 "Expectations get the better of Indian students abroad who are in search of jobs: Mitchell E Daniels")
Budgeting is what comes naturally to Mitchell E Daniels, Jr, former governor of Indiana, following the end of his role as advisor for the Bush administration. Daniels, 66, governed the state of Indiana for two terms, where he introduced massive reforms in school education before he took charge in 2013 as president of Purdue university.
Coming from outside the system and with his experience in the corporate world (he’s been president of Eli Lily in the past) and government, Daniels, in a way, saw the writing on the wall. He started by deciding to freeze the cost of obtaining a degree at Purdue (after 36 years of steady rise), just as many universities across America were grappling with rising costs. Costs of obtaining a degree at Purdue today are in fact lower than they were three years ago. Purdue student borrowing is down 23 per cent after the cuts.
In an interview with Anjuli Bhargava, Daniels explains how he managed to cut costs. Edited excerpts
You seem to have cut costs of obtaining a degree at Purdue just when people have begun to question the value of the degrees they were obtaining through college education in the United States. How ?
I came from outside academics and that perspective might have helped.
There is much debate around the rising costs of healthcare in the US, but the only three things in the American economy that have escalated faster than healthcare are college tuition, college room and board and textbooks.
Costs have risen because they could rise. No one was keeping score and there was no measurement of the quality of what students were learning. In the absence of that, people assumed if it costs more, it must be worth more.
The similarities with healthcare are striking. Consumers are not paying the whole cost themselves – there are all kinds of subsidies from the government – to either colleges or loans and grants to students, so the purchaser felt somewhat insulated from the real costs.
I’d say this was going to happen anyway, but the 2008 crisis and the difficult years after that – even till now – brought this forward. You have 45 per cent of recent college graduates living at home even now. You were meant to get a college degree, your ticket to a great life.
But now it turns out many of the students didn’t learn much, there are no great jobs to be got and students are back home.
How did you manage to freeze tuition, from 2013 to 2017, and other costs without huge cuts in staff and their allowances ?
It’s a bit of the other way round. When more and more money kept coming in, institutions just found a way to spend it. A lot of it was getting spent on things that weren’t absolutely necessary.
The first year, we set up a hotline and a drop box and asked people to come up with ideas to cut costs. Students, teachers, administrative staff and anyone who had an idea was invited to come forward — and they did.
The faculty strength today is larger than what it was. But we did other things. We modernised the healthcare benefit for our staff in a way that saves them money, and it is saving the university lots of money.
Today, the total cost of attending Purdue is lower than what it was three years ago — we have reduced room and board and the cost of textbooks. The cost of textbooks is 6-8 per cent of total costs. We worked with Amazon — their very first brick and mortar facility of any kind is at Purdue. Any student and faculty can order books through this at a saving of 30 per cent.
Is there more of a question mark on the value of a liberal arts degree than a STEM degree (science, technology, engineering and mathematics) ?
A large percentage of the 45 per cent of students who I mentioned are still living at home despite their degrees have been liberal arts students. There’s no question that liberal arts are under pressure.
But I worry about over-reaction. While it’s nice to have the technical skills, it’s important to understand economics and to be able to communicate. Companies often tell us not to send us a brilliant engineer who cannot talk to our customers or work in a team with less technically qualified people than himself.
Here we are seeing Indian children who are out of some of the best institutions in the US – fully paid for – but unable to find jobs.
At times, expectations get the better of them. If you have a degree from an Ivy League, you may have ridiculously high expectations at times — some students think they will be CEOs within two years or their salary expectations are bizarrely high. At Purdue, we try and give our students a rigorous education but keep their expectations on the ground.
What about massive open online courses (MOOC) and the threat they pose ?
We have to pass the “pyjamas” test — a lot of people who are very smart are telling these students why they want to move all the way to a university, pay a lot of money — just stay home in your pyjamas and I will bring the best university professors and the best courses with the best technology right here in your living room.
So, somewhere there has to be a value the university offers — be it peer learning, interacting with your professors, just the fun one has — but for some students, the living room may well be the answer somewhere in the future.
There is a possibility that somewhere in the future, everybody is in a MOOC. But I think if we make the right changes and offer real value at a price people can afford, there will still be a market for a university education.
Coming from outside the system and with his experience in the corporate world (he’s been president of Eli Lily in the past) and government, Daniels, in a way, saw the writing on the wall. He started by deciding to freeze the cost of obtaining a degree at Purdue (after 36 years of steady rise), just as many universities across America were grappling with rising costs. Costs of obtaining a degree at Purdue today are in fact lower than they were three years ago. Purdue student borrowing is down 23 per cent after the cuts.
