the future. not a continuation where we've been.

    >> do you think you will have a market of students that graduate in less than four years? basically, universities become -- the idea of the four years is an obsolete number.

    >> i really think that's a great goal to have. four years is not the rule for instance in europe and other places. if we used our facilities, more in the summer, as we're working hard to do, make at least possible for students to move quickly and go to school year round if you wanted to. we're a major engineering and technology school . we've got a number of disciplines that probably do require four years or even a little more. but that's okay because our students get employed when they leave. they make good incomes. they don't have trouble paying for any student loans that they might have taken. we've got to make sure that's the case ten years from now.

    >> what is it universities are using this money for? i look at where i went to school at gw and they made a massive building expansion. new buildings and new dorms. i thought, boy, they built these new dorms but does every -- it almost feels like it was extravagant, unnecessary --

    >> you're right. country club amenities. food that's so good you wouldn't recognize it if you went to school even a few years before. i mean, i lived on rameen noodles, there's nothing wrong with. really very lavish facilities. that's certainly part of it. administration has grown. it's not all the university's fault. a lot of it was required by government and so forth. but no question that it's been too easy to add these nice to do items and just send the bill to, a, taxpayer, b, the student's family. and that game's up.

    >> i want to ask you a pet issue of mine when it comes to university presidents and that's the ncaa . is there any way of making this a functioning body that football fans can feel confidence in, that the ncaa is a fair organization, but at the same time, also has the students in mind first?

    >> gee, i hope there's an answer to this somewhere. purdue meets three tests that i wish every university did. has very high standards of conduct for all its student athletes. high standards of academic performance. our athletes have outperformed the student body . and we pay for ourselves. there's no subsidy from the tuition dollar to the athletic problem.

    >> one of only seven division 1 schools in the country that do that.

    >> the ncaa , and i do know these folks, they're full of really good people. they want to do the right thing. they don't have the tools really to enforce many of the improvements and reforms they'd like to, i know, bring. i think they're working on it as hard as they can. i really think universities are going to have to police themselves.

    >> are you done with politics?

    >> yes.

    >> you are?

    >> as much as you can be on a university campus .

    >> they say it's even worse than anything, any capital, right?

    >> no, it isn't.

    >> all right. fair enough. good to see you, sir. go bail boilermakers.

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