[daepp]

Continued.



“I do think there’s a duty to try to validate a product charging this much money. People are saying: Show us there’s growth during those four years,” he says. “Particularly if you’re associated with a university you think is doing a fine job, I see this as an opportunity more than a defense mechanism.” The Purdue faculty, however, seems less enthusiastic about the opportunity—and though Mr. Daniels doesn’t say so, some teachers seem to be slow rolling his efforts by claiming they need more time to develop what they deem an academically valid standard.
Mr. Daniels also has some advice for Congress as the Higher Education Act of 1965 comes up for reauthorization. “Clearly an opportunity in deregulation,” he says. The act’s provision for Free Application for Federal Student Aid, a form that students use to figure out federal aid eligibility, has 108 questions, many of them useless.
Another problem: The aid-application system requires the disclosure of parental savings in addition to their current income, meaning it punishes parents who planned ahead. A potential new wrinkle in government hostility to saving for tuition came in January, when President Obama floated the idea of taxing so-called 529 accounts used by middle-class savers putting away money for their children’s education. A week later the administration backtracked amid irate public reaction. As Mr. Daniels dryly notes, “That one had a half-life somewhere at the bottom of the periodic table.”

In his drive to free students of debt, Mr. Daniels is considering innovations such as an unconventional financing option known as the income-share arrangement. Instead of taking out a loan, students promise an investor a certain percentage of their income for a fixed number of years. Graduates who earn more pay more, and those who earn little pay little. The concept, Mr. Daniels points out, isn’t new. “Like a lot of my ideas, Milton Friedman thought of it decades before,” he says with a grin.
Pondering what to call the income-share arrangement if he brings it to Purdue, home of the Boilermakers, Mr. Daniels has said he’s thinking about calling it “Bet on a Boiler.” The program would “start as something for people who had an affinity for a university,” namely enthusiastic alumni. If it works, he says, the program could appeal to other investors: “Somebody who has never been within a thousand miles of here might be very smart to bet on one of our chemical engineers.”
One roadblock: It’s unclear how the feds would treat such contracts. He testified about the concept before a congressional committee in March, and then came media howling that Mr. Daniels favored “indentured servitude.” He calls that charge “nonsense,” noting that “you don’t have to work, and by the way if you don’t, it’s no skin off yours; the investor loses.” If anything, being beholden to a bank for 20 years is indentured servitude.

As a college administrator, Mr. Daniels has also taken notice of the bureaucratic accreditation process that is a prerequisite for receiving federal funds. Six regional groups blessed by the Education Department, as well as a coterie of program-specific organizations, sign off on an institution’s programs. The ostensible goal when Congress coupled federal funding with accreditation in the 1952 G.I. Bill was to protect students from colleges hawking worthless degrees.

That hasn’t happened. Instead, universities devote considerable resources to a useless process. Almost no institution misses the mark, and since accreditation is done geographically, an upper-tier school like Purdue is accredited by the same agency that has given accreditation to Indiana University East, where the six-year graduation rate is about 18%.

Purdue pays $150,000 annually in direct accreditation fees, working with any combination of 17 agencies—but that doesn’t include time. Stanford University Provost John Etchemendy said in a 2011 letter that the school spent $849,000 in one year of a multiyear accreditation. “One suspects you have some basic inertia and some folks would rather spend their time being busy with this than doing something more productive,” Mr. Daniels says with a faint smile. “I refer of course to the people on other campuses.”

‘All this time and money and in the end some really lousy schools get accredited, so I’m not sure what the student—the consumer—learns. An awful lot of make work involved, or so it seems,” he says. Sen. Lamar Alexander (R., Tenn.) is considering reforms, including untangling accreditation from federal funding, an idea that Mr. Daniels says “ought to be looked at.”

Mr. Daniels has made a habit of searching out what “ought to be looked at” in his two years running Purdue, getting his school in shape for when the higher-education bubble implodes. It’s all part of trying to provide the accountability that students and parents are starting to demand. “Higher education has to get past the ‘take our word for it’ era,” he says. “Increasingly, people aren’t.”

Miss Bachelder is an assistant editorial features editor at the Journal.