In an interview with Anjuli Bhargava, Daniels explains how he managed to cut costs. Edited excerpts
You seem to have cut costs of obtaining a degree at Purdue just when people have begun to question the value of the degrees they were obtaining through college education in the United States. How ?
I came from outside academics and that perspective might have helped.
There is much debate around the rising costs of healthcare in the US, but the only three things in the American economy that have escalated faster than healthcare are college tuition, college room and board and textbooks.
Costs have risen because they could rise. No one was keeping score and there was no measurement of the quality of what students were learning. In the absence of that, people assumed if it costs more, it must be worth more.
The similarities with healthcare are striking. Consumers are not paying the whole cost themselves – there are all kinds of subsidies from the government – to either colleges or loans and grants to students, so the purchaser felt somewhat insulated from the real costs.
I’d say this was going to happen anyway, but the 2008 crisis and the difficult years after that – even till now – brought this forward. You have 45 per cent of recent college graduates living at home even now. You were meant to get a college degree, your ticket to a great life.
But now it turns out many of the students didn’t learn much, there are no great jobs to be got and students are back home.
How did you manage to freeze tuition, from 2013 to 2017, and other costs without huge cuts in staff and their allowances ?
It’s a bit of the other way round. When more and more money kept coming in, institutions just found a way to spend it. A lot of it was getting spent on things that weren’t absolutely necessary.
The first year, we set up a hotline and a drop box and asked people to come up with ideas to cut costs. Students, teachers, administrative staff and anyone who had an idea was invited to come forward — and they did.
The faculty strength today is larger than what it was. But we did other things. We modernised the healthcare benefit for our staff in a way that saves them money, and it is saving the university lots of money.
Today, the total cost of attending Purdue is lower than what it was three years ago — we have reduced room and board and the cost of textbooks. The cost of textbooks is 6-8 per cent of total costs. We worked with Amazon — their very first brick and mortar facility of any kind is at Purdue. Any student and faculty can order books through this at a saving of 30 per cent.
Is there more of a question mark on the value of a liberal arts degree than a STEM degree (science, technology, engineering and mathematics) ?
A large percentage of the 45 per cent of students who I mentioned are still living at home despite their degrees have been liberal arts students. There’s no question that liberal arts are under pressure.
But I worry about over-reaction. While it’s nice to have the technical skills, it’s important to understand economics and to be able to communicate. Companies often tell us not to send us a brilliant engineer who cannot talk to our customers or work in a team with less technically qualified people than himself.
Here we are seeing Indian children who are out of some of the best institutions in the US – fully paid for – but unable to find jobs.
At times, expectations get the better of them. If you have a degree from an Ivy League, you may have ridiculously high expectations at times — some students think they will be CEOs within two years or their salary expectations are bizarrely high. At Purdue, we try and give our students a rigorous education but keep their expectations on the ground.
What about massive open online courses (MOOC) and the threat they pose ?
We have to pass the “pyjamas” test — a lot of people who are very smart are telling these students why they want to move all the way to a university, pay a lot of money — just stay home in your pyjamas and I will bring the best university professors and the best courses with the best technology right here in your living room.
So, somewhere there has to be a value the university offers — be it peer learning, interacting with your professors, just the fun one has — but for some students, the living room may well be the answer somewhere in the future.
There is a possibility that somewhere in the future, everybody is in a MOOC. But I think if we make the right changes and offer real value at a price people can afford, there will still be a market for a university education.
Tell me a bit the reforms you introduced in K12 in Indiana…
This – the US K12 system – is in my view the biggest crisis the US faces currently. A recent national assessment shows that Americans kids don’t stack up well at all against kids from many countries and it has got worse.
Too many American families don’t place much of a value of education – unlike Indians and Chinese I’d say.
In our system, you couldn't get rid of a teacher, they are promoted based on seniority whereas they should be paid on merit…
What you are saying is what is true for India too…
In Indiana, we have managed to reduce drop out rates by 10 per cent by insisting that parents come to school, sign various forms and so on before a student just drops out. We have made sure a student cannot be promoted from Grade 3 to 4 if he can’t read. In some of the worst schools, high school students cannot read. We have made it illegal to promote such students.
We gave every parent – low and moderate income – the right to send their children to non-government schools by giving them “school vouchers” that subsidise the cost of sending them to better, private schools. Choice of school should not only be restricted to the rich.