Tuesday, March 17, 2015

Daniels Wants You to "Bet on a Boiler"

Purdue President Mitch Daniels
Sometimes, I don't even know where to start on something.  This would be one of those moments, so I'll just jump in.

You know how famous people or people with a lot of money will sometimes decide to donate a portion of that money to a school or to an endowment to fund scholarships?  Students then can qualify for those scholarships and take advantage of it to pay for post-secondary education.

Purdue President and former Indiana Governor Mitch Daniels wants to turn that system on its head.

Instead of students taking out loans from a bank, Daniels wants to turn to investors (or alumni) to fund a student's education in exchange for a share of future earnings of that student.  He wanted to call the plan, "Bet on a Boiler".  No joke.

This sounds like a bad reality or game show.  Some have called it "indentured servitude" or worse.  Daniels says he needs some legislation to make his plan legal, and he plans to try to sell it to Congress.  I guess we'll see if he's successful.

I'm all for ways to fund college for people that want to go, but I think this creates an awfully slippery slope here.  I hate using that term, but this program really has bad idea written all over it to me.


Emily said...

As a fairly recent graduate with student loans, I don't really understand how this would change the situation for students that much - how would it make the end result any different for us to owe the money to an individual investor versus the department of education or Sallie Mae? How long would graduates be paying a percentage of their income, and what percentage? How would the percentage be determined - would it depend on the field or the job obtained?

Anonymous said...

There was actually a book called, I believe, The Unincorporated Man, based upon this premise. Everyone was a corporation in a Any Randian utopia. The book began with a quote from Milton Friedman, if I recall, basically suggesting the idea that Daniels proposed now.

Only in the book, others could own more than 50% of you and then they, as the corporate majority, could tell you what job to take and where.

Christopher Rost said...

As a Democrat and Purdue grad - this is just another option for students and one that I fully support. Just as an FYI, I met with the CIO of the Purdue Research Foundation last night and spoke with him about the program. The 1 thing that is failed to mention is that a student will owe anywhere from 3-15% of their salary (depends on their major) for only 9 years. Let's say a woman becomes a mother and stops working altogether - she is not responsible for any repayment. Let's say a student decides to go on to medical school - for the next 8-10 years of their life they will not pay anything to Purdue because they will not be making a salary. In this situation, the fund would extend 5 years to a max of 14 years but after the 14 year mark, even that doctor will no longer have to pay.

While Democrats are quick to judge Mitch Daniels, don't just shoot this idea down without looking into it a bit further. Check out NBC Nightly News next week when the feature it. Also, check out the queue of universities and colleges across the country stepping in line to see if this works. Mitch openly states that they are not sure this will work but trying something is better than doing nothing, right?